<PAGE>
As filed with the Securities and Exchange Commission on December 31, 1996
Registration No. 33-
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
THE FIRST AMERICAN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-1068610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
114 EAST FIFTH STREET
SANTA ANA, CALIFORNIA 92701-4642
(Address of principal executive offices)
--------------------
THE FIRST AMERICAN FINANCIAL CORPORATION 1996 STOCK OPTION PLAN
(Full title of the plan)
--------------------
MARK R ARNESEN, ESQ. (Copy to)
VICE PRESIDENT, SECRETARY NEIL W. RUST, ESQ.
THE FIRST AMERICAN FINANCIAL CORPORATION WHITE & CASE
114 EAST FIFTH STREET 633 WEST FIFTH STREET
SANTA ANA, CALIFORNIA 92701 LOS ANGELES, CALIFORNIA 90071
(714) 558-3211 (213) 620-7700
(Name, address and telephone
number of agent for service)
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) FEE(1)
<S> <C> <C> <C> <C>
Common stock, $1.00 par value 1,250,000 shares $40.375 $40,586,250 $12,298.86
=============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h) under the Act, based (i) on the $25.625 per
share exercise price of 670,000 shares subject to options granted previous
to the filing of this Registration Statement and, as to the remaining
580,000 shares, (ii) on the average of the high and low prices of the
Common stock traded on the New York Stock Exchange as of December 27, 1996.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant hereby states that the documents listed in (1), (2), (3),
(4), (5) and (6) below are incorporated by reference in this Registration
Statement and all documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), prior to the filing of a post-effective amendment
that indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be part hereof from the date of
filing of such documents.
(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
(3) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996;
(4) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996;
(5) The Registrant's Report on Form 8-K dated April 23, 1996; and
(6) The description of the Common stock contained in the Registrant's
Registration Statement on Form 8-A registering its Common stock, par
value $1.00 per share, under Section 12(b) of the Exchange Act, dated
November 23, 1993.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subject to certain limitations, Section 317 of the California Corporations
Code provides in part that a corporation shall have power to indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of the corporation to
procure a judgment in its favor) by reason of the fact that the person is or was
an agent (which term includes officers and directors) of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with the proceeding if that person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation
II-1
<PAGE>
and, in the case of a criminal proceeding, had no reasonable cause to believe
the conduct of the person was unlawful.
The California indemnification statute, as provided in Section 317 of the
California Corporations Code (noted above), is nonexclusive and allows a
corporation to expand the scope of indemnification provided, whether by
provisions in its Bylaws or by agreement, to the extent authorized in the
corporation's articles.
The Articles of Incorporation of the Registrant provide that: "The
liability of the directors of the Corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law." The effect
of the this provision is to exculpate directors from any liability to the
Registrant,or anyone claiming on the Registrant's behalf, for breaches of the
directors' duty of care. However, the provision does not eliminate or limit the
liability of a director for actions taken in his capacity as an officer. In
addition, the provision applies only to monetary damages and is not intended to
impair the rights of parties suing on behalf of the Registrant to seek equitable
remedies (such as actions to enjoin or rescind a transaction involving a breach
of the directors' duty of care or loyalty).
The Bylaws of the Registrant provide that, subject to certain
qualifications, "(i) The corporation shall indemnify its Officers and Directors
to the fullest extent permitted by law, including those circumstances in which
indemnification would otherwise be discretionary; (ii) the corporation is
required to advance expenses to its Officers and Directors as incurred,
including expenses relating to obtaining a determination that such Officers and
Directors are entitled to indemnification, provided that they undertake to repay
the amount advanced if it is ultimately determined that they are not entitled to
indemnification; (iii) an Officer or Director may bring suit against the
corporation if a claim for indemnification is not timely paid; (iv) the
corporation may not retroactively amend this Section 1 in a way which is adverse
to its Officers and Directors; (v) the provisions of subsections (i) through
(iv) above shall apply to all past and present Officers and Directors of the
corporation." "Officer" includes the following officers of the Registrant:
Chairman of the Board, President, Vice President, Secretary, Assistant
Secretary, Treasurer, Assistant Treasurer and such other officers as the board
shall designate from time to time. "Director" of the Registrant means any person
appointed to serve on the Registrant's board of directors either by its
shareholders or by the remaining board members.
The Registrant's 1996 Stock Option Plan (the "Plan") provides that,
subject to certain conditions, "The Company shall, through the purchase of
insurance or otherwise, indemnify each member of the Board (or board of
directors of any affiliate), each member of the [Compensation] Committee, and
any other employees to whom any responsibility with respect to the Plan is
allocated or delegated, from and against any and all claims, losses, damages,
and expenses, including attorneys' fees, and any liability, including any
amounts paid in settlement with the Company's approval, arising from the
individual's action or failure to act, except when the same is judicially
determined to be attributable to the gross negligence or willful misconduct of
such person."
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant, however, the Registrant has been informed that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS.
4. The First American Financial Corporation 1996 Stock Option
Plan.
5. Opinion of Mark R Arnesen, Esq., Corporate Counsel and
Secretary, regarding legality.
23.1. Consent of Price Waterhouse.
23.2. Consent of Mark R Arnesen, Esq. (contained in Exhibit 5).
24. Power of Attorney.
ITEM 9. UNDERTAKINGS.
A. Rule 415 Offering. The undersigned Registrant hereby undertakes:
-----------------
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
- -------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
----
fide offering thereof.
- ----
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. Filings Incorporating Subsequent Exchange Act Documents by
----------------------------------------------------------
Reference. The undersigned Registrant hereby undertakes that, for purposes of
- ---------
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is
II-3
<PAGE>
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
----
fide offering thereof.
- ----
C. Securities and Exchange Commission Position on Indemnification.
--------------------------------------------------------------
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Ana, State of California, on December 30, 1996.
THE FIRST AMERICAN FINANCIAL CORPORATION
By: /s/ Parker S. Kennedy
-------------------------------------
Parker S. Kennedy, President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date: December 30, 1996 By:/s/ D.P. Kennedy
---------------------------------
D.P. Kennedy, Chairman
and Director
Date: December 30, 1996 By: /s/ Parker S. Kennedy
---------------------------------
Parker S. Kennedy, President
and Director
Date: December 30, 1996 By: /s/ Thomas A. Klemens
---------------------------------
Thomas A. Klemens, Executive Vice
President, Chief Financial Officer
(Principal Financial and
Accounting Officer)
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date: December 30, 1996 By:/s/ George L. Argyros*
----------------------------------
George L. Argyros, Director
Date: December 30, 1996 By:/s/ Gary J. Beban*
----------------------------------
Gary J. Beban, Director
Date: December 30, 1996 By:/s/ J. David Chatham*
----------------------------------
J. David Chatham, Director
Date: December 30, 1996 By:/s/ William G. Davis*
----------------------------------
William G. Davis, Director
Date: December 30, 1996 By:/s/ James L. Doti*
----------------------------------
James L. Doti, Director
Date: December 30, 1996 By:/s/ Lewis W. Douglas, Jr.*
----------------------------------
Lewis W. Douglas, Jr., Director
Date: December 30, 1996 By:/s/ Paul B. Fay, Jr.*
----------------------------------
Paul B. Fay, Jr., Director
Date: December 30, 1996 By:/s/ Robert B. McLain*
----------------------------------
Robert B. McLain, Director
Date: December 30, 1996 By:/s/ Anthony R. Moiso*
----------------------------------
Anthony R. Moiso, Director
Date: December 30, 1996 By:/s/ Rudolph J. Munzer*
----------------------------------
Rudolph J. Munzer, Director
Date: December 30, 1996 By:/s/ Frank E. O'Bryan*
----------------------------------
Frank E. O'Bryan, Director
Date: December 30, 1996 By:/s/ Roslyn B. Payne*
----------------------------------
Roslyn B. Payne, Director
Date: December 30, 1996 By:/s/ Virginia Ueberroth*
----------------------------------
Virginia Ueberroth, Director
*By:/s/ Mark R Arnesen
-----------------------------
Mark R Arnesen
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
4. The First American Financial Corporation 1996
Stock Option Plan.
5. Opinion of counsel regarding the legality of the
shares of common stock
23.1. Consent of independent auditors
23.2. Consent of counsel*
24. Power of Attorney
- --------------------------
</TABLE>
* Included in Exhibit 5.
<PAGE>
EXHIBIT 4
THE FIRST AMERICAN FINANCIAL CORPORATION
1996 STOCK OPTION PLAN
SECTION 1
PURPOSE
The purpose of the Plan is to foster and promote the long-term financial
success of the Company and materially increase shareholder value by (a)
motivating superior performance by means of performance-related incentives, (b)
encouraging and providing for the acquisition of an ownership interest in the
Company by Employees, and (c) enabling the Company to attract and retain the
services of an outstanding management team upon whose judgment, interest, and
special effort the successful conduct of its operations is largely dependent.
SECTION 2
DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall have the
-----------
respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means (i) the willful failure by the Participant to perform
substantially his duties as an Employee of the Company (other than due
to physical or mental illness) after reasonable notice to the
Participant of such failure, (ii) the Participant's engaging in serious
misconduct that is injurious to the Company or any Subsidiary, (iii) the
Participant's having been convicted of, or entered a plea of nolo
----
contendere to, a crime that constitutes a felony or (iv) the breach by
----------
the Participant of any written covenant or agreement with the Company or
any Subsidiary not to disclose any information pertaining to the Company
or any Subsidiary or not to compete or interfere with the Company or any
Subsidiary.
(d) "Change in Control" means the occurrence, following the grant of an
Option, of any of the following events:
(i) the acquisition by any person, entity or group (within the meaning
of section 13(d)(3) of the Act, as amended) as beneficial owner,
directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the then outstanding
securities of the Company; or
(ii) a change, during any period of two consecutive years, of a majority
of the Board as constituted at the beginning of such period, unless
the election of each director who was not a director at the
beginning of such period was approved by a vote of at least two-
thirds of the directors then in office who were directors at the
beginning of such period; or
(iii) any other event constituting a change in control required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
under the Act.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
(f) "Committee" means the Compensation Committee of the Board, which shall
consist of two or more members, each of whom shall be "disinterested
persons" within the meaning of Rule 16b-3, as promulgated under the Act,
or any other committee appointed by the Board to administer the Plan.
(g) "Company" means The First American Financial Corporation, a California
corporation, and any successor thereto.
(h) "Disability" means total disability as determined in accordance with the
terms of the long-term disability plan of the Company or any of its
Subsidiaries in which the Participant is eligible to participate.
(i) "Employee" means any officer or other key employee of the Company or
any of its Subsidiaries.
(j) "Fair Market Value" means, on any date, the average of the bid and asked
for price of a share of Stock as reported on the New York Stock Exchange
("NYSE") (or on such other recognized market or quotation system on
which shares of the Stock are traded or quoted at the relevant time) on
such date. In the event that there are no Stock transactions reported on
NYSE (or such other market or system) on such date, Fair Market Value
shall mean the closing price on the immediately preceding date on which
Stock transactions were so reported.
(k) "Incentive Stock Option" means an Option that is an Incentive Stock
Option within the requirements of section 422 of the Code.
(l) "Nonstatutory Stock Option" means an Option that is not an Incentive
Stock Option.
(m) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be
either (i) an Incentive Stock Option or (ii) a Nonstatutory Stock
Option.
(n) "Participant" means any Employee designated by the Committee to
participate in the Plan.
(o) "Plan" means The First American Financial Corporation 1996 Stock
Option Plan, as in effect from time to time.
(p) "Retirement" means termination of a Participant's employment on or
after the date the Participant attains age 65.
(q) "Stock" means the Common shares of the Company, par value $1.00 per
share.
(r) "Subsidiary" means any corporation or partnership in which the Company
owns, directly or indirectly, 50% or more of the total combined voting
power of all classes of stock of such corporation or of the capital
interest or profits interest of such partnership.
2.2 Gender and Number. Except when otherwise indicated by the context, words in
-----------------
the masculine gender used in the Plan shall include the feminine gender, the
singular shall include the plural, and the plural shall include the
singular.
SECTION 3
ELIGIBILITY AND PARTICIPATION
Participants in the Plan shall be those Employees selected by the Committee
to participate in the Plan.
2
<PAGE>
SECTION 4
POWERS OF THE COMMITTEE
4.1 Power to Grant. The Committee shall determine the Participants to whom
--------------
Options shall be granted and the terms and conditions of any and all such
Options. The terms and conditions of each Option shall be determined by the
Committee at the time of grant, and such terms and conditions shall not be
subsequently changed in a manner that would be adverse to Participants
without the consent of the Participant to whom such Option has been
granted. The Committee may establish different terms and conditions for
different Participants receiving Options and for each Option any
Participant may receive, whether or not granted at different times.
4.2 Substitute Options. The Committee shall have the right to grant Options
------------------
in substitution for, or upon the cancellation of, Options previously
granted, and such new Options may contain terms more favorable to the
recipient than the Options they replace, including, without limitation, a
lower exercise price (subject to Section 6.2).
4.3 Administration. The Committee shall be responsible for the administration
--------------
of the Plan. The Committee, by majority action thereof, is authorized to
prescribe, amend, and rescind rules and regulations relating to the Plan,
to provide for conditions deemed necessary or advisable to protect the
interests of the Company, and to make all other determinations necessary or
advisable for the administration and interpretation of the Plan with a view
to carrying out its provisions and purposes. All determinations, decisions,
interpretations and other actions made or taken by the Committee pursuant
to the provisions of the Plan shall be final, binding and conclusive for
all purposes and upon all persons.
SECTION 5
STOCK SUBJECT TO PLAN
5.1 Number. Subject to the provisions of Section 5.3, the number of shares
------
of Stock subject to Options under the Plan may not exceed 1,250,000 shares.
The shares to be delivered under the Plan may consist, in whole or in part,
of treasury Stock or authorized but unissued Stock, not reserved for any
other purpose.
5.2 Canceled, Terminated, or Forfeited Options. Any shares of Stock subject to
------------------------------------------
an Option that for any reason is canceled, terminated or otherwise settled
without the issuance of any Stock shall again be available for Options
subsequently granted under the Plan.
5.3 Adjustment in Capitalization. In the event of any Stock dividend or Stock
----------------------------
split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other
similar corporate change, the aggregate number of shares of Stock available
for Options under Section 5.1 or subject to outstanding Options and the
respective prices and/or performance criteria applicable to outstanding
Options may be appropriately adjusted by the Committee, whose determination
shall be conclusive.
SECTION 6
STOCK OPTIONS
6.1 Grant of Options. Options may be granted to Participants at such time or
----------------
times as shall be determined by the Committee. The Committee shall have
complete discretion in determining the number of Options, if any, to be
granted to a Participant, provided that no Participant may in the aggregate
be granted Options representing more than 15 percent of the shares of Stock
authorized for issuance pursuant to Section 5.1. Each Option shall
3
<PAGE>
be evidenced by an agreement between the Company and the Participant
specifying the type of Option granted, the exercise price, the duration
of the Option, the number of shares of Stock to which the Option
pertains, and such other terms and conditions not inconsistent with the
Plan as the Committee shall determine.
6.2 Option Price. Nonstatutory Stock Options and Incentive Stock Options
------------
granted pursuant to the Plan shall have an exercise price that is not
less than the Fair Market Value on the date the Option is granted.
6.3. Exercise of Options. Options awarded to a Participant under the Plan
-------------------
shall be exercisable at such times and shall be subject to such
restrictions and conditions, including the performance of a minimum
period of service or the satisfaction of performance goals, as the
Committee may impose at the time of granting such Options, subject to
the Committee's right to accelerate the exercisability of such Options
in its discretion. Notwithstanding the foregoing, no Option shall be
exercisable for more than 10 years after the date on which it is
granted.
6.4 Payment. The Committee shall establish procedures governing the exercise
-------
of Options, which shall require that written notice of exercise be given
and that the Option price be paid in full in cash or cash equivalents,
including by personal check, at the time of exercise. The Committee may,
in its discretion, permit a Participant to make payment in Stock already
owned by him or her, valued at its Fair Market Value on the date of
exercise, as partial or full payment of the exercise price. As soon as
practicable after receipt of a written exercise notice and full payment
of the exercise price, the Company shall deliver to the Participant a
certificate or certificates representing the acquired shares of Stock.
6.5 Incentive Stock Options. Notwithstanding anything in the Plan to the
-----------------------
contrary, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be so exercised, so as to disqualify
the Plan under Section 422 of the Code, or, without the consent of any
Participant affected thereby, to cause any Incentive Stock Option
previously granted to fail to qualify for the federal income tax
treatment afforded under Section 421 of the Code.
6.6 Change in Control. Each outstanding Option shall become fully
-----------------
exercisable immediately upon the occurrence of a Change in Control.
SECTION 7
TERMINATION OF EMPLOYMENT
7.1 Termination of Employment Due to Retirement. Unless otherwise determined
-------------------------------------------
by the Committee, in the event a Participant's employment terminates by
reason of Retirement, any Options granted to such Participant which are
not then exercisable shall be cancelled and any Options granted to such
Participant which are then exercisable and outstanding may be exercised
at any time prior to the expiration of the term of the Options or within
ninety (90) days (or such other period as the Committee shall determine
at the time of grant) following the Participant's termination of
employment, whichever period is shorter.
7.2. Termination of Employment Due to Death or Disability. Unless otherwise
----------------------------------------------------
determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of death or Disability,
any Options granted to such Participant which are then outstanding may
be exercised by the Participant or the Participant's designated
beneficiary, surviving spouse or estate, as applicable in accordance
with Section 9.2, at any time prior to the expiration date of the term
of the Options or within one year (or such other period as the Committee
shall determine at the time of grant) following such termination of the
Participant's employment, whichever period is shorter.
4
<PAGE>
7.3 Termination of Employment For Cause. Unless otherwise determined by the
-----------------------------------
Committee at the time of grant, in the event a Participant's employment
is terminated for Cause, any Options granted to such Participant which
are then outstanding (whether or not exercisable prior to the date of
such termination) shall be forfeited.
7.4 Termination of Employment for Any Other Reason. Unless otherwise
----------------------------------------------
determined by the Committee at or after the time of grant, in the event
the employment of a Participant shall terminate for any reason other
than one described in Sections 7.1, 7.2 or 7.3, any Options granted to
such Participant which are not exercisable shall be cancelled, and any
Options granted to such Participant which are exercisable and
outstanding at the date of the Participant's termination of employment
shall be exercisable at any time prior to the expiration of the term of
such Options or the fifth day following the Participant's termination of
employment, whichever period is shorter.
SECTION 8
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
The Board may at any time terminate or suspend the Plan, and from time to time
may amend or modify the Plan. No amendment, modification, or termination of the
Plan shall in any manner adversely affect any Option theretofore granted under
the Plan, without the consent of the Participant.
SECTION 9
MISCELLANEOUS PROVISIONS
9.1 Nontransferability of Options. No Options granted under the Plan may be
-----------------------------
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution to the Participant's designated beneficiary upon the
Participant's death, provided, that the deceased Participant's
--------
beneficiary or the representative of his estate shall acknowledge and
agree in writing, in a form prescribed by the Committee, to be bound by
the provisions of the Plan as if such beneficiary or the estate were the
Participant. All rights with respect to Options granted to a Participant
under the Plan shall be exercisable during his lifetime only by such
Participant.
9.2 Beneficiary Designation. Each Participant may from time to time name any
-----------------------
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid or by
whom any right under the Plan is to be exercised in the event of the
Participant's death. Each designation will revoke all prior designations
by the same Participant, shall be in a form prescribed by the Committee,
and will be effective only when filed by the Participant in writing with
the Committee during his lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall
be paid to or exercised by the Participant's surviving spouse, or, if
the Participant has no surviving spouse, then to or by the Participant's
estate.
9.3 No Guarantee of Employment or Participation. Nothing in the Plan shall
-------------------------------------------
interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time or for
any reason, nor confer upon any Participant any right to continue in the
employ of the Company or any Subsidiary or affiliate. No Employee shall
have a right to be selected as a Participant, or, having been so
selected, to receive any future Options.
9.4 Tax Withholding. Any federal, state, and local taxes, including FICA
---------------
amounts, required by law to be withheld with respect to Stock received
upon the exercise of an Option under the Plan or with respect to
benefits
5
<PAGE>
earned and vested under any other compensation arrangement may, if not
remitted by a Participant, be withheld from Stock otherwise issuable to
such Participant or from such Participant's salary, wages or other
amounts paid by the Company and reasonably available for withholding.
Prior to issuing Stock or authorizing the issuance of Stock under this
Plan, the Company may require such documents from any taxing authority,
or may require such indemnities or surety bond from any Participant or
beneficiary, as the Company shall reasonably consider necessary for its
protection.
9.5 Indemnification. The Company shall, through the purchase of insurance or
---------------
otherwise, indemnify each member of the Board (or board of directors of
any affiliate), each member of the Committee, and any other employees to
whom any responsibility with respect to the Plan is allocated or
delegated, from and against any and all claims, losses, damages, and
expenses, including attorneys' fees, and any liability, including any
amounts paid in settlement with the Company's approval, arising from the
individual's action or failure to act, except when the same is
judicially determined to be attributable to the gross negligence or
willful misconduct of such person. The right of indemnity described in
the preceding sentence shall be conditioned upon (i) the timely receipt
of notice by the Company of any claim asserted against the individual,
which notice, in the event of a lawsuit, shall be given within ten days
after receipt by the individual of the complaint, and (ii) the receipt
by the Company from the individual of an offer for the Company to
participate in the settlement or defense of such claim.
9.6 No Limitation on Compensation. Nothing in the Plan shall be construed to
-----------------------------
limit the right of the Company to establish other plans or to pay
compensation to its employees in cash or property, in a manner differing
from that authorized under the Plan.
9.7 Requirements of Law. The granting of Options and the issuance of shares
-------------------
of Stock shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
9.8 Term of Plan. The Plan shall be effective upon its adoption by the Board
------------
and approval by the shareholders of the Company. The Plan shall continue
in effect, unless sooner terminated pursuant to Section 8, until the
tenth anniversary of the date on which it is adopted by the Board.
9.9 Governing Law. The Plan, and all agreements hereunder, shall be
-------------
construed in accordance with and governed by the laws of the State of
California.
9.10 No Impact On Benefits. Options granted under the Plan are not
---------------------
compensation for purposes of calculating an Employee's rights under any
employee benefit plan.
6
<PAGE>
Exhibit 5
---------
[LETTERHEAD OF THE FIRST AMERICAN FINANCIAL CORPORATION]
December 30, 1996
The First American Financial Corporation
114 East Fifth Street
Santa Ana, CA 92701
Ladies and Gentlemen:
I am corporate counsel to The First American Financial Corporation, a
California corporation (the "Company"), and am familiar with the proceedings and
documents relating to the proposed registration by the Company, through a
Registration Statement on Form S-8 (the "Registration Statement"), to be filed
by the Company with the Securities and Exchange Commission, of: (a) 1,250,000
shares of Common stock, $1.00 par value, of the Company (the "Shares"), to be
issued and sold under the Company's 1996 Stock Option Plan (the "Plan"), and (b)
the options to be issued to those employees of the Company and its subsidiaries
who participate in the Plan (the "Options").
For purposes of rendering this opinion, I have examined originals or
photostatic or certified copies of such corporate records, agreements and other
documents of the Company as I have deemed relevant and necessary as a basis for
the opinion hereinafter set forth.
Based on the foregoing, I am of the opinion that the Shares, when issued
and paid for in accordance with the terms and conditions set forth in the Plan
and the Registration Statement, will be duly authorized, validly issued, fully
paid and nonassessable, and that the Options, when issued in accordance with the
terms and conditions of the Plan and the Registration Statement, will be validly
issued.
I consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Mark R Arnesen
Mark R Arnesen
Vice President, Secretary
and Corporate Counsel
<PAGE>
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 28, 1996 appearing on page
23 of the Annual Report of The First American Financial Corporation on Form 10-K
for the year ended December 31, 1995.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Costa Mesa, California
December 30, 1996
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of The First
American Financial Corporation, a California corporation (the "Corporation"),
hereby constitute and appoint Parker S. Kennedy and Mark R Arnesen, and each of
them, the true and lawful agents and attorneys-in-fact of the undersigned, with
full power and authority in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in their respective names as
directors of the Corporation the Registration Statement on Form S-8 to be filed
with the United States Securities and Exchange Commission, Washington, D.C.,
under the Securities Act of 1933, as amended, and any amendment or amendments to
such Registration Statement, relating to the Common stock, par value $1.00 per
share, of the Corporation to be offered under The First American Financial
Corporation 1996 Stock Option Plan, and the undersigned ratify and confirm all
acts taken by such agents and attorneys-in-fact, or either or both of them, as
herein authorized.
Date: December 11, 1996 By: /s/ George L. Argyros
-------------------------------
George L. Argyros
Date: December 11, 1996 By: /s/ Gary J. Beban
-------------------------------
Gary J. Beban
Date: December 11, 1996 By: /s/ J. David Chatham
-------------------------------
J. David Chatham
Date: December 11, 1996 By: /s/ William G. Davis
-------------------------------
William G. Davis
Date: December 11, 1996 By: /s/ James L. Doti
-------------------------------
James L. Doti
Date: December 11, 1996 By: /s/ Lewis W. Douglas, Jr.
-------------------------------
Lewis W. Douglas, Jr.
Date: December 11, 1996 By: /s/ Paul B. Fay, Jr.
-------------------------------
Paul B. Fay, Jr.
Date: December 11, 1996 By: /s/ Robert B. McLain
-------------------------------
Robert B. McLain
Date: December 11, 1996 By: /s/ Anthony R. Moiso
-------------------------------
Anthony R. Moiso
Date: December 11, 1996 By: /s/ Rudolph J. Munzer
-------------------------------
Rudolph J. Munzer
Date: December 11, 1996 By: /s/ Frank E. O'Bryan
-------------------------------
Frank E. O'Bryan
Date: December 11, 1996 By: /s/ Roslyn B. Payne
-------------------------------
Roslyn B. Payne
Date: December 11, 1996 By: /s/ Virginia Ueberroth
-------------------------------
Virginia Ueberroth
