0001157523-04-007716.txt : 20040813 0001157523-04-007716.hdr.sgml : 20040813 20040813090106 ACCESSION NUMBER: 0001157523-04-007716 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040813 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: 04971909 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 d60373_10-q.htm INVESTORS TITLE 10-Q

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, 2004

|_|

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 Identification No.)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|

As of June 30, 2004, there were 2,855,744 outstanding shares of common stock of Investors Title Company, including 354,380 shares held by Investors Title Insurance Company, a wholly owned subsidiary of Investors Title Company.

INVESTORS TITLE COMPANY
AND SUBSIDIARIES

INDEX

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003	1

	Consolidated Statements of Income For the Three and Six Months Ended June 30, 2004 and 2003	2

	Consolidated Statements of Stockholders’ Equity For the Six Months Ended June 30, 2004 and 2003	3

	Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2004 and 2003	4

	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17

Item 4.	Controls and Procedures	17

PART II.	OTHER INFORMATION

Item 2.	Changes in Securities, Use of Proceeds & Issuer Purchases of Equity Securities	18

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 6.	Exhibits and Reports on Form 8-K	20

SIGNATURE		21

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Investors Title Company and Subsidiaries
Consolidated Balance Sheets
As of June 30, 2004 and December 31, 2003

				June 30, 2004		December 31, 2003

				(Unaudited)		(Audited)
Assets
	Cash and cash equivalents			$	5,013,645	$	5,125,356

	Investments in securities:
		Fixed maturities:
			Held-to-maturity, at amortized cost		3,341,240		3,526,030
			Available-for-sale, at fair value		71,188,047		60,803,807
		Equity securities, at fair value			6,628,712		14,556,785
		Other investments			1,280,494		955,561

			Total investments		82,438,493		79,842,183

	Premiums receivable, less allowance for doubtful accounts of $2,360,000 and $2,474,000 for 2004 and 2003, respectively				7,995,639		8,031,803
	Accrued interest and dividends				679,458		667,147
	Prepaid expenses and other assets				1,488,550		934,345
	Property acquired in settlement of claims				286,517		286,517
	Property, net				4,143,845		4,099,243
	Deferred income taxes, net				1,172,598		1,485,217


Total Assets				$	103,218,745	$	100,471,811


Liabilities and Stockholders’ Equity
Liabilities:
	Reserves for claims (Note 2)			$	30,476,000	$	30,031,000
	Accounts payable and accrued liabilities				4,653,737		5,782,470
	Commissions and reinsurance payables				489,598		726,191
	Premium taxes payable				—		461,436
	Current income taxes payable				356,278		281,968

		Total liabilities			35,975,613		37,283,065


Commitments and Contingencies (Note 6)

Stockholders’ Equity:

	Class A Junior Participating preferred stock (shares authorized 100,000; no shares issued)				—		—
	Common stock-no par value (shares authorized 10,000,000; 2,501,364 and 2,503,923 shares issued and outstanding 2004 and 2003, respectively, excluding 354,380 and 351,821 shares 2004 and 2003, respectively, of common stock held by the Company’s subsidiary)				1		1
	Retained earnings				64,435,785		59,756,927
	Accumulated other comprehensive income, net of deferred taxes of $1,447,096 and $1,768,477 for 2004 and 2003, respectively (Note 3)				2,807,346		3,431,818

		Total stockholders’ equity			67,243,132		63,188,746


Total Liabilities and Stockholders’ Equity				$	103,218,745	$	100,471,811

See notes to consolidated financial statements.

Investors Title Company and Subsidiaries
Consolidated Statements of Income
For the Three and Six Months Ended June 30, 2004 and 2003
(Unaudited)

				For The Three Months Ended June 30				For The Six Months Ended June 30

				2004		2003		2004		2003

Revenues:
	Underwriting income:
		Premiums written		$	19,743,434	$	23,415,757	$	36,794,716	$	43,180,931
		Less - premiums for reinsurance ceded			93,782		93,128		163,308		190,317

			Net premiums written		19,649,652		23,322,629		36,631,408		42,990,614
	Investment income - interest and dividends				691,996		679,857		1,365,322		1,354,435
	Net realized gain on sales of investments				16,956		41,867		20,387		64,914
	Exchange services revenue (Note 5)				542,304		389,812		1,022,198		490,901
	Other				580,579		745,478		1,058,741		1,307,222

			Total		21,481,487		25,179,643		40,098,056		46,208,086


Operating Expenses:
	Commissions to agents				7,913,200		11,462,988		14,911,795		20,855,778
	Provision for claims (Note 2)				2,185,024		2,687,693		4,029,403		4,770,731
	Salaries, employee benefits and payroll taxes (Note 6)				4,328,260		3,708,942		8,176,165		7,255,999
	Office occupancy and operations				1,322,957		1,365,677		2,533,255		2,462,793
	Business development				523,523		402,204		876,937		783,156
	Taxes, other than payroll and income				97,940		121,159		299,054		175,282
	Premium and retaliatory taxes				389,391		462,819		722,395		884,105
	Professional fees				408,871		250,795		819,546		458,139
	Other				5,133		147,914		36,507		199,845

			Total		17,174,299		20,610,191		32,405,057		37,845,828


Income Before Income Taxes					4,307,188		4,569,452		7,692,999		8,362,258


Provision For Income Taxes					1,426,793		1,482,000		2,591,000		2,666,245


Net Income				$	2,880,395	$	3,087,452	$	5,101,999	$	5,696,013


Basic Earnings Per Common Share (Note 4)				$	1.15	$	1.24	$	2.04	$	2.27


Weighted Average Shares Outstanding - Basic (Note 4)					2,502,807		2,494,036		2,504,088		2,503,773


Diluted Earnings Per Common Share (Note 4)				$	1.10	$	1.18	$	1.94	$	2.18


Weighted Average Shares Outstanding - Diluted (Note 4)					2,618,477		2,619,743		2,628,431		2,616,098


Dividends Paid				$	113,988	$	74,708	$	189,175	$	150,179


Dividends Per Share				$	0.04	$	0.03	$	0.07	$	0.06

See notes to consolidated financial statements.

Investors Title Company and Subsidiaries
Consolidated Statements of Stockholders’ Equity
For the Six Months Ended June 30, 2004 and 2003
(Unaudited)

	Common Stock									Accumulated Other Comprehensive Income (Net				Total
							Retained			Unrealized Gain (Loss)				Stockholders’
	Shares			Amount			Earnings			on Investments)				Equity


Balance, December 31, 2002		2,515,804			$	1	$	49,613,044			$	3,055,139		$	52,668,184
Net income								5,696,013							5,696,013
Dividends ($.06 per share)								(150,179	)						(150,179	)
Shares of common stock repurchased		(36,128	)					(834,170	)						(834,170	)
Compensation expense related to stock options		1,443						31,009							31,009
Stock options exercised		17,820						272,246							272,246
Net unrealized gain (loss) on investments												570,099			570,099


Balance, June 30, 2003		2,498,939			$	1	$	54,627,963			$	3,625,238		$	58,253,202


Balance, December 31, 2003		2,503,923			$	1	$	59,756,927			$	3,431,818		$	63,188,746
Net income								5,101,999							5,101,999
Dividends ($.07 per share)								(189,175	)						(189,175	)
Shares of common stock repurchased		(13,579	)					(414,768	)						(414,768	)
Compensation expense related to stock options		525						17,292							17,292
Stock options exercised		10,495						163,510							163,510
Net unrealized gain (loss) on investments												(624,472	)		(624,472	)


Balance, June 30, 2004		2,501,364			$	1	$	64,435,785			$	2,807,346		$	67,243,132

See notes to consolidated financial statements.

Investors Title Company and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2004 and 2003
(Unaudited)

			2004			2003

Operating Activities:
Net income			$	5,101,999		$	5,696,013
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation		450,825			399,390
		Amortization, net		19,625			12,888
		Issuance of common stock in payment of bonuses and fees		17,292			31,009
		Provision (benefit) for losses on premiums receivable		(114,000	)		675,000
		Net gain on disposals of property		(5,011	)		(4,922	)
		Net realized gain on sales of investments		(20,387	)		(64,914	)
		Provision (benefit) for deferred income taxes		634,000			(34,000	)
	Changes in assets and liabilities:
		Increase in receivables and other assets		(416,352	)		(2,352,604	)
		Decrease in accounts payable and accrued liabilities		(1,128,733	)		(1,557,688	)
		Decrease in commissions and reinsurance payables		(236,593	)		(10,293	)
		Decrease in premium taxes payable		(461,436	)		(34,549	)
		Increase (decrease) in current income taxes payable		74,310			(78,622	)
		Provision for claims		4,029,403			4,770,731
		Payments of claims, net of recoveries		(3,584,403	)		(2,878,731	)

	Net cash provided by operating activities			4,360,539			4,568,708


Investing Activities:
	Purchases of available-for-sale securities			(31,730,117	)		(3,452,544	)
	Purchases of held-to-maturity securities			(3,897	)		(4,246	)
	Purchases of other securities			(324,933	)		(563,280	)
	Proceeds from sales of available-for-sale securities			28,324,938			6,064,365
	Proceeds from sales of held-to-maturity securities			192,608			592,000
	Proceeds from sales of other securities			—			25,967
	Purchases of property			(522,582	)		(483,508	)
	Proceeds from sales of property			32,166			9,235

	Net cash provided by (used in) investing activities			(4,031,817	)		2,187,989


Financing Activities:
	Repurchases of common stock			(414,768	)		(834,170	)
	Exercise of options			163,510			272,246
	Dividends paid			(189,175	)		(150,179	)

	Net cash used in financing activities			(440,433	)		(712,103	)


Net Increase (Decrease) in Cash and Cash Equivalents				(111,711	)		6,044,594
Cash and Cash Equivalents, Beginning of Year				5,125,356			3,781,961

Cash and Cash Equivalents, End of Period			$	5,013,645		$	9,826,555


Supplemental Disclosures:
Cash Paid During the Year for:
	Income Taxes, net of refunds		$	1,891,000		$	2,796,000

See notes to consolidated financial statements.

INVESTORS TITLE COMPANY
AND SUBSIDIARIES

Notes to Consolidated Financial Statements
June 30, 2004
(Unaudited)

Note 1 - Basis of Presentation

Reference should be made to the “Notes to Consolidated Financial Statements” of Investors Title Company’s (the “Company”) Annual Report to Shareholders for the year ended December 31, 2003 for a complete description of the Company’s significant accounting policies. There were no changes in the significant accounting policies during the six months ended June 30, 2004.

Principles of Consolidation – The unaudited consolidated financial statements include the accounts and operations of Investors Title Company and its subsidiaries (Investors Title Insurance Company, Northeast Investors Title Insurance Company, Investors Title Exchange Corporation, Investors Title Accommodation Corporation, Investors Title Management Services, Inc., Investors Title Commercial Agency, LLC, Investors Capital Management Company, and Investors Trust Company), and have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted. All intercompany balances and transactions have been eliminated in consolidation.

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.

Use of Estimates and Assumptions – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Earnings Per Share - Basic net income per share information is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share is computed using the weighted average number of shares of common and dilutive potential common shares outstanding during the period.

Stock-Based Compensation - The Company accounts for stock-based compensation based on the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, which states that, for fixed plans, no compensation expense is recorded for stock options or other stock-based awards to employees that are granted with an exercise price equal to or above the estimated fair value per share of the Company’s common stock on the grant date. In the event that stock options are granted with an exercise price below the estimated fair value of the Company’s common stock at the grant date, the difference between the fair value of the Company’s common stock and the exercise price of the stock option is recorded as deferred compensation. Deferred compensation is amortized to compensation expense over the vesting period of the stock option. The Company has adopted the disclosure requirements of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), and Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an Amendment to FASB Statement No. 123, which together require compensation expense to be disclosed based on the fair value of the options granted at the date of the grant.

Had compensation cost for the Company’s stock option plan been determined based on the fair value at the grant dates for awards under the plan consistent with the method required by SFAS No. 123, the Company’s net income and diluted net income per common share would have been the pro forma amounts indicated in the following table:

		For the Three Months Ended June 30,						For the Six Months Ended June 30,

		2004			2003			2004			2003

Net income as reported		$	2,880,395		$	3,087,452		$	5,101,999		$	5,696,013
Less: Total stock-based employee compensation expense determined under fair value-based method for all awards, net of related tax effects			(37,905	)		(32,534	)		(75,520	)		(70,447	)

Pro forma net income		$	2,842,490		$	3,054,918		$	5,026,479		$	5,625,566

Net income per share:
	Basic – as reported	$	1.15		$	1.24		$	2.04		$	2.27
	Basic – pro forma	$	1.14		$	1.22		$	2.01		$	2.25

	Diluted – as reported	$	1.10		$	1.18		$	1.94		$	2.18
	Diluted – pro forma	$	1.09		$	1.17		$	1.91		$	2.15

Recent Accounting Pronouncements - FIN 46: In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (“FIN 46”). FIN 46 amended Accounting Research Bulletin 51, Consolidated Financial Statements, and established standards for determining circumstances under which a variable interest entity (“VIE”) should be consolidated by its primary beneficiary. FIN 46 also requires disclosures about VIEs that the Company is not required to consolidate but in which it has a significant variable interest. In December 2003, the FASB issued FIN 46-R, which not only included amendments to FIN 46, but also required application of the interpretation to all affected entities no later than March 31, 2004 for calendar-year reporting companies. Prior to FIN 46-R, however, companies were required to apply the interpretation to special-purpose entities by December 31, 2003. The adoption of FIN 46-R as it relates to special-purpose entities did not have any effect on the Company’s results of operations, financial position or liquidity.

SFAS 150: In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Many of these instruments were previously classified as equity. SFAS No. 150 requires that an issuer classify a financial instrument that is within its scope as a liability, or as an asset in some circumstances. This Statement applies to three types of freestanding financial instruments, other than outstanding shares. One type is mandatorily redeemable shares, which the issuer is obligated to buy back in exchange for cash or assets; a second type includes put options and forward purchase contracts that require or may require the issuer to buy back some of its shares in exchange for cash or other assets; the third type is obligations that can be settled with shares, the monetary value of which is fixed, tied solely or predominantly to a variable such as a market index, or varies inversely with the value of the issuer’s shares. SFAS No. 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this Statement did not have a material impact on the Company’s financial statements.

Note 2 - Reserves for Claims

Transactions in the reserves for claims for the six months ended June 30, 2004 and the year ended December 31, 2003 were as follows:

	June 30, 2004				December 31, 2003

Balance, beginning of year		$	30,031,000			$	25,630,000
Provision, charged to operations			4,029,403				9,292,739
Payments of claims, net of recoveries			(3,584,403	)			(4,891,739	)

Ending balance		$	30,476,000			$	30,031,000

The total reserve for all reported and unreported losses the Company incurred through June 30, 2004 is represented by the reserve for claims. The Company’s reserves for unpaid losses and loss adjustment expenses are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future. Despite the variability of such estimates, management believes that the reserves are adequate to cover claim losses which might result from pending and future claims. The Company continually reviews and adjusts its reserve estimates to reflect its loss experience and any new information that becomes available. Adjustments resulting from such reviews may be significant.

Claims and losses paid are charged to the reserves for claims. Although claims losses are typically paid in cash, occasionally claims are settled by purchasing the interest of the insured or the claimant in the real property. When this event occurs, the Company carries assets at the lower of cost or estimated realizable value, net of any indebtedness on the property.

Note 3 - Comprehensive Income

Comprehensive income for the three months ended June 30, 2004 and 2003 was $2,177,908 and $3,679,441, respectively. Comprehensive income for the six months ended June 30, 2004 and 2003 was $4,477,527 and $6,266,112, respectively. Other comprehensive income is comprised solely of unrealized gains or losses on the Company’s available-for-sale securities.

Note 4 – Earnings Per Common Share

Employee stock options are considered outstanding for the diluted earnings per common share calculation and are computed using the treasury stock method. The total increase in the weighted average shares outstanding related to these equivalent shares was 115,670 and 125,707 for the three months ended June 30, 2004 and 2003, respectively, and 124,343 and 112,325 for the six months ended June 30, 2004 and 2003, respectively. Options to purchase 252,996 and 282,246 shares of common stock were outstanding as of June 30, 2004 and 2003, respectively. Of the total options outstanding, 1,200 and 28,100 options were not included in the computation of diluted earnings per share for the three months ended June 30, 2004 and 2003, respectively; and –0- and 39,840 options were not included in the computation of diluted earnings per share for the six months ended June 30, 2004 and 2003, respectively, because the options’ exercise prices were greater than the average market price of the common shares.

Note 5 – Segment Information

Consistent with SFAS No. 131, the Company has aggregated its operating segments into two reportable segments: 1) title insurance services; and 2) tax-free exchange services.

Three Months Ended	Operating Revenues		Operating Expenses		Income (Loss) Before Income Taxes			Assets

June 30, 2004
Title Insurance	$	19,871,814	$	16,478,417	$	3,941,432		$	90,493,978
Exchange Services		542,304		153,644		390,595			1,063,816
All Other		358,417		542,238		(24,839	)		11,660,951

	$	20,772,535	$	17,174,299	$	4,307,188		$	103,218,745


June 30, 2003
Title Insurance	$	23,846,555	$	20,180,270	$	4,225,350		$	82,525,967
Exchange Services		389,812		113,220		277,381			408,640
All Other		221,552		316,701		66,721			7,498,405

	$	24,457,919	$	20,610,191	$	4,569,452		$	90,433,012

Six Months Ended	Operating Revenues		Operating Expenses		Income (Loss) Before Income Taxes			Assets

June 30, 2004
Title Insurance	$	37,058,377	$	31,004,760	$	7,124,998		$	90,493,978
Exchange Services		1,022,198		299,122		726,213			1,063,816
All Other		631,772		1,101,175		(158,212	)		11,660,951

	$	38,712,347	$	32,405,057	$	7,692,999		$	103,218,745

June 30, 2003
Title Insurance	$	43,838,001	$	36,999,372	$	7,959,007		$	82,525,967
Exchange Services		490,901		249,782		242,501			408,640
All Other		459,835		596,674		160,750			7,498,405

	$	44,788,737	$	37,845,828	$	8,362,258		$	90,433,012

Operating revenues represent net premiums written and other revenues, excluding investment income and net realized gain on sales of investments. Below is a schedule reconciling operating revenues to total revenues:

		For the Three Months Ended June 30, 2004		For the Three Months Ended June 30, 2003		For the Six Months Ended June 30, 2004		For the Six Months Ended June 30, 2003


Operating Revenues		$	20,772,535	$	24,457,919	$	38,712,347	$	44,788,737
Investment income – interest and dividends			691,996		679,857		1,365,322		1,354,435
Net realized gain on sales of investments			16,956		41,867		20,387		64,914

	Total Revenues	$	21,481,487	$	25,179,643	$	40,098,056	$	46,208,086

Note 6 – Commitments and Contingencies

The Company and its subsidiaries are involved in various legal proceedings that are incidental to their business. In the Company’s opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings will not, in the aggregate, be material to the Company’s consolidated financial condition or operations.

On November 17, 2003, Investors Title Insurance Company entered into employment agreements with key executives that provide for the continuation of certain employee benefits upon retirement. The executive employee benefits include health insurance, dental insurance, vision insurance and life insurance. The plan is unfunded. The following sets forth the net periodic benefits cost for the executive benefits for the quarter ended June 30, 2004:

	For the Three Months Ended June 30, 2004			For the Six Months Ended June 30, 2004

Service cost at beginning of period		$	15,909		$	3,513
Interest cost			3,875			7,750
Amortization of Unrecognized Prior Service Cost			8,521			17,042
Amortization of Unrecognized Gains or Losses			—			—


Net Periodic Benefits Costs		$	28,305		$	28,305

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s 2003 Form 10-K and 2003 Annual Report to Shareholders should be read in conjunction with the following discussion since they contain important information for evaluating the Company’s operating results and financial condition.

Overview

Title Insurance: Investors Title Company (the “Company”) engages primarily in two segments of business. Its main business activity is the issuance of title insurance through two subsidiaries, Investors Title Insurance Company (“ITIC”) and Northeast Investors Title Insurance Company (“NE-ITIC”). Through ITIC and NE-ITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer and as a reinsurer for other title insurance companies. ITIC delivers title insurance coverage through a home office, branch offices, and issuing agents and NE-ITIC delivers title insurance through issuing agents. Title insurance protects against loss or damage resulting from defects that affect the title to real property. The commitment and policies issued are the standard American Land Title Association approved forms.

There are two basic types of title insurance policies - one for the mortgage lender and one for the real estate owner. A lender often requires property owners to purchase title insurance to protect its position as a holder of a mortgage loan, but the lender’s title insurance policy does not protect the property owner. The property owner has to purchase a separate owner’s title insurance policy to protect his investment. When real property is conveyed from one party to another, occasionally there is a hidden defect in the title or a mistake in a prior deed, will or mortgage that may give a third party a legal claim against such property. If a claim is made against real property, title insurance provides a corporate guarantee against insured defects, pays all legal expenses to eliminate any title defects, pays any claims arising from errors in title examination and recording, and pays any losses arising from hidden defects in title and defects that are not of record. Title insurance provides an assurance that the insurance holder’s ownership and use of such property will be defended promptly against claims, at no cost, whether or not the claim is valid.

The Company’s profitability in the land title insurance industry is affected by a number of factors, including the cost and availability of mortgage funds, the level of real estate and mortgage refinance activity, the cost of real estate, consumer confidence, employment levels, family income levels and general economic conditions. Generally, real estate activity declines as a result of higher interest rates or an economic downturn, thus leading to a corresponding decline in title insurance premiums written and the revenues and profitability of the Company. The cyclical nature of the land title insurance industry has historically caused fluctuations in revenues and profitability and it is expected to continue to do so in the future.

Volume is also a key factor in the Company’s profitability because the Company has certain significant fixed costs such as personnel and occupancy expenses associated with processing and issuing a title insurance policy. These costs do not necessarily increase or decrease depending on the size and type of the policy issued.

During 2004, premiums have declined principally due to the decline in refinancing activity, as a result of increased interest rates, which is expected to continue throughout the year. Operating results for the six months ended June 30, 2004, therefore, should not be viewed as indicative of the Company’s future operating results. As always, the Company has been monitoring and carefully managing operating expenses such as salaries, employees’ benefits and certain other operational expenses in light of the expected decline in title insurance revenues.

The Company strives to offset the cyclical nature of the real estate market by increasing its market share. This effort includes expanding into new markets primarily by continuing to develop agency relationships, as well as improving market penetration with existing offices and agents. In order to maintain and improve profits, the Company endeavors to identify opportunities to refine operating procedures and to implement programs designed to reduce expenses.

Exchange Services: The Company’s second segment provides tax-free exchange services through its subsidiaries, Investors Title Exchange Corporation (“ITEC”) and Investors Title Accommodation Corporation (“ITAC”). ITEC serves as a qualified intermediary in §1031 like-kind exchanges of real or personal property. In its role as qualified intermediary, ITEC coordinates the exchange aspects of the real estate transaction with the closing agents. ITEC’s duties include drafting standard exchange documents, holding the exchange funds between the sale of the old property and the purchase of the new property, and accepting the formal identification of the replacement property within the required identification period. ITAC serves as exchange accommodation titleholder in reverse exchanges. As exchange accommodation titleholder, ITAC offers a vehicle for accommodating a reverse exchange when the taxpayer must acquire replacement property before selling the relinquished property.

New Services: Investors Trust Company (“INTC”), wholly owned by the Company, was chartered on February 17, 2004 by the North Carolina Commissioner of Banks. INTC will serve clients throughout North Carolina and neighboring states by providing professional portfolio management services along with trust services. Activities of this company are not currently significant.

Critical Accounting Policies:

During the six months ended June 30, 2004, the Company made no changes in its critical accounting policies as previously disclosed within the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Results of Operations:

For the quarter ended June 30, 2004, net premiums written decreased 16% to $19,649,652, investment income increased 2% to $691,996, total revenues decreased 15% to $21,481,487 and net income decreased 7% to $2,880,395, all compared with the same quarter in 2003. Both net income per basic and diluted common share decreased 7%, to $1.15 and $1.10, respectively, as compared with the same quarter ended June 30, 2003. For the quarter ended June 30, 2004, the title insurance segment’s operating revenues decreased 17% compared with the second quarter of 2003, while the exchange services segment’s operating revenues increased 39% for the quarter ended June 30, 2004, compared with the same quarter in 2003.

For the six months ended June 30, 2004, net premiums written decreased 15% to $36,631,408, investment income increased 1% to $1,365,322, total revenues decreased 13% to $40,098,056 and net income decreased 10% to $5,101,999, all compared with the same period in 2003. Net income per basic and diluted common share decreased 10% and 11%, respectively, to $2.04 and $1.94 as compared with the same six-month period ended June 30, 2003. For the six months ended June 30, 2004, the title insurance segment’s operating revenues decreased 15% compared with the same period in 2003, while the exchange services segment’s operating revenues increased 108% for the six months ended June 30, 2004 compared with the same period in 2003.

Operating revenues: Premiums written declined primarily due to significantly lower levels of mortgage refinancing compared with the prior year quarter, which was partially offset by a rate increase in North Carolina. According to the Freddie Mac Weekly Mortgage Rate Survey, the monthly average 30-year fixed mortgage interest rates increased to an average of 5.87% for the six months ended June 30, 2004, compared with 5.67% for the six months ended June 30, 2003. The volume of business decreased in the first half of 2004, as the number of policies and commitments issued for the six months declined to 149,842, a decrease of 30.1% compared with 214,228 in the same period in 2003.

Shown below is a schedule of premiums written for the three and six months ended June 30, 2004 and 2003 in all states in which the Company’s two insurance subsidiaries, Investors Title Insurance Company and Northeast Investors Title Insurance Company, currently underwrite insurance:

	For the Three Months Ended						For the Six Months Ended

State	2004			2003			2004			2003

Alabama	$	385,354		$	362,456		$	713,670		$	645,527
Florida		299,884			10,170			655,488			25,150
Illinois		285,394			444,000			549,122			756,449
Kentucky		469,178			511,292			869,208			941,646
Maryland		402,188			563,848			737,048			975,414
Michigan		1,357,627			2,499,942			2,580,427			4,394,450
Minnesota		271,224			486,750			517,584			1,093,748
Mississippi		266,542			327,540			512,817			565,025
Nebraska		236,882			665,620			455,806			1,163,552
New York		1,015,832			1,693,109			1,832,172			3,106,336
North Carolina		8,979,950			7,949,288			16,568,586			14,909,659
Pennsylvania		884,749			1,728,956			1,459,575			3,297,694
South Carolina		1,471,548			1,701,820			3,245,445			3,272,382
Tennessee		873,284			1,111,776			1,584,199			2,029,754
Virginia		1,872,162			2,565,849			3,320,600			4,608,819
West Virginia		488,153			593,811			863,081			1,034,122
Other States		183,483			196,884			329,888			354,973

Direct Premiums		19,743,434			23,413,111			36,794,716			43,174,700
Reinsurance Assumed		—			2,646			—			6,231
Reinsurance Ceded		(93,782	)		(93,128	)		(163,308	)		(190,317	)

Net Premiums	$	19,649,652		$	23,322,629		$	36,631,408		$	42,990,614

The decline in total premiums written was primarily due to lower mortgage refinancing activity compared with the same period in 2003. Premiums written in Pennsylvania and Virginia were also impacted by declining business in individual agencies in those states. Year to date premiums in North Carolina, the Company’s largest market, were positively impacted by approximately $3.7 million related to the rate increase filed on October 1, 2003 for insured closing services. The increase in Florida is due primarily to the increase in agent business.

Shown below is a breakdown of branch and agency premiums for the three and six months ended June 30:

	For The Three Months Ended						For The Six Months Ended

	2004		%	2003		%	2004		%	2003		%

Branch	$	8,828,544	45	$	7,996,257	34	$	16,287,955	44	$	14,997,950	35
Agency		10,821,108	55		15,326,372	66		20,343,453	56		27,992,664	65

Total	$	19,649,652	100	$	23,322,629	100	$	36,631,408	100	$	42,990,614	100

Net premiums written from branch operations increased 10% for the three months ended June 30, 2004 as compared with the same period in the prior year due to the above mentioned North Carolina rate increase. For the six months ended June 30, 2004 and 2003, net premiums written from branch operations increased 9%. Of the Company’s 29 branch locations that underwrite title insurance policies, 27 are located in North Carolina and, as a result, branch net premiums written primarily represent North Carolina business.

Agency net premiums decreased 29% for the three months ended June 30, 2004 as compared with the same period in the prior year. For the six months ended June 30, 2004, agency net premiums decreased 27% as compared with the same prior year period. The majority of the decrease in agency net premiums written in the second quarter 2004 can be attributed to the general decline in business due to the slowdown in refinancing activity.

The increase in exchange services revenue was due to both an increase in the volume of transactions, resulting in a revenue increase of approximately $170,000, as well as an increase in fees. The Company believes that this line of business will continue to grow, although not necessarily at the same rate.

Operating Expenses: Total operating expenses decreased 17% and 14% for the three and six month periods ended June 30, 2004, respectively, compared with the same periods in 2003. This was due primarily to a decrease in commission expense as a result of decreased business from agent sources. A summary by segment of the Company’s operating expenses is as follows for the three and six months ended June 30:

	For The Three Months Ended						For The Six Months Ended

	2004		%	2003		%	2004		%	2003		%

Title insurance	$	16,478,417	96	$	20,180,270	98	$	31,004,760	96	$	36,999,372	98
Exchange services		153,644	1		113,220	—		299,122	1		249,782	1
All other		542,238	3		316,701	2		1,101,175	3		596,674	1

Total	$	17,174,299	100	$	20,610,191	100	$	32,405,057	100	$	37,845,828	100

Commissions to agents decreased 31% for the three months ended June 30, 2004 when compared with the same quarter in 2003. Commissions to agents decreased 29% for the six months ended June 30, 2004 when compared with the same period in 2003. This decrease is in proportion to the decline in agency premiums written.

The provision for claims as a percentage of net premiums written was 11.0% for the six months ended June 30, 2004, versus 11.1% for the same period in 2003.

Total salaries, employee benefits and payroll taxes as a percentage of total revenues were 20% and 16% for the six months ended June 30, 2004 and 2003, respectively. The increase in these costs was attributed to several factors, including $333,000 for certain employee benefits associated with key executive employment agreements entered into in late 2003, personnel costs of approximately $243,000 related to staff hired by the newly formed Investors Trust Company and the regulated investment advisory, and various staff additions and salary adjustments made during the first six months of 2004. The title insurance segment’s total salaries, employee benefits and payroll taxes accounted for 89% and 93% of the total consolidated amount for the six months ended June 30, 2004 and 2003, respectively.

Professional fees for the six months ended June 30, 2004 increased primarily due to the costs associated with compliance with Section 404 of the Sarbanes-Oxley Act of 2002, along with an increase in other professional fees.

Provision for Income Taxes: The provision for income taxes was 33% and 32% of income before income taxes for the three months ended June 30, 2004 and 2003, respectively. For the six months ended June 30, 2004 and 2003, the provision for income taxes was 34% and 32%, respectively, of income before income taxes.

Liquidity and Capital Resources:

Cash flows: Net cash provided by operating activities for the six months ended June 30, 2004, amounted to $4,360,539 compared with $4,568,708 for the same six month period of 2003. The decrease is primarily the result of a decrease in net income, a decrease in provision for claims, and increased net claim payments, offset by an increase in receivables and other assets. The principal non-operating use of cash and cash equivalents for the six months ended June 30, 2004 was additions to the investment portfolio.

Payment of dividends: The Company’s ability to pay dividends to its shareholders and operating expenses is dependent on funds received from the insurance subsidiaries, which are subject to regulation in the states in which they do business. These regulations, among other things, require prior regulatory approval of the payment of dividends and other intercompany transfers. The Company believes, however, that amounts available for transfer from the insurance subsidiaries are adequate to meet the Company’s operating needs.

Liquidity: Management believes that funds generated from operations will enable the Company to adequately meet its cash needs and is unaware of any trend or occurrence that is likely to result in adverse liquidity changes. In addition to operational liquidity, the Company maintains a high degree of liquidity within its investment portfolio in the form of short-term investments and other readily marketable securities.

Capital Expenditures: During 2004, the Company has plans for various capital improvement projects, including an upgrade of certain electronic data processing systems. For the six months ended June 30, 2004, the Company purchased electronic data processing equipment in excess of $400,000. Other property additions were approximately $100,000. The Company anticipates additional capital expenditures of approximately $500,000 during the remainder of 2004 in connection with these capital improvement projects.

Off-Balance Sheet Arrangements and Contractual Obligations: It is not the general practice of the Company to enter into off-balance sheet arrangements nor is it the policy of the Company to issue guarantees to third parties. Off-balance sheet arrangements are generally limited to the future payments under noncancelable operating leases, payments made from claims reserves, payments due under various agreements with third-party service providers, and obligations pursuant to certain executive employment agreements.

The following table summarizes the Company’s future estimated cash payments under existing contractual obligations, including payments due by period:

	Payments due by period

Contractual Obligations	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years

Long-term Debt Obligations	$	—	$	—	$	—	$	—	$	—
Capital Lease Obligations		—		—		—		—		—
Operating Lease Obligations		1,347,995		344,097		877,494		126,404		—
Telecommunications Contractual Obligations		410,400		116,400		294,000		—		—
Other Obligations		204,399		168,899		35,500		—		—
Executive Employment Agreements Obligations		785,000		—		—		—		785,000


Total	$	2,747,794	$	629,396	$	1,206,994	$	126,404	$	785,000

The total reserve for all reported and unreported losses the Company incurred through June 30, 2004 is represented by the reserve for claims. Information regarding the claims reserve can be found in Note 2 to the consolidated financial statements of this Form 10-Q. Further information on contractual obligations related to the reserves for claims can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission.

Safe Harbor Statement

This Quarterly Report on Form 10-Q, as well as information included in future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company, contains, or may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current outlook for future periods. These statements may be identified by the use of words such as “plan,” “expect,” “aim,” “believe,” “project,” “anticipate,” “intend,” “estimate,” “will,” “should,” “could” and other expressions that indicate future events and trends. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, product and service development, market position, claims, expenditures and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors, including, but not limited to, the following: (1) the demand for title insurance will vary due to factors such as the cost and availability of mortgage funds, the level of real estate and mortgage refinance activity, the cost of real estate, consumer confidence, employment levels, family income levels and general economic conditions; (2) losses from claims may be greater than anticipated such that reserves for possible claims are inadequate; (3) unanticipated adverse changes in securities markets could result in material losses on the Company’s investments; (4) the Company’s dependence on key management personnel, the loss of whom could have a material adverse effect on the Company’s business; (5) the Company’s ability to develop and offer products and services that meet changing industry standards in a timely and cost-effective manner; (6) the costs of producing title evidence are relatively high, whereas premium revenues are subject to regulatory and competitive restraints; and (7) state statutes require the Company’s insurance subsidiaries to maintain minimum levels of capital and surplus and restrict the amount of dividends that the insurance subsidiaries may pay to the Company without prior regulatory approval. 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

No material changes in the Company’s market risk or market strategy occurred since December 31, 2003. A detailed discussion of market risk is provided in the Company’s 2003 Annual Report on Form 10-K for the period ended December 31, 2003.

Item 4. Controls and Procedures

The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 (the “Act”) was recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms. An evaluation was performed under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(e) under the Act. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2004. In reaching this conclusion, the Company’s Chief Executive Officer and Chief Financial Officer determined that the Company’s disclosure controls and procedures were effective in ensuring that such information was accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended June 30, 2004, there was no change in the Company’s internal control over financial reporting identified in connection with the above-referenced evaluation that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

(a)	None

(b)	None

(c)	None

(d)	None

(e)	The following table provides information about purchases by the Company (and all affiliated purchasers) during the quarter ended June 30, 2004 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Plan		Maximum Number of Shares that May Yet Be Purchased Under the Plan

Beginning of period									401,684
04/01/04 – 04/30/04		120		$	31.00		120		401,564
05/01/04 – 05/31/04		7,591		$	28.02		7,591		393,973
06/01/04 – 06/30/04		45		$	27.34		45		393,928

Total:		7,756		$	28.06		7,756		393,928

	(1)	For the quarter ended June 30, 2004, ITIC purchased an aggregate of 7,756 shares of the Company’s common stock pursuant to the purchase plan (the “Plan”) that was publicly announced on June 5, 2000.

	(2)	The Board of Directors of ITIC approved the purchase by ITIC of up to an aggregate of 500,000 shares of the Company’s common stock pursuant to the Plan. Unless terminated earlier by resolution of the Board of Directors of ITIC, the Plan will expire when ITIC has purchased all shares authorized for purchase thereunder.

	(3)	ITIC intends to make further purchases under this Plan.

Item 4. Submission of Matters to a Vote of Security Holders

(a)	Investors Title Company’s Annual Meeting of Shareholders was held on May 19, 2004.

(c)	The voting results for the proposal to elect three Directors to the Company’s Board of Directors, each for a three-year term, are as follows:

	For	Against	Abstentions	Withheld	Broker Non-votes


J. Allen Fine	2,107,814	N/A	N/A	141,248	N/A

David L. Francis	2,244,608	N/A	N/A	4,454	N/A

A. Scott Parker	2,247,896	N/A	N/A	1,166	N/A

Item 6. Exhibits and Reports on Form 8-K

(a)	Exhibits

	10(x)	Amended and Restated Employment Agreement dated June 1, 2004 with J. Allen Fine

	10(xi)	Form of Amended and Restated Employment Agreement dated June 1, 2004 with each of James A. Fine, Jr. and W. Morris Fine

	10(xii)	Nonqualified Deferred Compensation Plan dated June 1, 2004

	10(xiii)	Nonqualified Supplemental Retirement Benefit Plan dated November 17, 2003

	10(xiv)	Death Benefit Plan Agreement dated April 1, 2004 with J. Allen Fine

	10(xv)	Death Benefit Plan Agreement dated May 19, 2004 with James A. Fine, Jr.

	31(i)	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31(ii)	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)	Reports on Form 8-K

	On April 28, 2004, the Company furnished a report on Form 8-K that reported under Item 12 that, on April 27, 2004, the Company released earnings for the quarter ended March 31, 2004.

SIGNATURE

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

	By:	/s/ James A. Fine, Jr.

		James A. Fine, Jr.
		President, Principal Financial Officer and Principal Accounting Officer

Dated: August 13, 2004

EX-10 2 d60373_ex10x.htm EXHIBIT 10(X)

Exhibit 10(x)

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) effective as of November 17, 2003 (the “Effective Date”), and as amended June 1, 2004, is between Investors Title Insurance Company, a North Carolina corporation (the “Company”), and J. Allen Fine (“Executive”).

RECITALS:

WHEREAS, Executive is presently the Chief Executive Officer of the Company and has made and is expected to continue to make major contributions to the profitability, growth and financial strength of the Company; and

WHEREAS, the Company desired to secure the services of the Executive for the future;

NOW, THEREFORE, in consideration of the mutual covenants contained herein the parties hereto agree as follows:

1. Employment. The Company shall employ Executive, and Executive accepts continued employment with the Company, upon the terms and conditions set forth in this Agreement. The term of this Agreement shall be for a period of five (5) years beginning on the date hereof, and shall on the first day of each calendar month, unless either party gives written notice to the other party at least thirty (30) days prior to such date of intent not to extend this Agreement, be extended one (1) additional month so that at all times the term of this Agreement shall be for a period of five (5) years unless earlier terminated as provided in paragraph 4 hereof (the “Employment Period”).

2. Position and Duties.

(a) During the Employment Period, Executive shall serve as the Chief Executive Officer of the Company or in such other similar position as the Executive and the Board shall agree upon and, subject to the management of the business and affairs of the Company at the direction of the Board of Directors of the Company (the “Board”), shall have the normal duties, responsibilities and authority of an executive serving in such position.

(b) Executive shall report to the Board.

(c) During the Employment Period, Executive shall devote his best efforts and his full business time and attention (except for participation in charitable and civic endeavors and management of Executive’s personal investments and business interests, provided such activities do not have more than a de minimis effect on Executive’s performance of his duties under this Agreement) to the business and affairs of the Company, its parent, subsidiaries and affiliates. Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

(d) Executive shall perform his duties and responsibilities principally in the Chapel Hill, North Carolina area and shall not be required to travel outside that area any more extensively than Executive has done in the recent past in the ordinary course of the business of the Company.

3. Compensation and Benefits.

(a) Salary. The Company agrees to pay Executive a salary during the Employment Period in installments based on the Company’s practices as may be in effect from time to time. Executive’s initial salary shall be at the rate of Two Hundred Fifty-Nine Thousand Five Hundred and No/100 Dollars ($259,500.00) per year, as may be increased from time to time (the “Base Salary”), provided, however, that if there is a Change in Control (as hereafter defined), the Executive’s Base Salary as then in effect shall double effective at the time the Change in Control becomes effective. Executive’s Base Salary shall be reviewed by the Compensation Committee of the Board (the “Compensation Committee”) and shall be increased, but not decreased, from time to time at least in an amount as shall be substantially consistent with increases in base salary generally awarded in the ordinary course of business to other peer executives of the Company and its affiliated companies. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

(b) Bonuses. Executive will be entitled to such cash bonuses as the Board may determine, in its sole discretion, from time to time (“Bonus Compensation”).

(c) Expense Reimbursement. The Company shall reimburse Executive for all reasonable expenses incurred by Executive during the Employment Period in the course of performing his duties under this Agreement that are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements applicable generally with respect to reporting and documentation of such expenses.

(d) Nonqualified Supplemental Retirement Benefit Plan. During the Employment Period and within ten (10) days after each calendar quarter, the Company shall make a contribution on the Executive’s behalf to a Nonqualified Supplemental Retirement Benefit Plan in an amount equal to twenty-two percent (22%) of the Executive’s Base Salary and Bonus Compensation paid during such calendar quarter. If the Employment Period is terminated, for any reason whatsoever, prior to a contribution being made for twenty (20) calendar quarters, then in such event the Company shall make a lump sum contribution to the plan equal to the number of calendar quarters less than twenty (20), using as a base for determining such amount twenty two percent (22%) of the Executive’s Base Salary and Bonus Compensation for the twelve (12) months preceding the termination of employment.

(e) Compensation for Serving on Board. Executive shall be entitled to no extra compensation for serving on the Company’s or its affiliated companies’ Boards of Directors.

(f) Vacation and Sick Leave. Executive shall be entitled annually to thirty (30) days of paid vacation and to unlimited sick leave, provided the Employment Period is subject to termination for disability as provided under paragraph 4(b). The vacation leave shall be cumulative; provided, however, that Executive shall not be compensated for any unused vacation leave.

(g) Other Benefits. Executive shall be entitled during the Employment Period to participate, on the same basis as other executives of the Company, in such other benefits for which substantially all of the executives of the Company are from time to time generally eligible, as determined from time to time by the Board.

4. Employment Period.

(a) The Employment Period shall continue until terminated as provided in subsection (b) below.

(b) The Employment Period shall end upon the first to occur of any of the following events:

	(i) Executive’s death;

	(ii) the Company’s termination of Executive’s employment on account of Executive’s having become unable (as determined by the Board in good faith) to perform regularly Executive’s duties hereunder by reason of illness or incapacity for a period of more than one hundred eighty (180) consecutive days, plus accrued vacation days (“Termination for Disability”);

	(iii) the Company’s termination of Executive’s employment for Cause (“Termination for Cause”);

	(iv) the Company’s termination of Executive’s employment other than pursuant to subsections (b)(ii) or (iii) above (“Termination without Cause”) by means of advance written notice of at least sixty (60) days.

	(v) Executive’s termination of his employment for Good Reason by means of advance written notice to the Company at least thirty (30) days prior to the effective date of such termination (“Termination by Executive for Good Reason”);

	(vi) Executive’s retirement at any time following his 70th birthday, upon written notice to the Company of at least six (6) months (“Retirement”);

	(vii) Executive’s termination of his employment within thirty (30) days following a Change in Control by written notice to the Company.

	(i) the Executive’s conviction of, or plea of guilty or nolo contendere to, any crime involving dishonesty or moral turpitude;

	(ii) the commission by Executive of a fraud against the Company or any of its parent, subsidiaries or affiliates for which he is convicted;

	(iii) gross negligence or willful misconduct by Executive with respect to the Company or any of its parent, subsidiaries or affiliates which causes material detriment to the Company or any of its parent, subsidiaries or affiliates;

	(iv) the falsification or manipulation of any records of the Company or any of its parent, subsidiaries or affiliates;

	(v) repudiation of this Agreement by Executive or Executive’s abandonment of employment with the Company or any of its parent, subsidiaries or affiliates;

	(vi) breach by Executive of any of the agreements in paragraphs 6 and 7 hereof prior to the end of the Employment Period;

	(vii) failure or refusal of Executive to perform his duties with the Company or any of its parent, subsidiaries or affiliates or to implement or follow the policies or directions of the Board within thirty (30) days after a written demand for performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has not performed his duties or failed to implement or follow the policies or directions of the Board.

	(d) For purposes of this Agreement,

	(i) ”Good Reason” shall mean any breach by the Company of this Agreement that is material and that is not cured within thirty (30) days after written notice thereof to the Company from Executive;

	(ii) ”Change in Control” shall be deemed to have occurred upon the occurrence of any of the following events:

		(A) Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than Executive or his affiliates or immediate family members, is or becomes the “beneficial owner” (as defined in Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of the Company, or its parent, Investors Title Company, representing 50% or more of the combined voting power of the Company’s or Investors Title Company’s outstanding securities then entitled ordinarily (and apart from rights accruing under special circumstances) to vote for the election of directors; or

		(B) Individuals who are “Continuing Directors” (as hereinafter defined) of Investors Title Company cease for any reason to constitute at least a majority of its Board of Directors; or

		(C) A sale of more than 50% of the assets (measured in terms of monetary value) of the Company or Investors Title Company is consummated; or

		(D) Any merger, consolidation, or like business combination or reorganization of the Company or Investors Title Company is consummated that results in the occurrence of any event described in subparagraph (A), (B) or (C) above.

	(iii) “Continuing Directors” shall mean:

		(A) the directors of Investors Title Company in office on the date of this Agreement; or

		(B) any successor to any such director (and any additional director) who after the date of this Agreement (i) was nominated or selected by a majority of the Continuing Directors in the office at the time of his or her nomination or selection and (ii) who is not an “affiliate” or “associate” (as defined in Regulation 12B under the Exchange Act) of any person who is the beneficial owner, directly or indirectly, of securities representing 50% or more of the combined voting power of the Company’s outstanding securities then entitled ordinarily to vote for the election of directors.

	5. Post-Employment Period Payments.

(a) If the Employment Period ends pursuant to paragraph 4 hereof for any reason, Executive shall cease to have any rights to salary, options, expense reimbursements or other benefits other than: (i) any salary which has accrued but is unpaid and any reimbursable expenses which have been incurred but are unpaid as of the end of the Employment Period, (ii) any option rights or plan benefits which by their terms extend beyond termination of Executive’s employment (but only to the extent provided in any option theretofore granted to Executive or any other benefit plan in which Executive has participated as an employee of the Company), (iii) any benefits to which Executive is entitled under Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended (“COBRA”), (iv) any accumulations and benefits to which employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, and (v) any other amount(s) payable pursuant to the succeeding provisions of this paragraph 5.

(b) If the Employment Period ends pursuant to paragraph 4 hereof on account of Executive’s death, Termination for Disability or Retirement, the Executive or, in the event of death, his beneficiary (as identified to the Company in writing) shall be entitled to receive the following: (i) payment of the Executive’s then current base salary for a period of three (3) years following the termination date, payable on a monthly basis, (ii) three (3) annual payments on the anniversary of the termination date, each in an amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to Executive’s death, Disability or Retirement, (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, and (vi) immediate vesting of Executive’s existing stock options.

(c) If the Employment Period ends pursuant to paragraph 4 hereof on account of Termination for Cause, the Company shall pay Executive (i) an amount equal to that amount Executive would have received as salary (based on Executive’s Base Salary then in effect) had the Employment Period remained in effect until the later of the effective date of the Company’s termination of Executive’s employment or the date thirty (30) days after the Company’s notice to Executive of such termination, and (ii) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan. The Company shall make no further payments to Executive, except as provided in Section 5(a) hereof.

(d) If the Employment Period ends pursuant to paragraph 4 hereof on account of a Termination without Cause or a Termination by Executive for Good Reason, the Executive shall be entitled to receive the following: (i) payment of the Executive’s then current Base Salary for a period of five (5) years following the termination date, payable on a monthly basis, (ii) five (5) annual payments on the anniversary of the termination date, each in an amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, (iii) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (iv) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, and (vi) immediate vesting of Executive’s existing stock options.

(e) If the Executive terminates his employment because of a Change in Control, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to 2.99 times the sum of the Executive’s then current Base Salary, (ii) a lump sum payment equal to 2.99 times the amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (v) immediate vesting of Executive’s existing stock options, and (vi) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan. Upon entitlement, all sums due hereunder will be payable in cash or by official bank check within thirty (30) days following termination of the Executive’s employment. Notwithstanding anything to the contrary contained herein, in the event that any portion of the payments or benefits received or to be received by the Executive, together with any other payments received by him, whether paid or payable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any other person or entity, would cause, either directly or indirectly, an “excess parachute payment” to exist within the meaning of said Section 280G of the Internal Revenue Code, the payments hereunder shall be reduced until no portion of the payments would fail to be deductible by reason of being an “excess parachute payment”. In the event that any dispute arises as to whether an “excess parachute payment” exists, the appropriate calculations shall be made by the Company’s regularly employed independent public auditors and delivered to the Executive in writing within thirty (30) days following the date for payment of such severance payment, and the Company will warrant to the Executive the accuracy of the calculations and the information on which they are based.

(f) Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

6. Confidential Information. Executive acknowledges that the information, observations and data obtained by Executive while employed by the Company pursuant to this Agreement, as well as those obtained by Executive while employed by the Company or any of its subsidiaries or affiliates or any predecessor thereof prior to the date of this Agreement, concerning the business or affairs of the Company or any of its subsidiaries or affiliates or any predecessor thereof (unless and except to the extent the foregoing become generally known to and available for use by the public other than as a result of Executive’s acts or omissions to act, “Confidential Information”) are the property of the Company or such parent, subsidiary or affiliate. Therefore, Executive agrees that during the Employment Period and thereafter Executive shall not disclose any Confidential Information without the prior written consent of the Board unless and except to the extent that such disclosure is (i) made in the ordinary course of Executive’s performance of Executive’s duties under this Agreement or (ii) required by any subpoena or other legal process (in which event Executive will give the Company prompt notice of such subpoena or other legal process in order to permit the Company to seek appropriate protective orders), and that Executive shall not use any Confidential Information for Executive’s own account without the prior written consent of the Board. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may reasonably request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information, or to the work product or the business of the Company or any of its parent, subsidiaries or affiliates that Executive may then possess or have under his control.

7. Noncompetition; Nonsolicitation.

(a) Executive acknowledges that in the course of his employment with the Company pursuant to this Agreement, Executive will become familiar, and during the course of Executive’s employment by the Company or any of its parent, subsidiaries or affiliates or any predecessor thereof prior to the date of this Agreement, Executive has become familiar with trade secrets and customer lists of and other confidential information concerning the Company and its parent, subsidiaries and affiliates and predecessors thereof and that Executive’s services have been and will be of special, unique and extraordinary value to the Company.

(b) Executive agrees that during the Employment Period and, as a condition to the receipt of payments as provided under paragraph 4, for a period of two (2) years after termination of Executive’s employment with the Company, in the State of North Carolina Executive shall not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer, director, shareholder, investor or employee of or in any other corporation or enterprise or otherwise, engage or be engaged in, or assist any other person, firm, corporation or enterprise in engaging or being engaged in, any business then actively being conducted by the Company or any of its parent, subsidiaries or affiliates.

(c) Executive further agrees that, during the Employment Period and, as a condition to the receipt of payments as provided under paragraph 4, for a period of two (2) years after termination of Executive’s employment with the Company, Executive shall not in any manner, directly or indirectly, induce or attempt to induce any employee of the Company or of any of its parent, subsidiaries or affiliates (other than his spouse, if applicable) to quit or abandon his or her employ.

(d) Nothing in this paragraph 7 shall prohibit Executive from being: (1) a shareholder in a mutual fund or a diversified investment company or (ii) a passive owner of not more than 5% of the outstanding equity securities of any class of a corporation or other entity which is publicly traded, so long as Executive has no active participation in the business of such corporation or other entity.

(e) In the event Executive violates any legally enforceable provision of this Agreement as to which there is a specific time period during which Executive is prohibited from taking certain actions or from engaging in certain activities, as set forth in this Agreement, then, in such event, the violation shall toll the running of such time period from the date of such violation until the violation ceases.

(f) Executive acknowledges that he has carefully considered the nature and extent of the restrictions on him and the rights and remedies conferred on the Company under this Agreement. Executive further acknowledges and agrees that the same are reasonable in time and territory, are designed to eliminate competition which would otherwise be unfair to the Company, do not stifle Executive’s inherent skill and experience, would not operate as a bar to Executive’s sole means of support, are fully required to protect the legitimate interests of the Company and do not confer a benefit upon the Company disproportionate to Executive’s detriment.

(g) If, at the time of enforcement of this paragraph, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

8. Enforcement. Because Executive’s services are unique and because Executive has access to Confidential Information and work product, the parties hereto agree that the Company would be damaged irreparably in the event any of the provisions of paragraph 7 hereof were not performed in accordance with their specific terms or were otherwise breached and that money damages would be an inadequate remedy for any such non-performance or breach. Therefore, the Company or its successors or assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security).

9. Consulting and Advice. During the time period that the Executive receives post-employment payments under paragraph 5, other than by reason of death or disability, the Executive agrees that when and as requested, he will consult with the Company concerning policies, procedures and operations. The requests by the Company for consultation shall be at reasonable times, with appropriate notice, not more frequent than three (3) times a month, and may, at Employee’s election, be through telephone communication.

10. Survival. Subject to any limits on applicability contained therein, paragraphs 5, 6, 7 and 9 hereof shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period.

11. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight carrier or mailed by first class mail, return receipt requested. Any notice to Executive will be delivered to the last home address on file with the Company and any notice to the Company should be delivered to:

          Investors Title Insurance Company
          Attention: Secretary
          P. O. Drawer 2687
          Chapel Hill, NC 27515-2687

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement will be deemed to have been given when so delivered, sent or mailed.

12. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

13. Complete Agreement. This Agreement embodies the complete agreement and understanding between the parties with respect to the subject matter hereof and effective as of its date supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

14. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and both of which taken together shall constitute one and the same agreement.

15. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, executors, personal representatives, successors and assigns, except that neither party may assign any rights or delegate any obligations hereunder without the prior written consent of the other party. Executive hereby consents to the assignment by the Company of all of its rights and obligations hereunder to any successor to the Company by merger or consolidation or purchase of all or substantially all of the Company’s assets, provided such transferee or successor assumes the liabilities of the Company hereunder.

16. Choice of Law. This Agreement shall be governed by the internal law, and not the laws of conflicts, of the State of North Carolina.

17. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

18. Mediation. If a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree to submit such controversy to mediation for resolution. The parties may use the procedures set forth in the North Carolina General Statutes’ Rules Implementing Court Ordered Mediated Settlement Conferences, where and if applicable. Provided, however, if any controversy between the parties is not resolved by mediation within sixty (60) days after the date the controversy has arisen (hereinafter “controversy date”), the parties shall settle such controversy by arbitration in accordance with the terms of the Uniform Arbitration Act, currently codified in North Carolina General Statute, Article 45A, §1-567.1, et seq., or any successor statutes thereto, and as provided in Section 19 below.

19. Arbitration. Any dispute or controversy arising under this Agreement which is not resolved by mediation pursuant to Section 18 shall be determined and settled by an independent disinterested person agreed upon by the parties to the dispute. If the parties are unable to mutually agree upon an independent arbitrator within thirty (30) days, then each party shall appoint an independent arbitrator within thirty (30) days, and the said two (2) independent arbitrators shall appoint a third independent arbitrator within thirty (30) days, and the three (3) independent arbitrators will resolve the dispute in controversy by majority vote in accordance with the terms of the Uniform Arbitration Act currently codified in North Carolina General Statute, Article 45A, §1-567.1, et seq. or any successor statutes. The expenses of arbitration shall be shared equally by each party hereto, except that each party will pay the costs of his own legal counsel and all other incidental expenses. The parties hereto agree to be bound by the results of the arbitration. The place of arbitration shall be Orange County, North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.

	INVESTORS TITLE INSURANCE COMPANY

	By:


	Its


	Date:


	J. ALLEN FINE



	Date:

EX-10.1 3 d60373_ex10xi.htm EXHIBIT 10(XI)

Exhibit 10(xi)

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

RECITALS:

WHEREAS, Executive is presently the Executive Vice President, Treasurer and Chief Financial Officer of the Company and has made and is expected to continue to make major contributions to the profitability, growth and financial strength of the Company; and

WHEREAS, the Company desired to secure the services of the Executive for the future;

NOW, THEREFORE, in consideration of the mutual covenants contained herein the parties hereto agree as follows:

2. Position and Duties.

(a) During the Employment Period, Executive shall serve as the Executive Vice President, Treasurer and Chief Financial Officer of the Company or in such other similar position as the Executive and the Board shall agree upon and, subject to the management of the business and affairs of the Company at the direction of the Board of Directors of the Company (the “Board”), shall have the normal duties, responsibilities and authority of an executive serving in such position.

(b) Executive shall report to the Chief Executive Officer.

3. Compensation and Benefits.

(a) Salary. The Company agrees to pay Executive a salary during the Employment Period in installments based on the Company’s practices as may be in effect from time to time. Executive’s initial salary shall be at the rate of Two Hundred Seven Thousand and No/100 Dollars ($207,000.00) per year, as may be increased from time to time (the “Base Salary”), provided, however, that if there is a Change in Control (as hereafter defined), the Executive’s Base Salary as then in effect shall double effective at the time the Change in Control becomes effective. Executive’s Base Salary shall be reviewed by the Compensation Committee of the Board (the “Compensation Committee”) and shall be increased, but not decreased, from time to time at least in an amount as shall be substantially consistent with increases in base salary generally awarded in the ordinary course of business to other peer executives of the Company and its affiliated companies. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

(b) Bonuses. Executive will be entitled to such cash bonuses as the Board may determine, in its sole discretion, from time to time (“Bonus Compensation”).

(e) Compensation for Serving on Board. Executive shall be entitled to no extra compensation for serving on the Company’s or its affiliated companies’ Boards of Directors.

4. Employment Period.

	(a)	The Employment Period shall continue until terminated as provided in subsection (b) below.

	(b)	The Employment Period shall end upon the first to occur of any of the following events:

	(i) Executive’s death;

	(ii) the Company’s termination of Executive’s employment on account of Executive’s having become unable (as determined by the Board in good faith) to perform regularly Executive’s duties hereunder by reason of illness or incapacity for a period of more than one hundred eighty (180) consecutive days, plus accrued vacation days (“Termination for Disability”);

	(iii) the Company’s termination of Executive’s employment for Cause (“Termination for Cause”);

	(iv) the Company’s termination of Executive’s employment other than pursuant to subsections (b)(ii) or (iii) above (“Termination without Cause”) by means of advance written notice of at least sixty (60) days.

	(v) Executive’s termination of his employment for Good Reason by means of advance written notice to the Company at least thirty (30) days prior to the effective date of such termination (“Termination by Executive for Good Reason”);

	(vi) Executive’s retirement at any time following his 50th birthday, upon written notice to the Company of at least six (6) months (“Retirement”);

	(vii) Executive’s termination of his employment within thirty (30) days following a Change in Control by written notice to the Company.

	(c)	For purposes of this Agreement, “Cause” shall mean:

	(i) the Executive’s conviction of, or plea of guilty or nolo contendere to, any crime involving dishonesty or moral turpitude;

	(ii) the commission by Executive of a fraud against the Company or any of its parent, subsidiaries or affiliates for which he is convicted;

	(iii) gross negligence or willful misconduct by Executive with respect to the Company or any of its parent, subsidiaries or affiliates which causes material detriment to the Company or any of its parent, subsidiaries or affiliates;

	(iv) the falsification or manipulation of any records of the Company or any of its parent, subsidiaries or affiliates;

	(v) repudiation of this Agreement by Executive or Executive’s abandonment of employment with the Company or any of its parent, subsidiaries or affiliates;

	(vi) breach by Executive of any of the agreements in paragraphs 6 and 7 hereof prior to the end of the Employment Period;

	(vii) failure or refusal of Executive to perform his duties with the Company or any of its parent, subsidiaries or affiliates or to implement or follow the policies or directions of the Board within thirty (30) days after a written demand for performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has not performed his duties or failed to implement or follow the policies or directions of the Board.

	(d)	For purposes of this Agreement,

	(i) “Good Reason” shall mean any breach by the Company of this Agreement that is material and that is not cured within thirty (30) days after written notice thereof to the Company from Executive;

	(ii) “Change in Control” shall be deemed to have occurred upon the occurrence of any of the following events:

		(A) Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than Executive or his affiliates or immediate family members, is or becomes the “beneficial owner” (as defined in Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of the Company, or its parent, Investors Title Company, representing 50% or more of the combined voting power of the Company’s or Investors Title Company’s outstanding securities then entitled ordinarily (and apart from rights accruing under special circumstances) to vote for the election of directors; or

		(B) Individuals who are “Continuing Directors” (as hereinafter defined) of Investors Title Company cease for any reason to constitute at least a majority of its Board of Directors; or

		(C) A sale of more than 50% of the assets (measured in terms of monetary value) of the Company or Investors Title Company is consummated; or

		(D) Any merger, consolidation, or like business combination or reorganization of the Company or Investors Title Company is consummated that results in the occurrence of any event described in subparagraph (A), (B) or (C) above.

		(iii)	“Continuing Directors” shall mean:

		(A) the directors of Investors Title Company in office on the date of this Agreement; or

		(B) any successor to any such director (and any additional director) who after the date of this Agreement (i) was nominated or selected by a majority of the Continuing Directors in the office at the time of his or her nomination or selection and (ii) who is not an “affiliate” or “associate” (as defined in Regulation 12B under the Exchange Act) of any person who is the beneficial owner, directly or indirectly, of securities representing 50% or more of the combined voting power of the Company’s outstanding securities then entitled ordinarily to vote for the election of directors.

5. Post-Employment Period Payments.

(b) If the Employment Period ends pursuant to paragraph 4 hereof on account of Executive’s death, Termination for Disability or Retirement, the Executive or, in the event of death, his beneficiary (as identified to the Company in writing) shall be entitled to receive the following: (i) payment of the Executive’s then current base salary for a period of three (3) years following the termination date, payable on a monthly basis, (ii) three (3) annual payments on the anniversary of the termination date, each in an amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to Executive’s death, Disability or Retirement, (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies, and (vii) immediate vesting of Executive’s existing stock options.

(d) If the Employment Period ends pursuant to paragraph 4 hereof on account of a Termination without Cause or a Termination by Executive for Good Reason, the Executive shall be entitled to receive the following: (i) payment of the Executive’s then current Base Salary for a period of five (5) years following the termination date, payable on a monthly basis, (ii) five (5) annual payments on the anniversary of the termination date, each in an amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, (iii) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (iv) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) immediate vesting of Executive’s existing stock options and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies.

(e) If the Executive terminates his employment because of a Change in Control, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to 2.99 times the sum of the Executive’s then current Base Salary, (ii) a lump sum payment equal to 2.99 times the amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (v) immediate vesting of Executive’s existing stock options, (vi) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies. Upon entitlement, all sums due hereunder will be payable in cash or by official bank check within thirty (30) days following termination of the Executive’s employment. Notwithstanding anything to the contrary contained herein, in the event that any portion of the payments or benefits received or to be received by the Executive, together with any other payments received by him, whether paid or payable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any other person or entity, would cause, either directly or indirectly, an “excess parachute payment” to exist within the meaning of said Section 280G of the Internal Revenue Code, the payments hereunder shall be reduced until no portion of the payments would fail to be deductible by reason of being an “excess parachute payment”. In the event that any dispute arises as to whether an “excess parachute payment” exists, the appropriate calculations shall be made by the Company’s regularly employed independent public auditors and delivered to the Executive in writing within thirty (30) days following the date for payment of such severance payment, and the Company will warrant to the Executive the accuracy of the calculations and the information on which they are based.

(f) Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

7. Noncompetition; Nonsolicitation.

          Investors Title Insurance Company
          Attention: Secretary
          P. O. Drawer 2687
          Chapel Hill, NC 27515-2687

16. Choice of Law. This Agreement shall be governed by the internal law, and not the laws of conflicts, of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.

	INVESTORS TITLE INSURANCE COMPANY

	By:


	Its


	Date:


	JAMES A. FINE, JR.



	Date:

EX-10.2 4 d60373_ex10xii.htm EXHIBIT 10(XII)

Exhibit 10(xii)

INVESTORS TITLE INSURANCE COMPANY

NONQUALIFIED DEFERRED COMPENSATION PLAN

Effective June 1, 2004

TABLE OF CONTENTS

			Page

PREAMBLE			1

ARTICLE I		DEFINITIONS	2

	1.1	“Account”	2
	1.2	“Beneficiary”	2
	1.3	“Benefit Commencement Date”	2
	1.4	“Board” or “Board of Directors”	2
	1.5	“Code”	2
	1.6	“Committee”	2
	1.7	“Company”	2
	1.8	“Company Contributions”	2
	1.9	“Compensation”	3
	1.10	“Effective Date”	3
	1.11	“Elective Deferral”	3
	1.12	“Eligible Employee”	3
	1.13	“Participant”	3
	1.14	“Plan”	3
	1.15	“Plan Administrator”	3
	1.16	“Plan Year”	3
	1.17	“Rabbi Trust”	3
	1.18	“Schedule”	3
	1.19	“SEP”	3
	1.20	“Termination of Employment”	3
	1.21	“Valuation Date”	3

ARTICLE II		PARTICIPATION	4

	2.1	Eligible Class	4
	2.2	Commencement of Participation	4

ARTICLE III		ESTABLISHMENT OF ACCOUNTS	5

	3.1	Accounts	5
	3.2	Credits and Debits to Accounts	5

ARTICLE IV		CONTRIBUTIONS AND BENEFITS	6

	4.1	Benefits	6
	4.2	Elective Deferrals	6
	4.3	Crediting Elective Contributions to Accounts	6
	4.4	Taxation	7
	4.5	Investment Funds	7
	4.6	Company Investments	8

ARTICLE V		BENEFIT EVENTS	9

	5.1	Benefits Following Termination of Employment	9

TABLE OF CENTENTS
(continued)

			Page

	5.2	Death Benefits	9
	5.3	Payor	9

ARTICLE VI		VALUATION AND DISTRIBUTION OF ACCOUNTS	10

	6.1	Valuation of Accounts	10
	6.2	Commencement of Benefits	10
	6.3	Form and Amount of Payment	10
	6.4	Deferral of Benefits	10

ARTICLE VII		ADMINISTRATION AND CLAIMS PROCEDURE	11

	7.1	Administration	11
	7.2	Expenses; Reliance on Third-Parties	11
	7.3	Annual Statements	11
	7.4	Appointment of a Conservator	11
	7.5	Limitation of Liability	11
	7.6	Claims for Benefits	12

ARTICLE VIII		FUNDING	14

	8.1	In General	14
	8.2	Rabbi Trust	14

ARTICLE IX		AMENDMENT, TERMINATION AND CHANGE OF CONTROL	15

	9.1	Amendment or Termination	15
	9.2	Change of Control	15

ARTICLE X		GENERAL PROVISIONS	16

	10.1	Payment to Minors and Incompetents	16
	10.2	No Contract	16
	10.3	Use of Masculine and Feminine; Singular and Plural	16
	10.4	Non-Alienation of Benefits	16
	10.5	Protective Provisions	16
	10.6	Governing Law	17
	10.7	Captions	17

PREAMBLE

Effective June 1, 2004, Investors Title Insurance Company the “Company”) hereby establishes this non-qualified deferred compensation plan referred to as the Investors Title Insurance Company Non-qualified Deferred Compensation Plan (the “Plan”).

The purpose of this Plan is to permit selected management employees to set-aside additional retirement benefits on a pre-tax basis. This Plan shall be unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is intended to be effective with respect to Compensation earned after December 31, 2002.

Benefits are based upon hypothetical contributions from a Participant’s Compensation, and from Company Contributions, in each case which are credited to a Participant’s “Account”.

It is intended that funds accumulated under this Plan on a Participant’s behalf will be paid to the Participant at a specified future date determined under procedures described herein, or upon disability or Termination of Employment. The Participant may select a lump sum, or from among other payment options for Plan benefits. Upon the Participant’s death, the Participant’s remaining Account balance, if any, will be paid to the Participant’s named Beneficiary.

Account balances resulting from a Participant’s deferred compensation may be credited with interest, at a rate determined by the Company, or with amounts reflecting and corresponding to the performance (i.e., income, gains, losses, etc.) of a designated security or index. Further, the Company may choose to set aside assets relating to Plan obligations in a Rabbi Trust, the corpus of which will be available to the Company’s creditors in the event of bankruptcy. However, the Company is under no obligation to invest amounts deemed contributed to the Plan or to set aside funds in a Rabbi Trust. In all cases, the Company may elect to pay the benefits promised hereunder from other general assets. Notwithstanding the fact that the Company may set aside assets in respect of its obligations under the Plan, the Plan is unfunded and the rights of Participants and Beneficiaries are limited to those of general, unsecured creditors of the Company.

ARTICLE I
DEFINITIONS

The following words and phrases when used in the Plan shall have the following meanings, unless a different meaning is plainly required by the context:

1.1	“Account” means the bookkeeping account established for the measurement of the Company’s accumulated liability to a Participant under the Plan. Each Participant’s Account will reflect the undistributed balance to the credit of the Participant, representing accumulated Elective Deferrals and Company Contributions, and the hypothetical investment earnings, gains and losses credited to the Account under the terms of the Plan.

1.2	“Beneficiary” means the person, persons or trust designated by the Participant or former Participant to receive benefits under the Plan in the event of the Participant’s death prior to the full distribution of his Account. A Participant shall designate his Beneficiary or Beneficiaries in writing under the specific procedures as shall be established by the Plan Administrator. A Participant may change his Beneficiaries at any time by delivering written instructions to the Plan Administrator. In the event a Participant dies without a valid designation of Beneficiary in effect, the Participant’s remaining Account shall be payable to his spouse or, if the Participant is not married at the time of death, to his estate.

1.3	“Benefit Commencement Date” means the date upon which the Participant’s Termination of Employment occurs or is deemed to occur in accordance with the provisions of Article IV and after which the distribution of benefits to the Participant will commence in accordance with the provisions of Articles IV and V.

1.4	“Board” or “Board of Directors” means the Board of Directors of Investors Title Insurance Company.

1.5	“ Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations issued thereunder. Reference to any section of the Code shall include any successor provision thereto.

1.6	“Committee” means the Compensation Committee of Investors Title Insurance Company or such other person or persons designated by the Company to determine the eligibility of employees for participation in the Plan in accordance with the provisions of Article XI, and to provide oversight to the administration of the plan in accordance with Article VII.

1.7	“Company” means Investors Title Insurance Company, a North Carolina corporation, and its successor or successors. The Company is a wholly-owned subsidiary of Investors Title Company.

1.8	“Company Contributions” means the amounts which the Company will credit to a Participant’s Account, as provided in Section 4.3.

1.9	“Compensation” means the aggregate compensation paid to a participant by the Company for a Plan Year, including salary, overtime pay, commissions, bonuses and all other items that constitute wages within the meaning of § 3401(a) of the Code or are required to be reported under §§ 6041(d), 6051(a)(3) or 6052 of the Code. Compensation also includes Elective Deferrals under this Plan and any deferrals under cash-or-deferred arrangements or cafeteria plans that are not includible in gross income by reason of § 125 or § 402(a)(8) of the Code but does not include any other amounts contributed pursuant to, or received under, this Plan or any other plan of deferred compensation. Compensation excludes all stock option transactions, relocation reimbursements, and automobile allowances.

1.10	“Effective Date” means June 1, 2004.

1.11	“Elective Deferral” means the amounts of Compensation which a Participant may elect to defer receipt until a later date, and which will be credited to such Participant’s Account, as provided in Section 4.2.

1.12	“Eligible Employee” means an employee of the Company who is included in the eligible class described in Section 2. 1, and who is listed on the Schedule.

1.13	“Participant” means an Eligible Employee for whom an Account is being maintained under the terms of the Plan.

1.14	“Plan” means the Investors Title Insurance Company Non-Qualified Deferred Compensation Plan as set forth in this document and as amended from time to time.

1.15	“Plan Administrator” means the Company.

1.16	“Plan Year” means each calendar year commencing January 1, 2004 and thereafter.

1.17	“Rabbi Trust” means, for the purposes of this Plan, a grantor trust under Subpart E of Subchapter J of Chapter I of the Code established by an employer in connection with a nonqualified deferred compensation or supplemental retirement benefit plan, the assets of which may be reached by the employer grantor’s general creditors.

1.18	“Schedule” means the document which lists the Eligible Employees who are Participants in the Plan, as such Schedule is amended from time to time.

1.19	“SEP” means the simplified employee pension which the Company sponsors and administrators, as provided in Code section 408.

1.20	“Termination of Employment” means any severance of the employee/employer relationship between a Participant and the Company for any reason.

1.21	“Valuation Date” means the last day of each calendar quarter, and is the date on which Participant Account values are determined.

ARTICLE II
PARTICIPATION

2.1	Eligible Class.

	(a)	Except as provided in (b) and (c) below, an individual who is employed by the Company is an Eligible Employee with respect to a particular Plan Year only if he is both (i) within a select group of management or highly compensated Employees within the meaning of Sections 201(2), 301 (a)(3) and 401 (a)(1) of ERISA, as determined by the Committee in its sole discretion, and (ii) identified by the Company as an Eligible Employee and listed in the Schedule A, attached hereto.

	(b)	Each Eligible Employee must cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder. Notwithstanding any provision in the Plan to the contrary, an individual who would otherwise be eligible to receive benefits under the Plan shall nevertheless be considered ineligible, and may be barred by the Company from participation in the Plan, (i) if he refuses to cooperate with any requirement which the Committee or Plan Administrator may reasonably impose; or (ii) if the Company chooses, in its discretion, to purchase one or more life insurance policies on the life of the individual in connection with its obligations under this plan, and the individual fails to submit a complete and accurate application in connection with the acquisition of the policy(ies), or fails to submit to any physical examination that the insurer may require, or fails to provide any other information that the insurer or Plan Administrator may reasonably request or to comply with any other requirement which the insurer may reasonably impose.

2.2	Commencement of Participation.

	Each Eligible Employee shall first become a Participant as of the initial pay period for the first Plan Year following the date upon which he is first determined by the Committee to be an Eligible Employee.

ARTICLE III
ESTABLISHMENT OF ACCOUNTS

3.1	Accounts.

	The Plan Administrator will establish and maintain separate memorandum Accounts for each Participant, for bookkeeping purpose only, which will be used to measure the amount of the Company’s liability to each Participant and Beneficiary under this Plan.

3.2	Credits and Debits to Accounts.

	The Plan Administrator will, as often and as soon as may be reasonable and practicable, make such adjustments to the Accounts, by credit (addition) or debit (reduction), as may be necessary and/or appropriate to reflect:

	(a)	a Participant’s Elective Deferrals,

	(b)	any Company Contributions,

	(c)	any accrued interest (if Company contributions are deemed to be invested at interest), and

	(d)	any income and/or expense, and any gain or loss (i.e., increase or decrease, whether realized or unrealized), associated with any other investment(s) in which the contributions are deemed be invested, so that the balance of any portion of the Account that is deemed to be invested will be adjusted in the same manner and amount that it would have been adjusted had the Account investment actually been made (i.e., so as to reflect the net amount invested, and any changes in the investment’s market or net asset value).

ARTICLE IV
CONTRIBUTIONS AND BENEFITS

4.1	Benefits.

	Participants (or their Beneficiaries) will be entitled to benefits from this Plan upon the Participant’s Termination of Employment. Benefits will be based upon the value of a Participant’s Account, which will reflect credits for (i) hypothetical “contributions” made by the Company in an amount equal to a Participant’s Elective Deferrals, (ii) hypothetical contributions made by the Company in amounts as described in section 4.3, and (iii) additional credits (or debits) for the hypothetical investment performance of those contributions, as hereinafter described.

4.2	Elective Deferrals.

	A Participant may file a written election with the Company (on a form approved by the Company) to defer receipt of any Compensation which the Participant would otherwise be entitled to receive from the Company. Except as otherwise provided herein, the Participant’s election to defer payment of his Compensation must be made at least thirty (30) days before the beginning of the calendar year for which the Compensation is payable. If the Participant elects to defer any Compensation under this Section 4.2, the election may not be revoked during the calendar year in which it was intended to be applicable; however, the Participant may revoke and/or re-elect for Compensation that may be earned subsequent calendar years.

4.3	Company Contributions.

	(a) Initial Contribution. On or before December 31, 2004, the Company will credit to the account of each Participant who was employed by the Company on January 1, 2004, a sum equal to the aggregate amount that the Company would have contributed to such Participant’s SEP during the period from January 1 to December 31, 2003 if the Company’s contributions to the SEP had not been limited by Code section 415(c).

	(b) Annual Contributions. On or before December 31 of each calendar year beginning on or after January 1, 2004, the Company will credit to the account of each Participant a sum equal to the amount that the Company would have contributed to such Participant’s SEP during such calendar year if the Company’s contributions to the SEP for such calendar year had not been limited by Code section 415(c).

4.4	Crediting Elective Contributions to Accounts.

	Elective Deferrals will be credited to a Participant’s Account within ten (10) days after the end of the month to which the Elective Deferrals relates. No amount shall actually be set aside for payment under this Agreement, and the existence of the Account shall not create and shall not be deemed to create a trust of any kind, or fiduciary relationship between the Company and the Participant or his Beneficiary.

4.5	Taxation.

	Amounts credited to a Participant’s Account under this Plan are subject to rules of taxation (including employment taxes) as may be applicable from time to time. Any taxes owing in a year will be deducted from a Participant’s Compensation pursuant to rules established by the Committee.

4.6	Investment Funds.

	(a)	Investment Funds Offered under Plan. The Company, in conjunction with the advice and recommendations of its investment advisors, shall designate one or more investments to be offered under the Plan, and shall provide the Participant a list of the mutual funds, stocks, bonds securities or other assets into which the Participant’s Account may be deemed invested.

	(b)	Change in Investment Funds Offered under Plan. In its sole discretion, the Company may from time to time, upon advice and recommendations by its investment advisors, designate other investment funds in addition to or in lieu of the investment funds then being offered under the Plan. Any such change in the investment funds offered under the Plan may be made without amending the Plan. Any addition or deletion of a designated investment fund shall be communicated to the Participant.

	(c)	Participant’s Choice of Funds. The Participant’s choice of the investment funds into which an Account is deemed to be invested shall be the sole responsibility of the Participant. At the time an individual becomes a Participant (or within a short period of time thereafter), he may make an initial election regarding such deemed investment funds by submitting a completed investment election form to the Plan Administrator (in such documents as the Plan Administrator may designate).

	(d)	Revised Participant’s Elections Regarding Investment Funds. The Participant may elect to change the investment funds into which his Account is deemed to be invested by completing a new investment election form. On such form, the Participant may designate the investment funds into which future Elective Deferrals and Company Contributions will be deemed to be invested and may change the investment funds into which prior Elective Deferrals and Company Contributions are deemed to be invested. Such changes shall become effective as soon as administratively feasible following the date the investment election form is completed and submitted to the Plan Administrator.

	(e)	Default Provision. In the event the Participant fails to provide instructions on the investment of his Account, the Participant’s Account shall be deemed invested in a money market or similar type fund until further instructions are received from the Participant.

	(f)	Investment Performance Not Guaranteed. The Participant shall assume all risks that the investments attributable to his Account may decrease in value when invested in accordance with his investment instructions made pursuant to this Section 4.5. Notwithstanding any other provision of this Plan to the contrary, the Company shall not be liable to the Participant for any decrease in the value of investments attributable to the Participant’s Account resulting from his investment selections, including, but not be limited to, market value fluctuations, administrative fees, sales commissions, and withdrawal or surrender penalties/charges.

4.7	Company Investments.

	Any investment the Company may actually make in connection with Section 4.5 of the Plan shall at all times remain part of the general assets of the Company, within the Company’s control and available for any Company purpose, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the Company.

ARTICLE V
BENEFIT EVENTS

5.1	Benefits Following Termination of Employment.

	Upon a Participant’s Termination of Employment, the Company will pay benefits to the Participant in the amount and manner described in Article VI.

5.2	Death Benefits.

	(a)	Prior to his death, a Participant shall have the right to designate one or more Beneficiary for the amount payable under this Section 5.2.

	(b)	If the Participant’s Termination of Employment occurs as a result of such Participant’s death, the Participant’s Account will be paid to the Participant’s named Beneficiary(ies) in a lump sum as described in Section 6.3. Payment will occur as soon as may be practicable under procedures established by the Plan Administrator.

	(c)	Unless the Participant’s Beneficiary designation provides to the contrary, the following will apply with respect to payments after the Participant’s death:

		(i)	If the primary Beneficiary survives the Participant but dies before distribution of the amount credited to such Participant’s Account, such amount will be paid to the Beneficiary’s estate.

		(ii)	If the primary Beneficiary does not survive the Participant, payment will be made to a contingent Beneficiary or, if none is named or none survives the Participant, to the Participant’s estate.

5.3	Payor.

	The Company may pay directly any amounts due under the Plan to a Participant or Beneficiary, or it may delegate responsibility for payments to a trustee or other third party.

ARTICLE VI
VALUATION AND DISTRIBUTION OF ACCOUNTS

6.1	Valuation of Accounts.

	A Participant’s Account shall be valued as of each Valuation Date under procedures established by the Plan Administrator.

6.2	Commencement of Benefits.

	Benefits will be paid after the Participant’s Benefit Commencement Date, which shall be determined in accordance with the terms of Article V.

6.3	Form and Amount of Payment.

	A Participant will receive a full lump sum payable on or within thirty days after the Participant’s Benefit Commencement Date, equal to the Account balance as of the Valuation Date immediately preceding the Benefit Commencement Date

6.4	Deferral of Benefits.

	A Participant will have one opportunity to postpone the commencement of his benefits for his Account, as follows: At least twelve (12) months prior to the date on which distribution would otherwise commence (or, in the sole discretion of the Plan Administrator, on a date not less than six (6) months prior to that date, but not later than the last day of the year preceding the year in which distribution would otherwise commence), the Participant may elect to postpone, but not accelerate, his Benefit Commencement Date to a later specified date which may not be earlier than two years after his Termination of Employment. Any election which is determined, considering the date upon which the Participant terminates or is deemed to have terminated under Article V, to have been made too late, and not in accordance with this Section 6.4, will be void and without effect.

ARTICLE VII
ADMINISTRATION AND CLAIMS PROCEDURE

7.1	Administration.

	The Plan shall be administered by the Board, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Board deems appropriate including the authority to determine eligibility for benefits under the Plan. The Board shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Board shall be final and binding on all persons and parties concerned. Any benefits payable under this Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

7.2	Expenses; Reliance on Third-Parties.

	Expenses of administration shall be paid by the Company. The Board shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.

7.3	Annual Statements.

	The Board shall furnish individual annual statements of accrued benefits to each Participant, or Beneficiary, in such form as determined by the Board.

7.4	Appointment of a Conservator.

	The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual’s care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may pay such individual’s benefits to such conservator, person legally charged with such individual’s care, or institution then contributing toward or providing for the care and maintenance of such individual. Any such payment shall constitute a complete discharge of any liability of the Company and the Plan for such individual.

7.5	Limitation of Liability.

	Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, former Participant, designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.

7.6	Claims for Benefits.

	All claims for benefits shall be handled through the following procedure:

	(a)	Claim.

	A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the Plan Administrator at the Company’s then principal place of business.

	(b)	Claim Decision.

	Upon receipt of a claim, the Plan Administrator shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Plan Administrator may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

	If the claim is denied in whole or in part, the Plan Administrator shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

		(i)	The specific reason or reasons for such denial;

		(ii)	The specific reference to pertinent provisions of this Agreement on which such denial is based;

		(iii)	A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

		(iv)	Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

		(v)	The time limits for requesting a review under Section 7.6(c) and for review under Section 7.6(d).

	(c)	Request for Review.

	Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Assistant Secretary of the Company review the determination of the Company. Such request must be addressed to the Assistant Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Assistant Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.


	(d)	Review of Decision.

	Within sixty (60) days after the Assistant Secretary’s receipt of a request for review, he will review the Company’s determination. After considering all materials presented by the Claimant, the Assistant Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Assistant Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

ARTICLE VIII
FUNDING

8.1	In General.

	This Plan is unfunded. The rights of a Participant or Beneficiary are those of an unsecured general creditor of the Company. In general, benefits will be paid by the Company from its general assets when due.

	The Company, in its sole discretion, shall decide whether or not to underwrite its obligations under the Plan by actually investing amounts equal to the Company contributions in any investment vehicle. If the Company decides to invest its contributions, no Participant or Beneficiary will have any interest in those actual investments, even if those actual investments correspond to the Plan’s hypothetical investments, and even if the amounts invested correspond to the amounts of the Company’s hypothetical Plan contributions. Any investment the Company makes in connection with the Plan shall at all times remain part of the general assets of the Company, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the company.

	Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company, including any investments actually acquired in connection with the Company’s obligations under the Plan, except as may be provided for in a Rabbi Trust which the Company may choose to establish, as provided for in Section 8.2. No life insurance policy(ies) or other asset(s) of the Company shall be held by the Company, or by any other person or entity, in a fiduciary capacity, under any trust expressed or implied, for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns (other than under a Rabbi Trust), or shall be held as collateral security for the fulfillment of the obligations of the Company under this Plan. Any and all of the Company’s assets, including such Policies, shall be, and remain, the general, unpledged, unrestricted assets of the Company.

	Whether or not the Company sets aside assets in a Rabbi Trust in connection with this Plan, the Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

8.2	Rabbi Trust.

	The Company may transfer cash, life insurance policies or any other assets to a Rabbi Trust which it may establish in connection with the Plan.

	In that event, Plan benefits may be paid, in the absolute discretion of the Company, from the Company’s other general assets, or from assets held in the Rabbi Trust.

	In the event that assets are placed in a Rabbi Trust, those assets shall remain available to general creditors of the Company in the event of its insolvency.

ARTICLE IX
AMENDMENT, TERMINATION AND CHANGE OF CONTROL

9.1	Amendment or Termination. The Company reserves the right to amend, modify, suspend or terminate this Plan in whole or in part at anytime by action of its Board. No amendment shall reduce the Account credited to a Participant under this Plan as of the amendment date, except to the extent that the Participant agrees in writing to such a reduction.

9.2	Change of Control. Following a Change of Control (as that term is defined in the Employment Agreement), the Plan shall be continued by the surviving entity, and the participant’s rights under this Plan shall not be impaired without the consent of the Participant.

ARTICLE X
GENERAL PROVISIONS

10.1	Payment to Minors and Incompetents.

	If any Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is deemed by the Plan Administrator, or adjudged to be, legally incapable of giving valid receipt and discharge for benefits received, benefits will be paid to such person or institution as the Plan Administrator may designate or to the duly appointed guardian of the Participant or Beneficiary, as the case may be. Any payment so made shall be deemed to be in complete discharge of the Participant or Beneficiary’s right to such payment under the Plan.

10.2	No Contract.

	This Plan shall not be deemed to create a contract of employment with any Participant, nor shall any provision of the Plan alter in any way the rights and responsibilities of the Company or any Participant under any employment agreement entered into by the Company and a Participant.

10.3	Use of Masculine and Feminine; Singular and Plural.

	Wherever used in this Plan, the masculine gender will include the feminine gender and the singular will include the plural, unless the context indicates otherwise.

10.4	Non-Alienation of Benefits.

	No amount payable to, or held under the Plan for the account of, any Participant or Beneficiary shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. Nor shall any amount payable to, or held under the Plan for the account of, any Participant or Beneficiary be in any manner liable for his debts, contracts, liabilities, engagements, or torts, or be subject to any legal process to levy upon or attach.

10.5	Protective Provisions.

	Each Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examination as the Insurer may require and such other relevant action as may be requested by the Plan Administrator. If a Participant refuses to cooperate with any requirements reasonably imposed, the Company shall have no further obligation to the Participant under the Plan, other than payment to the Participant of the cumulative amounts previously deferred by the Participant under the Plan.

10.6	Governing Law.

	The provisions of the Plan shall be interpreted, construed, and administered in accordance with the laws of the of the State of North Carolina, except to the extent federal law (including, but not limited to, ERISA) applies. ERISA will govern all issues and matters relating to the Plan and shall preempt all state laws relating to the Plan.

10.7	Captions.

	The captions contained in the Plan are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge, or describe the scope or intent of the Plan nor in any way affect the construction of any provision of the Plan.

EXECUTED this _____________ day of ________________, 2004 by the Company’s duly empowered officer.

			INVESTORS TITLE INSURANCE COMPANY


ATTEST:

			Signature

			Title


			Date

EX-10.3 5 d60373_ex10xiii.htm EXHIBIT 10(XIII)

Exhibit 10(xiii)

INVESTORS TITLE INSURANCE COMPANY

NONQUALIFIED SUPPLEMENTAL RETIREMENT BENEFIT PLAN

Effective November 17, 2003

TABLE OF CONTENTS

			Page

PREAMBLE			1

ARTICLE I		DEFINITIONS	2

	1.1	“Account”	2
	1.2	“Base Salary”	2
	1.3	“Beneficiary”	2
	1.4	“Benefit Commencement Date”	2
	1.5	“Board” or “Board of Directors”	2
	1.6	“Bonus Compensation”	2
	1.7	“Cause”	2
	1.8	“Code”	2
	1.9	“Committee”	2
	1.10	“Company”	3
	1.11	“Effective Date”	3
	1.12	“Eligible Employee”	3
	1.13	“Employment Agreement”	3
	1.14	“Employment Period”	3
	1.15	“Participant”	3
	1.16	“Plan”	3
	1.17	“Plan Administrator”	3
	1.18	“Plan Year”	3
	1.19	“Rabbi Trust”	3
	1.20	“Schedule”	3
	1.21	“Termination of Employment”	3
	1.22	“Valuation Date”	3

ARTICLE II		PARTICIPATION	4

	2.1	Eligible Class	4
	2.2	Commencement of Participation	4

ARTICLE III		ESTABLISHMENT OF ACCOUNTS	5

	3.1	Accounts	5
	3.2	Credits and Debits to Accounts	5

ARTICLE IV		CONTRIBUTIONS AND BENEFITS	6

	4.1	Benefits	6
	4.2	Contributions	6
	4.3	Changes in Base Salary and/or Base Compensation	6
	4.4	Crediting of Contributions	6
	4.5	Taxation	6
	4.6	Deemed Investment of Contributions	6
	4.7	Company Investments	7

TABLE OF CONTENTS
(continued)

			Page

ARTICLE V		BENEFIT EVENTS	8

	5.1	Benefits Following Retirement and Certain Other Events	8
	5.2	Benefits Upon Disability	8
	5.3	Death Benefits	8
	5.4	Termination For Cause	9
	5.5	Payor	9

ARTICLE VI		VALUATION AND DISTRIBUTION OF ACCOUNTS	10

	6.1	Valuation of Accounts	10
	6.2	Commencement of Benefits	10
	6.3	Form and Amount of Payment Options	10
	6.4	Election of Payment Options and Deferral of Benefits	11

ARTICLE VII		ADMINISTRATION AND CLAIMS PROCEDURE	12

	7.1	Administration	12
	7.2	Expenses; Reliance on Third Parties	12
	7.3	Annual Statements	12
	7.4	Appointment of a Conservator	12
	7.5	Limitation of Liability	12
	7.6	Claims for Benefits	13

ARTICLE VIII		FUNDING	15

	8.1	In General	15
	8.2	Rabbi Trust	15

ARTICLE IX		AMENDMENT, TERMINATION AND CHANGE OF CONTROL	16

	9.1	Amendment or Termination	16
	9.2	Change of Control	16

ARTICLE X		GENERAL PROVISIONS	17

	10.1	Payment to Minors and Incompetents	17
	10.2	No Contract	17
	10.3	Use of Masculine and Feminine; Singular and Plural	17
	10.4	Non-Alienation of Benefits	17
	10.5	Protective Provisions	17
	10.6	Governing Law	17
	10.7	Captions	18

PREAMBLE

Effective November 17, 2003, Investors Title Insurance Company (the “Company”) hereby establishes this non-qualified deferred compensation plan referred to as the Investors Title Insurance Company Non-qualified Supplemental Retirement Benefit Plan (the “Plan”).

The purpose of this Plan is to provide additional retirement benefits to Eligible Employees on a non-qualified, tax-deferred basis. This Plan shall be unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is intended to be effective with respect to Compensation earned after October 1, 2003.

Benefits are based upon hypothetical Company contributions credited to Participant “Accounts”.

Account balances resulting from employer contributions may be credited with interest, at a rate determined by the Company, or with amounts reflecting and corresponding to the performance (i.e., income, gains, losses, etc.) of a designated security or index. Further, the Company may choose to set aside assets relating to Plan obligations in a Rabbi Trust, the corpus of which will be available to the Company’s creditors in the event of bankruptcy. However, the Company is under no obligation to invest amounts deemed contributed to the Plan or to set aside funds in a Rabbi Trust. In all cases, the Company may elect to pay the benefits promised hereunder from other general assets. Notwithstanding the fact that the Company may set aside assets in respect of its obligations under the Plan, the Plan is unfunded and the rights of Participants and Beneficiaries are limited to those of general, unsecured creditors of the Company.

ARTICLE I
DEFINITIONS

The following words and phrases when used in the Plan shall have the following meanings, unless a different meaning is plainly required by the context:

1.1	“Account” means the bookkeeping account established for the measurement of the Company’s accumulated liability to a Participant under the Plan. Each Participant’s Account will reflect the undistributed balance to the credit of the Participant, representing accumulated Company Plan contributions, and the hypothetical investment earnings, gains and losses credited to the Account under the terms of the Plan.

1.2	“Base Salary” has the meaning given to it in Section 3 of the Employment Agreement.

1.3	“Beneficiary” means the person, persons or trust designated by the Participant or former Participant to receive benefits under the Plan in the event of the Participant’s death prior to the full distribution of his Account. A Participant shall designate his Beneficiary or Beneficiaries in writing under the specific procedures as shall be established by the Plan Administrator. A Participant may change his Beneficiaries at any time by delivering written instructions to the Plan Administrator. In the event a Participant dies without a valid designation of Beneficiary in effect, the Participant’s remaining Account shall be payable to his spouse or, if the Participant is not married at the time of death, to his estate.

1.4	“Benefit Commencement Date” means the date upon which the Participant’s Termination of Employment occurs or is deemed to occur in accordance with the provisions of Article IV and after which the distribution of benefits to the Participant will commence in accordance with the provisions of Articles IV and V.

1.5	“Board” or “Board of Directors” means the Board of Directors of Investors Title Insurance Company.

1.6	“Bonus Compensation” has the meaning given to it in Section 3 of the Employment Agreement.

1.7	“Cause” has the meaning given in Section 4 of the Employment Agreement.

1.8	“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations issued thereunder. Reference to any section of the Code shall include any successor provision thereto.

1.9	“Committee” means the Compensation Committee of Investors Title Company or such other person or persons designated by the Company to determine the eligibility of employees for participation in the Plan in accordance with the provisions of Article XI, and to provide oversight to the administration of the plan in accordance with Article VII.

1.10	“Company” means Investors Title Insurance Company, a North Carolina corporation, and its successor or successors. The Company is a wholly-owned subsidiary of Investors Title Company.

1.11	“Effective Date” means November 17, 2003.

1.12	“Eligible Employee” means an employee of the Company who is included in the eligible class described in Section 2. 1, and who is listed on the Schedule.

1.13	“Employment Agreement” means the agreement, as amended from time to time, entered into between an Eligible Employee and the Company, which contains the certain defined terms used herein along with the general terms and conditions of the Eligible Employee’s employment.

1.14	“Employment Period” has the meaning given to it in Section 1 of the Employment Agreement.

1.15	“Participant” means an Eligible Employee for whom an Account is being maintained under the terms of the Plan.

1.16	“Plan” means the Investors Title Insurance Company Non-Qualified Supplemental Retirement Benefit Plan as set forth in this document and as amended from time to time.

1.17	“Plan Administrator” means the Company.

1.18	“Plan Year” means each calendar year commencing January 1, 2004 and thereafter.

1.19	“Rabbi Trust” means, for the purposes of this Plan, a grantor trust under Subpart E of Subchapter J of Chapter I of the Code established by an employer in connection with a nonqualified deferred compensation or supplemental retirement benefit plan, the assets of which may be reached by the employer grantor’s general creditors.

1.20	“Schedule” means the document which lists the Eligible Employees who are Participants in the Plan, as such Schedule is amended from time to time.

1.21	“Termination of Employment” means any severance of the employee/employer relationship between a Participant and the Company for any reason including the Participant’s Retirement, death, Termination for Disability, Termination for Cause, Termination without Cause, Termination for Good Reason or termination following a Change in Control, as such terms are defined in the Employment Agreement.

1.22	“Valuation Date” means the last day of each calendar quarter, and is the date on which Participant Account values are determined.

ARTICLE II
PARTICIPATION

2.1	Eligible Class.

	(a)	Except as provided in (b) and (c) below, an individual who is employed by the Company is an Eligible Employee with respect to a particular Plan Year only if he is both (i) within a select group of management or highly compensated Employees within the meaning of Sections 201(2), 301 (a)(3) and 401 (a)(1) of ERISA, as determined by the Committee in its sole discretion, and (ii) identified by the Company as an Eligible Employee and listed in the Schedule A, attached hereto.

	(b)	Each Eligible Employee must cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder. Notwithstanding any provision in the Plan to the contrary, an individual who would otherwise be eligible to receive benefits under the Plan shall nevertheless be considered ineligible, and may be barred by the Company from participation in the Plan, (i) if he refuses to cooperate with any requirement which the Committee or Plan Administrator may reasonably impose; or (ii) if the Company chooses, in its discretion, to purchase one or more life insurance policies on the life of the individual in connection with its obligations under this plan, and the individual fails to submit a complete and accurate application in connection with the acquisition of the policy(ies), or fails to submit to any physical examination that the insurer may require, or fails to provide any other information that the insurer or Plan Administrator may reasonably request or to comply with any other requirement which the insurer may reasonably impose.

2.2	Commencement of Participation.

	Each Eligible Employee shall first become a Participant as of the initial pay period for the first Plan Year following the date upon which he is first determined by the Committee to be an Eligible Employee.

ARTICLE III
ESTABLISHMENT OF ACCOUNTS

3.1	Accounts.

	The Plan Administrator will establish and maintain separate memorandum Accounts for each Participant, for bookkeeping purpose only, which will be used to measure the amount of the Company’s liability to each Participant and Beneficiary under this Plan.

3.2	Credits and Debits to Accounts.

	The Plan Administrator will, as often and as soon as may be reasonable and practicable, make such adjustments to the Accounts, by credit (addition) or debit (reduction), as may be necessary and/or appropriate to reflect:

	(a)	Company contributions,

	(b)	any accrued interest (if Company contributions are deemed to be invested at interest), and

	(c)	any income and/or expense, and any gain or loss (i.e., increase or decrease, whether realized or unrealized), associated with any other investment(s) in which the contributions are deemed be invested, so that the balance of any portion of the Account that is deemed to be invested will be adjusted in the same manner and amount that it would have been adjusted had the Account investment actually been made (i.e., so as to reflect the net amount invested, and any changes in the investment’s market or net asset value).

ARTICLE IV
CONTRIBUTIONS AND BENEFITS

4.1	Benefits.

	Participants (or their Beneficiaries) will be entitled to benefits from this Plan upon the Participant’s Termination of Employment for any reason. Benefits will be based upon the value of a Participant’s Account, which will reflect credits for hypothetical “contributions” made by the Company, as well as additional credits (or debits) for the hypothetical investment performance of those Plan contributions, as hereinafter described.

4.2	Contributions.

	For each calendar quarter during the Employment Period, the Company shall make a contribution on the Participant’s behalf to the Plan in an amount equal to twenty-two percent (22%) of the Participant’s Base Salary and Bonus Compensation paid during such calendar quarter. Notwithstanding the foregoing, however, if the Participant has a Termination of Employment before the Company has contributed said amount for twenty (20) calendar quarters, then in such event the Company shall make a lump sum contribution to the Plan equal to the number of calendar quarters less than twenty (20), using as a base for determining such amount twenty two percent (22%) of the Participant’s Base Salary and Bonus Compensation for the twelve (12) months preceding the Termination of Employment. After the Company has contributed to the Plan an amount equal to twenty-two percent (22%) of the Participant’s Base Salary and Bonus Compensation paid during the calendar quarter for twenty (20) calendar quarters, the Company, in its sole discretion, may determine the amount, if any, contributed for subsequent calendar quarters during the Employment Period.

4.3	Changes in Base Salary and/or Base Compensation.

	The rate of Company contribution shall continue in effect for the Employment Period to which it applies, notwithstanding any change in the Participant’s Base Salary and Bonus Compensation which may occur during such year.

4.4	Crediting of Contributions.

	Company contributions to the Plan will be credited to a Participant’s Account within ten (10) days after the end of the calendar quarter to which the contribution relates.

4.5	Taxation.

	Amounts credited to a Participant’s account under this Plan are subject to rules of taxation (including employment taxes) as may be applicable from time to time. Any taxes owing in a year will be deducted from a Participant’s Base Salary and/or Bonus Compensation pursuant to rules established by the Committee.

4.6	Deemed Investment of Contributions.

	Solely for the purpose of measuring the Company’s liability to a Participant under the Plan, Company contributions credited to Participant Accounts will be deemed invested as the Participant/Committee shall from time to time determine. Credits to Participant Accounts for hypothetical investment performance will, if amounts are deemed invested at interest, be based upon a rate of interest determined by the Board from time to time. Otherwise, such credits (or debits) will be based upon the performance of a security, index or other investment (or upon any other method) determined by the Committee and specified in an Appendix to this Plan, which will be amended, as appropriate, to reflect any change in the investment made by the Committee.

4.7	Company Investments.

	The Company, in its sole discretion, shall decide whether or not to underwrite its obligations under the Plan by actually investing its hypothetical contributions. If the Company decides to invest any amounts, Plan Participants and Beneficiaries shall have no interest (other than those of unsecured general creditors) in such actual investments even if they correspond to the securities, index or other hypothetical investments used for the measurement of Plan benefits. Any investment the Company may actually make in connection with the Plan shall at all times remain part of the general assets of the Company, within the Company’s control and available for any Company purpose, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the Company.

ARTICLE V
BENEFIT EVENTS

5.1	Benefits Following Retirement and Certain Other Events.

	Upon a Participant’s Termination of Employment for any reason other than as a result of such Participant’s Termination for Disability (as that term is defined in the Employment Agreement) or death, the Company will pay benefits to the Participant (or his Beneficiary) in the amount and manner described in Article VI.

5.2	Benefits Following a Termination for Disability.

	(a)	In the event that a Participant’s Termination of Employment is the result of such Participant’s Termination for Disability (as that term is defined in the Employment Agreement), such Participant’s Termination of Employment will be deemed to have occurred on the date specified by the Board and the Company will pay benefits to the Participant (or his Beneficiary) in the amount and manner as described in Article VI.

	(b)	For the purpose of this Article, a Participant who is disabled and absent from employment with the Company due to that disability will be considered to be employed in the active, full-time service of the Company for as long as he remains disabled.

5.3	Death Benefits.

	(a)	Prior to his death, a Participant shall have the right to designate a beneficiary or beneficiaries for the amount payable under this Section 5.3, and to select a separate payment option for benefits commencing upon death, upon a form approved by the Plan Administrator.

	(b)	If the Participant’s Termination of Employment occurs as a result of such Participant’s death, the Participant’s Account will be paid to the Participant’s named beneficiary(ies) according to a form of payment option described in Section 6.3 (or otherwise permitted by the Plan Administrator) and elected by the Participant separately for this post-death benefit distribution. Payment of these amounts will commence as soon as may be practicable under procedures established by the Plan Administrator.

	(c)	If a Participant dies after his Benefit Commencement Date but prior to receiving a distribution of his entire Account, and the Participant had not elected a single life annuity option for his retirement benefit, the balance remaining in his Account (or, in the event that the Participant elected an annuity payable over the life of Participant and spouse, the survivor annuity) will be paid to the Participant’s named beneficiary(ies) (or surviving annuitant) according to the Participant’s election for retirement benefits, for the remainder of the period over which the retirement benefits were to be paid.

	(d)	Unless the Participant’s beneficiary designation provides to the contrary, the following will apply with respect to payments after the Participant’s death:

		(i)	If the primary beneficiary survives the Participant but dies before all amounts due to the beneficiary under the Plan are paid out, the present value of any payments due after the death of the primary beneficiary will be paid to the beneficiary’s estate in a lump sum.

		(ii)	If the primary beneficiary does not survive the Participant, any payments due after the death of the Participant will be paid to the contingent beneficiary or, if none is named or none survives the Participant, the present value of all amounts not yet paid to the Participant will be paid to the Participant’s estate in a lump sum.

		(iii)	In the case of installment payments other than an annuity, the present value of amounts not yet paid will be the remaining Account Balance.

		(iv)	In the case of an annuity, the present value will be determined by the Plan Administrator using the mortality table set forth in Revenue Ruling 95-6, 1995-1 CB 80 and a reasonable interest determined by the Plan Administrator considering the type of annuity and prevailing market rates.

5.4	Payor.

	The Company may pay directly any amounts due under the Plan to a Participant or Beneficiary, or it may delegate responsibility for payments to a trustee or other third party.

ARTICLE VI
VALUATION AND DISTRIBUTION OF ACCOUNTS

6.1	Valuation of Accounts.

	A Participant’s Account shall be valued as of each Valuation Date under procedures established by the Plan Administrator.

6.2	Commencement of Benefits.

	Benefits will be paid after the Participant’s Benefit Commencement Date, which shall be determined in accordance with the terms of Article V.

6.3	Form and Amount of Payment Options.

	A Participant may elect the form of payment option applicable to his Account. Payment options available under the Plan are:

	(a)	Lump Sum. A full lump sum payable on or within thirty days after the Participant’s Benefit Commencement Date, equal to the Account balance as of the Valuation Date immediately preceding the Benefit Commencement Date; or

	(b)	Equal Annual Installments. For Account balances of not less than $10,000, equal annual installments payable over five, ten, fifteen or twenty years, beginning on or within thirty days after the Participant’s Benefit Commencement Date. Annual installments shall be equal to the Account balance on the Valuation Date immediately preceding first payment divided by the number of years in the elected installment period, plus interest to the date of each payment at such rate as the Board may determine from time to time (but not less than five percent (5%)); or

	(c)	Recalculated Annual Installments. For Account balances of not less than $10,000, annual installments payable over five, ten, fifteen or twenty years, beginning on or within thirty days after the Participant’s Benefit Commencement Date. Annual installments shall be, for the first payment, equal to the Account balance on the Valuation Date immediately preceding the first payment divided by the number of years in the elected installment period, and for the remaining payments, equal to the Account Balance on the Valuation Date immediately preceding the payment, divided by the remaining number of installment payments to be made. For the purpose of determining the amount of all payments following, the first payment, interest shall be credited to the Account Balance remaining after the first payment at such rate as the Board may determine from time to time (but not less than five percent (5%)); or

	(d)	Life Annuity Options. For Account balances of not less than $10,000, equal annual installments, beginning on or within thirty days after the Participant’s Benefit Commencement Date, payable over the life of the Participant, or over the lives of the Participant and spouse, with or without a minimum period certain, as elected by the Participant at the commencement of his participation in the Plan, or in a later change of form of payment made pursuant to Section 6.3. This annuity will be the actuarial equivalent of the Account balance on the Valuation Date immediately preceding first payment, as determined by the Plan Administrator using the mortality table set forth in Revenue Ruling 95-6, 1995-1 CB 80 and a reasonable interest rate determined by the Plan Administrator considering the type of annuity and prevailing market rates.

6.4	Election of Payment Options and Deferral of Benefits.

	(a)	Elections as to the manner of distribution of the Participant’s Account will be made upon forms provided by and according to procedures established by the Plan Administrator. At the commencement of an Eligible Employee’s participation in the Plan, he shall be required to make a written election indicating his form of payment option. This election will be binding and apply to all amounts held for the Participant under the Plan except as provided under (b) below.

	(b)	A Participant will have one opportunity to postpone the commencement of his benefits and/or change his initial election regarding the form of payment option for his Account, as follows: At least twelve (12) months prior to the date on which distribution would otherwise commence (or, in the sole discretion of the Plan Administrator, on a date not less than six (6) months prior to that date, but not later than the last day of the year preceding the year in which distribution would otherwise commence), the Participant may elect to postpone, but not accelerate, his Benefit Commencement Date to a later specified date which may not be earlier than two years after his Termination of Employment, and/or specify a different form of payment, under procedures established by the Plan Administrator. Any election which is determined, considering the date upon which the Participant terminates or is deemed to have terminated under Article V, to have been made too late, and not in accordance with this Section 6.3(b), will be void and without effect.

ARTICLE VII
ADMINISTRATION AND CLAIMS PROCEDURE

7.1	Administration.

	The Plan shall be administered by the Board, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Board deems appropriate including the authority to determine eligibility for benefits under the Plan. The Board shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Board shall be final and binding on all persons and parties concerned. Any benefits payable under this Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

7.2	Expenses; Reliance on Third Parties.

	Expenses of administration shall be paid by the Company. The Board shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.

7.3	Annual Statements.

	The Board shall furnish individual annual statements of accrued benefits to each Participant, or Beneficiary, in such form as determined by the Board.

7.4	Appointment of a Conservator.

	The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual’s care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may pay such individual’s benefits to such conservator, person legally charged with such individual’s care, or institution then contributing toward or providing for the care and maintenance of such individual. Any such payment shall constitute a complete discharge of any liability of the Company and the Plan for such individual.

7.5	Limitation of Liability.

	Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, former Participant, designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.

7.6	Claims for Benefits.

	All claims for benefits shall be handled through the following procedure:

	(a)	Claim.

	A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the Plan Administrator at the Company’s then principal place of business.

	(b)	Claim Decision.

	Upon receipt of a claim, the Plan Administrator shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Plan Administrator may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

	If the claim is denied in whole or in part, the Plan Administrator shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

		(i)	The specific reason or reasons for such denial;

		(ii)	The specific reference to pertinent provisions of this Agreement on which such denial is based;

		(iii)	A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

		(iv)	Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

		(v)	The time limits for requesting a review under Section 7.6(c) and for review under Section 7.6(d).

	(c)	Request for Review.

	Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Assistant Secretary of the Company review the determination of the Company. Such request must be addressed to the Assistant Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Assistant Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.

	(d)	Review of Decision.

	Within sixty (60) days after the Assistant Secretary’s receipt of a request for review, he will review the Company’s determination. After considering all materials presented by the Claimant, the Assistant Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Assistant Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

ARTICLE VIII
FUNDING

8.1	In General.

	This Plan is unfunded. The rights of a Participant or Beneficiary are those of an unsecured general creditor of the Company. In general, benefits will be paid by the Company from its general assets when due.

	The Company, in its sole discretion, shall decide whether or not to underwrite its obligations under the Plan by actually investing amounts equal to the Company contributions in any investment vehicle. If the Company decides to invest its contributions, no Participant or Beneficiary will have any interest in those actual investments, even if those actual investments correspond to the Plan’s hypothetical investments, and even if the amounts invested correspond to the amounts of the Company’s hypothetical Plan contributions. Any investment the Company makes in connection with the Plan shall at all times remain part of the general assets of the Company, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the Company.

	Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company, including any investments actually acquired in connection with the Company’s obligations under the Plan, except as may be provided for in a Rabbi Trust which the Company may choose to establish, as provide for in Section 8.2. No life insurance policy(ies) or other asset(s) of the Company shall be held by the Company, or by any other person or entity, in a fiduciary capacity, under any trust expressed or implied, for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns (other than under a Rabbi Trust), or shall be held as collateral security for the fulfillment of the obligations of the Company under this Plan. Any and all of the Company’s assets, including such Policies, shall be, and remain, the general, unpledged, unrestricted assets of the Company.

	Whether or not the Company sets aside assets in a Rabbi Trust in connection with this Plan, the Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

8.2	Rabbi Trust.

	The Company may transfer cash, life insurance policies or any other assets to a Rabbi Trust which it may establish in connection with the Plan.

	In that event, Plan benefits may be paid, in the absolute discretion of the Company, from the Company’s other general assets, or from assets held in the Rabbi Trust.

	In the event that assets are placed in a Rabbi Trust, those assets shall remain available to general creditors of the Company in the event of its insolvency.

ARTICLE IX
AMENDMENT, TERMINATION AND CHANGE OF CONTROL

9.1	Amendment or Termination. The Company reserves the right to amend, modify, suspend or terminate this Plan in whole or in part at any time by action of its Board. No amendment shall reduce the Account credited to a Participant under this Plan as of the amendment date, including the amounts that are to be credited under Section 4.2 of this Plan, except to the extent that the Participant agrees in writing to such a reduction.

9.2	Change of Control. Following a Change of Control (as that term is defined in the Employment Agreement), the Plan shall be continued by the surviving entity, and the Participant’s rights under this Plan shall not be impaired without the consent of the Participant.

ARTICLE X
GENERAL PROVISIONS

10.1	Payment to Minors and Incompetents.

	If any Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is deemed by the Plan Administrator, or adjudged to be, legally incapable of giving valid receipt and discharge for benefits received, benefits will be paid to such person or institution as the Plan Administrator may designate or to the duly appointed guardian of the Participant or Beneficiary, as the case may be. Any payment so made shall be deemed to be in complete discharge of the Participant or Beneficiary’s right to such payment under the Plan.

10.2	No Contract.

	This Plan shall not be deemed to create a contract of employment with any Participant, nor shall any provision of the Plan alter in any way the rights and responsibilities of the Company or any Participant under such Participant’s Employment Agreement.

10.3	Use of Masculine and Feminine; Singular and Plural.

	Wherever used in this Plan, the masculine gender will include the feminine gender and the singular will include the plural, unless the context indicates otherwise.

10.4	Non-Alienation of Benefits.

	No amount payable to, or held under the Plan for the account of, any Participant or Beneficiary shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. Nor shall any amount payable to, or held under the Plan for the account of, any Participant or Beneficiary be in any manner liable for his debts, contracts, liabilities, engagements, or torts, or be subject to any legal process to levy upon or attach.

10.5	Protective Provisions.

	Each Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examination as the Insurer may require and such other relevant action as may be requested by the Plan Administrator. If a Participant refuses to cooperate with any requirements reasonably imposed, the Company shall have no further obligation to the Participant under the Plan, other than payment to the Participant of the cumulative amounts previously deferred by the Participant under the Plan.

10.6	Governing Law.

	The provisions of the Plan shall be interpreted, construed, and administered in accordance with the laws of the of the State of North Carolina, except to the extent federal law (including, but not limited to, ERISA) applies. ERISA will govern all issues and matters relating to the Plan and shall preempt all state laws relating to the Plan.

10.7	Captions.

	The captions contained in the Plan are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge, or describe the scope or intent of the Plan nor in any way affect the construction of any provision of the Plan.

EXECUTED this _____________ day of ________________, 2004 by the Company’s duly empowered officer.

			INVESTORS TITLE INSURANCE COMPANY


ATTEST:

			Signature

			Title


			Date

EX-10.4 6 d60373_ex10xiv.htm EXHIBIT 10(XIV)

Exhibit 10(xiv)

DEATH BENEFIT PLAN AGREEMENT

THIS AGREEMENT, made and entered into this 1st day of April, 2004, by and between Investors Title Insurance Company, a North Carolina corporation (hereinafter referred to as the “Company”), and J. Allen Fine, an individual residing in the State of North Carolina (hereinafter referred to as the “Executive”),

WITNESSETH THAT:

WHEREAS, the Executive is employed by the Company under the terms of an Employment Agreement dated November 17, 2003, as amended from time to time (the “Employment Agreement”), and

WHEREAS, the Company recognizes the valuable services heretofore performed for it by the Executive and wishes to encourage his continued employment; and

WHEREAS, the Executive wishes to be assured that his irrevocably designated beneficiary will be entitled to a certain benefit for some definite period of time from and after the Executive’s death; and

WHEREAS, the parties hereto wish to provide the terms and conditions upon which the Company shall pay such benefit to the Executive’s beneficiary after the Executive’s death;

WHEREAS, the parties hereto intend that this Agreement be considered an unfunded arrangement, maintained primarily to provide deferred compensation benefits for the Executive, a member of a select group of management or highly compensated employees of the Company, for purposes of the Employee Retirement Income Security Act of 1974, as amended;

NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows:

	1.	DEATH BENEFIT.

	a. In the event of the death of the Executive while employed by the Company, the Company shall thereafter pay to the Executive’s designated beneficiary within sixty (60) days of the death of the Executive a lump sum amount equal to:

		(i) an amount equal to three (3) times the sum of the Executive’s (i) current Base Salary plus (ii) average Bonus Compensation for the past three (3) years (as such terms are defined in the Employment Agreement), and

b. The Executive hereby irrevocably designates The James Allen Fine Irrevocable Trust dated August 14, 1998 as his beneficiary hereunder.

	2.	BENEFIT CONTINGENT ON CONTINUED EMPLOYMENT.

	a. In the event that the employment of the Executive by the Company is terminated due to Retirement, Disability, Termination without Cause or Termination by Executive for Good Reason, the Employment Agreement shall govern.

	b. In the event that the employment of the Executive by the Company is terminated due to any reason other than his death or a reason listed in Section 2(a), this Agreement shall terminate and the Company shall have no obligation to provide the Executive or his designated beneficiary with any benefits hereunder.

	c. Nothing contained herein shall be construed to be a contract of employment for any term of years, nor as conferring upon the Executive the right to continue to be employed by the Company, in any capacity. It is expressly understood by the parties hereto that this Agreement relates exclusively to a death benefit for the Executive’s services, and is not intended to alter in any way the rights and responsibilities under the Employment Agreement, as such may be amended from time to time.

3. NO TRUST CREATED. Nothing contained in this Agreement, and no action taken pursuant to its provisions by either party hereto shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Company and the Executive, his designated beneficiary or any other person.

4. BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS; UNSECURED GENERAL CREDITOR STATUS OF EXECUTIVE.

	a. The payments to the Executive’s designated beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be a part of the general, unrestricted assets of the Company; no such person shall have nor acquire any interest in any such assets by virtue of the provisions of this Agreement. The Company’s obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that any person acquires a right to receive payments from the Company under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Company; no such person shall have nor require any legal or equitable right, interest or claim in or to any property or assets of the Company.

	b. In the event that, in its discretion, the Company purchases an insurance policy or policies insuring the life of the Executive (or any other property) to allow the Company to recover, in whole, or in part, the cost of providing the benefits hereunder, neither the Executive nor any of his designated beneficiaries shall have or acquire any right whatsoever therein or in the proceeds therefrom. The Company shall be the sole owner and beneficiary of any such policy or policies, and, as such, shall possess and may exercise all incidents of ownership therein. No such policy, policies or other property shall be held in any trust for the Executive or any other person nor as collateral security for any obligation of the Company hereunder.

5. NON-ASSIGNABILITY OF BENEFITS. Neither the Executive nor his designated beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder. Such amounts shall not be subject to seizure by any creditor of any such beneficiary, by a proceeding at law or in equity, nor transferable by operation of law in the event of the bankruptcy, insolvency or death of the Executive, his designated beneficiary, or any other beneficiary hereunder. Any such attempted assignment or transfer shall be void and shall terminate this Agreement; the Company shall thereupon have no further liability hereunder.

6. ADMINISTRATION, DETERMINATION OF BENEFITS, AND CLAIMS PROCEDURE.

a. The Plan shall be administered by the Company’s Board of Directors, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Board deems appropriate including the authority to determine eligibility for benefits under the Plan. The Board shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Board shall be final and binding on all persons and parties concerned. Any benefits payable under this Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

b. Expenses of administration shall be paid by the Company. The Board shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.

c. Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to the Executive the Executive’s designated beneficiary, the Executive’s estate or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.

d. All claims for benefits shall be handled through the following procedure:

		(i) Claim.

	A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the President of the Company at its then principal place of business.

	(ii) Claim Decision.

	Upon receipt of a claim, the Company shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Company may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

	If the claim is denied in whole or in part, the Company shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

		(A) The specific reason or reasons for such denial;

		(B) The specific reference to pertinent provisions of this Agreement on which such denial is based;

	(C) A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

	(D) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

	(E) The time limits for requesting a review under Section 6(e)(iii) and for review under Section 6(e)(iv).

		(iii) Request for Review.

		Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Assistant Secretary of the Company review the determination of the Company. Such request must be addressed to the Assistant Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Assistant Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.

		(iv) Review of Decision.

		Within sixty (60) days after the Assistant Secretary’s receipt of a request for review, he will review the Company’s determination. After considering all materials presented by the Claimant, the Assistant Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Assistant Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

7. AMENDMENT AND TERMINATION. This Agreement may not be amended, altered, modified, or terminated, except by a written instrument signed by the parties hereto, or their respective successors or assigns.

8. CHANGE OF CONTROL. Following a Change of Control (as that term is defined in the Employment Agreement), the Plan shall be continued by the surviving entity, and the Executive’s rights under this Agreement shall not be impaired without the consent of the Executive.

9. INUREMENT. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the Executive, his successors, heirs, executors, administrators and beneficiaries.

10. NOTICES. Any notice, consent or demand required or permitted to be given under the provisions of this Agreement shall be in writing, and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, addressed to such party’s last known address as shown on the records of the Company. The date of such mailing shall be deemed the date of notice, consent or demand.

11. GOVERNING LAW. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.

	Investors Title Insurance Company


	By:

		President
ATTEST:



Secretary


	Executive

EX-10.5 7 d60373_ex10xv.htm EXHIBIT 10(XV)

Exhibit 10(xv)

DEATH BENEFIT PLAN AGREEMENT

THIS AGREEMENT, made and entered into this 19th day of May, 2004, by and between Investors Title Insurance Company, a North Carolina corporation (hereinafter referred to as the “Company”), and James A. Fine, Jr., an individual residing in the State of North Carolina (hereinafter referred to as the “Executive”),

WITNESSETH THAT:

WHEREAS, the Executive is employed by the Company under the terms of an Employment Agreement dated November 17, 2003, as amended from time to time (the “Employment Agreement”), and

WHEREAS, the Company recognizes the valuable services heretofore performed for it by the Executive and wishes to encourage his continued employment; and

WHEREAS, the parties hereto wish to provide the terms and conditions upon which the Company shall pay such benefit to the Executive’s beneficiary after the Executive’s death;

NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows:

	1. DEATH BENEFIT.

	a. In the event of the death of the Executive while employed by the Company, the Company shall thereafter pay to the Executive’s designated beneficiary within sixty (60) days of the death of the Executive a lump sum amount equal to:

		(i) an amount equal to three (3) times the sum of the Executive’s (i) current Base Salary plus (ii) average Bonus Compensation for the past three (3) years (as such terms are defined in the Employment Agreement), and

		(ii) two million dollars ($2,000,000), reduced by the amount that the Executive’s estate will receive under Section 3(d) and Section 5(b) (i), (ii), (iii) and (v) of the Employment Agreement, plus the amount accrued on the Company’s books pursuant to Section 3(d) and Section 5(b) (i), (ii), (iii) and (v) of the Employment Agreement.

	b. The Executive hereby irrevocably designates The James Allen Fine, Jr. Irrevocable Family Trust dated April 16, 2003 as his beneficiary hereunder.

	2. BENEFIT CONTINGENT ON CONTINUED EMPLOYMENT.

	a. In the event that the employment of the Executive by the Company is terminated due to Retirement, Disability, Termination without Cause or Termination by Executive for Good Reason, the Employment Agreement shall govern.

	b. In the event that the employment of the Executive by the Company is terminated due to any reason other than his death or a reason listed in Section 2(a), this Agreement shall terminate and the Company shall have no obligation to provide the Executive or his designated beneficiary with any benefits hereunder.

	c. Nothing contained herein shall be construed to be a contract of employment for any term of years, nor as conferring upon the Executive the right to continue to be employed by the Company, in any capacity. It is expressly understood by the parties hereto that this Agreement relates exclusively to a death benefit for the Executive’s services, and is not intended to alter in any way the rights and responsibilities under the Employment Agreement, as such may be amended from time to time.

4. BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS; UNSECURED GENERAL CREDITOR STATUS OF EXECUTIVE.

	a. The payments to the Executive’s designated beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be a part of the general, unrestricted assets of the Company; no such person shall have nor acquire any interest in any such assets by virtue of the provisions of this Agreement. The Company’s obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that any person acquires a right to receive payments from the Company under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Company; no such person shall have nor require any legal or equitable right, interest or claim in or to any property or assets of the Company.

	b. In the event that, in its discretion, the Company purchases an insurance policy or policies insuring the life of the Executive (or any other property) to allow the Company to recover, in whole, or in part, the cost of providing the benefits hereunder, neither the Executive nor any of his designated beneficiaries shall have or acquire any right whatsoever therein or in the proceeds therefrom. The Company shall be the sole owner and beneficiary of any such policy or policies, and, as such, shall possess and may exercise all incidents of ownership therein. No such policy, policies or other property shall be held in any trust for the Executive or any other person nor as collateral security for any obligation of the Company hereunder.

6. ADMINISTRATION, DETERMINATION OF BENEFITS, AND CLAIMS PROCEDURE.

	a. The Plan shall be administered by the Company’s Board of Directors, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Board deems appropriate including the authority to determine eligibility for benefits under the Plan. The Board shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Board shall be final and binding on all persons and parties concerned. Any benefits payable under this Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

	b. Expenses of administration shall be paid by the Company. The Board shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.

	c. Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to the Executive, the Executive’s designated beneficiary, the Executive’s estate or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.

	d. All claims for benefits shall be handled through the following procedure:

		(i) Claim.

		A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the President of the Company at its then principal place of business.

		(ii) Claim Decision.

		Upon receipt of a claim, the Company shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Company may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

	If the claim is denied in whole or in part, the Company shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

	(A) The specific reason or reasons for such denial;

	(B) The specific reference to pertinent provisions of this Agreement on which such denial is based;

	(C) A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

	(D) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

	(E) The time limits for requesting a review under Section 6(e)(iii) and for review under Section 6(e)(iv).

		(iii) Request for Review.

		Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Assistant Secretary of the Company review the determination of the Company. Such request must be addressed to the Assistant Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Assistant Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.

		(iv) Review of Decision.

		Within sixty (60) days after the Assistant Secretary’s receipt of a request for review, he will review the Company’s determination. After considering all materials presented by the Claimant, the Assistant Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Assistant Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

11. GOVERNING LAW. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.

	Investors Title Insurance Company


	By:

			President
ATTEST:



Secretary


		Executive

EX-31.1 8 d60373_ex31i.htm EXHIBIT 31(I)

Exhibit 31(i)

Certification

I, J. Allen Fine, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of Investors Title Company;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

		a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

		b) {Reserved}

		c) evaluated the effectiveness of the registrant’s disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

		d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.		The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

		a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

		b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2004

/s/ J. Allen Fine

J. Allen Fine
Chief Executive Officer

EX-31.2 9 d60373_ex31ii.htm EXHIBIT 31(II)

Exhibit 31(ii)

Certification

I, James A. Fine, Jr., certify that:

2.		I have reviewed this quarterly report on Form 10-Q of Investors Title Company;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

		a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

		b) {Reserved}

		c) evaluated the effectiveness of the registrant’s disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

		d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.		The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

		a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

		b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2004

/s/ James A. Fine, Jr.

James A. Fine, Jr.
Chief Financial Officer

EX-32 10 d60373_ex32.htm EXHIBIT 32

Exhibit 32

Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Investors Title Company, a North Carolina corporation (the “Company”), does hereby certify that:

The Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 13, 2004		/s/ J. Allen Fine

		J. Allen Fine
		Chief Executive Officer


Dated: August 13, 2004		/s/ James A. Fine, Jr.

		James A. Fine, Jr.
		Chief Financial Officer