Exhibit 10.1 

 

Execution Version

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the “First Amendment” or this
“Amendment”), dated effective as of December 31, 2015, is entered into by and
among STEWART INFORMATION SERVICES CORPORATION, a Delaware corporation (the
“Borrower”), each of the entities listed on the signature pages hereof as
guarantors (the “Guarantors”) and COMPASS BANK, N.A., as administrative agent
(the “Administrative Agent”) for the lenders to the Credit Agreement referred to
below (the “Lenders”) and the Lenders party hereto.

 

PRELIMINARY STATEMENT

 

WHEREAS, the Borrower, the Guarantors, the Administrative Agent and the Lenders
entered into that certain Credit Agreement dated as of October 21, 2014 (as may
be amended from time to time, the “Credit Agreement”), pursuant to which the
Lenders agreed to make available to the Borrower a revolving credit commitment.
All capitalized terms used in this Amendment and not otherwise defined herein
shall have the meanings ascribed to such terms in the Credit Agreement; and

 

WHEREAS, the Borrower has now asked the Lenders to amend certain provisions of
the Credit Agreement; and

 

WHEREAS, the Lenders are willing do so subject to the terms and conditions set
forth herein, provided that the Borrower and Guarantors ratify and confirm all
of their respective obligations under the Credit Agreement and the Loan
Documents;

 

NOW, THEREFORE, in consideration of the premises and further valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

 

1. Amendment. As of the First Amendment Effective Date, the Credit Agreement is
amended as follows:

 

(a) The following definitions in Section 1.01 of the Credit Agreement are hereby
amended and restated in its entirety as follows:

 

“Change in Control” means (a) any “person” or “group” (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding
any employee benefit plan of such person or its subsidiaries, and any person or
entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) that becomes the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), except that
a person or group shall be deemed to have “beneficial ownership” of all
securities that such person or group has the right to acquire (such right, an
“option right”), directly or indirectly, of 40% or more of the Equity Interests
of the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the borrower on a fully-diluted basis (and taking
into account all such securities that such “person” or “group” has the right to
acquire pursuant to any option right); or (b) during any period of 24
consecutive months, a majority of the members of the board of directors or other
equivalent governing body of the Borrower ceases to be composed of individuals
(i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or (iii) whose election or nomination to
that board or other equivalent governing body was approved by Individuals
referred to in clauses (i) and (ii) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body.

 

 

 

 

“EBITDA” means, for any period, without duplication, the Consolidated Net Income
for such period, plus cash Interest Expense, income tax expense, depreciation,
amortization and income attributable to non-controlling interests, in each case
for the Borrower and its Subsidiaries on a consolidated basis; provided that the
calculation of EBITDA shall exclude the non-cash impairment charge in the amount
of $35,900,000 for the fiscal quarter ended September 30, 2015.

 

(b) Section 5.01 of the Credit Agreement is hereby amended by amending and
restating subsection (d) to read as follows:

 

“(d) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any Subsidiary with the Securities and Exchange Commission, or any Government
Authority succeeding to any or all of the functions of said Commission, or with
national securities agencies (other than immaterial correspondence filed in the
ordinary course of business, and comment letters received from the Securities
and Exchange Commission or responses thereto), or distributed by the Borrower or
any subsidiary thereof to its shareholders generally, as the case may be;
provided, that the Borrower shall be deemed to have delivered the foregoing to
the Administrative Agent and the Lenders if such information has been filed with
the Securities and Exchange Commission and is available on the Edgar site at
www.sec.gov or any successor government site that is freely and readily
available to the Administrative Agent and the Lenders without charge, or has
been made available on the Borrower’s website www.stewart.com, and the delivery
date therefore shall be deemed to be the first day on which such information is
available to the Administrative Agent and the Lenders on one of such website
pages, provided further that the Borrower will promptly notify the
Administrative Agent and the Lenders of each posting to such sites upon the
occurrence thereof;”

 

(c) Section 5.02 of the Credit Agreement is hereby amended by amending and
restating subsection (c) to read as follows:

 

 

 

 

“(c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in
liability of any Obligor in an aggregate amount exceeding $5,000,000; and”

 

(d) Section 6.07 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

 

“Restricted Payments. None of the Obligors will declare or make, or agree to pay
or make, any Restricted Payment, except (a) Restricted Payments to an Obligor;
(b) Restricted Payments by the Borrower to any Person other than an Obligor so
long as (i) the aggregate amount of such Restricted Payments during any calendar
year does not exceed $35,000,000 and (ii) no Default or Event of Default exists
at the time such Restricted Payment is made or is created as a result of such
Restricted Payment; (c) Restricted Payments by the Borrower under its previously
announced share repurchase program, provided that the aggregate amount of such
Restricted Payments shall not exceed $60,000,000 from and after the Effective
Date; (d) on or prior to December 31, 2018, Restricted Payments by the Borrower
to repurchase its outstanding shares of common stock in an amount not to exceed
$50,000,000 in the aggregate from and after the First Amendment Effective Date;
(e) Restricted Payments by the Borrower in respect of the exchange of Class B
common shares into common shares, including payment to the holders of Class B
common shares in an amount not to exceed $12,000,000; and (f) any Obligor may
make Restricted Payments to Stewart Title Guaranty Company.”

 

(e) Section 6.12 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

 

“Capital Expenditures. The Borrower shall not permit consolidated Capital
Expenditures to exceed $25,000,000 in the aggregate in any calendar year;
provided, any unused portion of such $25,000,000 allowance that is not used may
be carried forward for one (1) year and utilized the following year; provided
further, that such carryover shall not be used unless and until the Borrower
shall have fully utilized the $25,000,000 allowance for said following year and,
if unused in a second year, any such carryover shall not be carried forward any
further.”

 

(f) Exhibit H to Credit Agreement is hereby amended and restated in its entirety
to read as set forth on Annex I attached hereto.

 

2. Conditions Precedent. This Amendment shall become effective on the date on
which the following conditions are satisfied (the “First Amendment Effective
Date”):

 

(a) after giving effect to this Amendment, no Default or Event of Default shall
exist;

 

 

 

 

(b) the Administrative Agent (or its counsel) shall have received counterparts
of this Amendment, duly executed by the Borrower, each Guarantor and the Lenders
constituting at least the Required Lenders; and

 

(c) all fees and expenses payable to the Administrative Agent (including the
fees and expenses of counsel to the Administrative Agent) accrued to date and
billed shall have been paid in full to the extent invoiced prior to the date
hereof, but without prejudice to the later payment of accrued fees and expenses
not so invoiced.

 

3. Ratification. The Borrower and each of the Guarantors hereby ratify all of
its Obligations under the Credit Agreement and each of the Loan Documents to
which it is a party, and agrees and acknowledges that the Credit Agreement and
each of the Loan Documents to which it is a party are and shall continue to be
in full force and effect as amended and modified by this Amendment. Nothing in
this Amendment extinguishes, novates or releases any right, claim, lien,
security interest or entitlement of the Lenders created by or contained in any
of such documents nor is the Borrower nor any Guarantor released from any
covenant, warranty or obligation created by or contained herein or therein.

 

4. Representations and Warranties. The Borrower and each Guarantor hereby
represent and warrant to the Lenders that (a) this Amendment has been duly
executed and delivered on behalf of the Borrower and each of the Guarantors, (b)
this Amendment constitutes a valid and legally binding agreement enforceable
against the Borrower and each of the Guarantors in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law, (c) after giving effect to this Amendment, the
representations and warranties made by it in the Credit Agreement and the Loan
Documents to which it is a party are true and correct on and as of the date
hereof in all material respects as though made as of the date hereof except to
the extent that such representations and warranties expressly relate to an
earlier date in which case they are true and correct as of such earlier date,
(d) after giving effect to this Amendment, no Default or Event of Default exists
under the Credit Agreement or under any Loan Document, (e) the Persons appearing
as Guarantors on the signature pages to this Amendment constitute all Persons
who are required to be Guarantors pursuant to the terms of the Credit Agreement
and the other Loan Documents, and (f) the execution, delivery and performance of
this Amendment has been duly authorized by the Borrower and each of the
Guarantors.

 

5. Release and Indemnity.

 

(a) The Borrower and each Guarantor hereby release and forever discharge the
Administrative Agent, each of the Lenders and each affiliate thereof and each of
their respective employees, officers, directors, trustees, agents, attorneys,
successors, assigns or other representatives from any and all claims, demands,
damages, actions, cross-actions, causes of action, costs and expenses (including
legal expenses), of any kind or nature whatsoever, whether based on law or
equity, which any of said parties has held or may now own or hold, whether known
or unknown, for or because of any matter or thing done, omitted or suffered to
be done on or before the actual date upon which this Amendment is signed by any
of such parties arising directly or indirectly out of the Loan Documents, or any
other documents, instruments or any other transactions relating thereto. Such
release, waiver, acquittal and discharge shall and does include, without
limitation, any claims of usury, fraud, duress, misrepresentation, lender
liability, control, exercise of remedies and all similar items and claims, which
may, or could be, asserted by the Borrower or any Guarantor including any such
caused by the actions or negligence of the indemnified party (other than its
gross negligence or willful misconduct).

 

 

 

  

(b) The Borrower and each Guarantor hereby ratify the indemnification provisions
contained in the Loan Documents, including, without limitation, Article VIII and
Section 10.03(b) of the Credit Agreement, and agree that the Guarantee is in
full force and effect after the execution and delivery of this Amendment, and
that all losses, claims, damages and expenses related thereto shall be covered
by such indemnities.

 

6. Counterparts. This Amendment may be signed in any number of counterparts,
which may be delivered in original, facsimile or electronic form each of which
shall be construed as an original, but all of which together shall constitute
one and the same instrument.

 

7. Governing Law. This Amendment shall be construed in accordance with and
governed by the Law of the State of New York, without regard to such state’s
conflict of laws rules.

 

8. Final Agreement of the Parties. THIS AMENDMENT, THE CREDIT AGREEMENT AND THE
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

 

[Signature pages follow] 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
by their respective officers thereunto duly authorized as of the date first
above written.

 

  ADMINISTRATIVE AGENT, ISSUING BANK, SWINGLINE LENDER AND LENDER:        
COMPASS BANK, N.A.               By: /s/ Jason Consoli   Name: Jason Consoli  
Title Senior Vice President

 

 

 

 

  LENDER:         ZB, N.A. DBA AMEGY BANK               By: /s/ Jeremy A. Newsom
  Name: Jeremy A. Newsom   Title Executive Vice President

 

 

 

 

  LENDER:         IBERIABANK               By: /s/ Steven C. Krueger   Name:  
Steven C. Krueger   Title SVP

  

 

 

  

  LENDER:         TEXAS CAPITAL BANK, N.A.               By: /s/ Kurt A.
Goeringer   Name: Kurt A. Goeringer   Title Senior Vice President

 

 

 

  

  BORROWER:         STEWART INFORMATION SERVICES CORPORATION, a Delaware
corporation               By: /s/ J. Allen Berryman     J. Allen Berryman    
Chief Financial Officer

 

 

 

  

  GUARANTORS:         STEWART TITLE COMPANY,   a Texas corporation              
By: /s/ J. Allen Berryman     J. Allen Berryman     Chief Financial Officer

  

 

  STEWART LENDER SERVICES, INC.,   a Texas corporation               By: /s/ J.
Allen Berryman     J. Allen Berryman     Vice President

 

 

 

 

 

Annex I

 

FORM OF COMPLIANCE CERTIFICATE

 

The undersigned hereby certifies that [s]he is a Financial Officer of Stewart
Information Services Corporation, a Delaware corporation (the “Borrower”) and
that as such [s]he is authorized to execute this certificate on behalf of the
Borrower. With reference to the Credit Agreement dated October 21, 2014
(together with all amendments or supplements thereto being the “Credit
Agreement”), among the Borrower, the Guarantors party thereto and Compass Bank,
the undersigned represents and warrants as follows (each capitalized term used
herein having the same meaning given to it in the Credit Agreement unless
otherwise specified):

 

(a)The representations and warranties of the Borrower and its Subsidiaries
contained in Article III of the Credit Agreement and in the other Loan Documents
were true and correct in all material respects when made, and are repeated at
and as of the time of delivery hereof and to the best of the undersigned’s
knowledge are true and correct in all material respects at and as of the time of
delivery, except for such representations and warranties as are by their express
terms limited to a specific date.

 

(b)Since the later of the last date of the Credit Agreement or the most recent
Compliance Certificate, no change has occurred either in any case or in the
aggregate, in the business, financial condition or results of operations, of the
Borrower or any of its Subsidiaries which would have a Material Adverse Effect.

 

(c)The Borrower hereby certifies that no Default has occurred or is continuing
or, if a Default has occurred, the details thereof and any action taken or
proposed to be taken with respect thereto are specified on Exhibit A attached
hereto.

 

(d)There have been no changes in GAAP or the application thereof since the date
of the last audited financial statements delivered pursuant to Section [______]
of the Credit Agreement, or if any change has occurred, the effect such change
would have on the financial statements accompanying this certificate is set
forth on Exhibit A attached hereto.

 

(e)Calculations for all financial covenants are set forth in the worksheet
attached hereto as Exhibit B.

 

 

 

 

EXECUTED AND DELIVERED this _____ day of _____________________, 20__.

  

 

  BORROWER:         STEWART INFORMATION SERVICES CORPORATION           By:    
Name:     Title:  

  

 

 

 

EXHIBIT A

 

DEFAULTS; CHANGES IN GAAP

 

 

 

 

 

EXHIBIT B

 

FINANCIAL COVENANT CALCULATION WORKSHEET

 

($ in 000’s)

 

 

Pro Forma Calculation

 

Covenant Requirement

 

Fixed Charge Coverage Ratio x > 1.25 to 1.0 Leverage Ratio x < 2.25 to 1.0
Capital Expenditures x See Note 1 below.       Fixed Charge Coverage Ratio:
calculated as of the fiscal quarter ended _______________, 201_     (i) EBITDA
for the four quarter period then ended     to     (ii) the sum of:     (a) 
scheduled principal payments required to be made on Indebtedness of the Borrower
and its Subsidiaries for the four quarter period then ended plus     (b)  cash
Interest Expense for the four quarter period then ended plus     (c)  cash
income tax expense for the four quarter period then ended plus     (d)
 Restricted Payments paid by the Borrower as permitted by Section 6.07(b) for
the four quarter period then ended.    

 

 

 

 

  

      Leverage Ratio: calculated as of the fiscal quarter ended _____________,
201__     (i) total Indebtedness (exclusive of Indebtedness under Investment
Securities Lines, contingent liabilities related to escrow and 1031 exchange
accounts, letters of credit that are fully collateralized and contingent
obligations of the Borrower or any of its Subsidiaries as an account party in
respect of letters of credit and letters of guaranty)     to     (ii) EBITDA for
the four quarter period ended on such date           Capital Expenditures: for
the calendar year ended December 31, 20___     (i) the difference of:     (a)
expenditures of the Borrower and its Subsidiaries in respect of fixed or capital
assets, including the capital portion of the lease payments made in respect of
Capital Lease Obligations, in each case which are required to be capitalized on
a balance sheet prepared in accordance with GAAP minus     (b) any such
expenditures for the repair or replacement of any fixed or capital assets which
were destroyed or damaged, in whole or in part, to the extent financed by the
proceeds of an insurance policy.    

 

 

 

Notes:

 

1. [Include for Compliance Certificates delivered with annual financial
statements only.] Capital Expenditure Limitation: < (a) $20,000,000 for the
calendar year ending December 31, 2014, (b) $20,000,000 for the calendar year
ending December 31, 2015 and (c) $25,000,000, for the calendar year ending
December 31, 2016 and each calendar year thereafter, plus any unused amounts
from the immediately preceding calendar year after utilizing the allowance for
such calendar year.