<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____)
THE FIRST AMERICAN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
- --------------------------------------------------------------------------------
(Title of Class of Securities)
318 522 307
--------------------------------------
(CUSIP Number)
THOMAS G. BROCKINGTON, ESQ.
611 ANTON BOULEVARD, SUITE 1400,
COSTA MESA, CALIFORNIA 92626
(714) 641-3466
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
JUNE 13, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. / /
Check the following box if a fee is being paid with the statement /x/. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 7 Pages
--- ---
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SCHEDULE 13D
CUSIP No. 318 522 307 Page 2 of 7 Pages
----------- --- ---
- -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Kennedy Enterprises, L.P.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /x /
(b) / /
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
PF, OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
California
- -------------------------------------------------------------------------------
NUMBER OF SHARES (7) SOLE VOTING POWER
BENEFICIALLY OWNED 734,051
BY EACH REPORTING --------------------------------------------------
PERSON WITH (8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
734,051
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
734,051
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
- -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.3%
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(14) TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 318 522 307 Page 3 of 7 Pages
----------- --- ---
- -------------------------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Parker S. Kennedy (General Partner of Kennedy Enterprises, L.P.)
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /x /
(b) / /
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
PF, OO
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) / /
- -------------------------------------------------------------------------------
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- -------------------------------------------------------------------------------
NUMBER OF SHARES (7) SOLE VOTING POWER
BENEFICIALLY OWNED 734,051
BY EACH REPORTING --------------------------------------------------
PERSON WITH (8) SHARED VOTING POWER
0
--------------------------------------------------
(9) SOLE DISPOSITIVE POWER
734,051
--------------------------------------------------
(10) SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
734,051
- -------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /X/
- -------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.3%
- -------------------------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
CUSIP No. 318 522 307 Page 4 of 7
ITEM 1. SECURITY AND ISSUER.
The securities that are the subject of this statement consist of Common
Stock of The First American Financial Corporation (the "Issuer"). The name and
the address of the principal executive offices of the Issuer are as follows:
The First American Financial Corporation
114 East Fifth Street
Santa Ana, California 92701
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is filed on behalf of Kennedy Enterprises, L.P., a
California limited partnership. The general partner of Kennedy Enterprises,
L.P. is Parker S. Kennedy.
(b) The business address of Kennedy Enterprises, L.P. and Parker S.
Kennedy is:
114 East Fifth Street
Santa Ana, California 92701
(c) (1) The principal business of Kennedy Enterprises, L.P. is to acquire
all of the shares of the Issuer owned by the partners of Kennedy Enterprises,
L.P. and, by consolidating such shares under the control of the General Partner,
to ensure the continuity and voting power of such shares as a block. Kennedy
Enterprises, L.P. is not an operating company and it has no subsidiaries.
(2) The principal occupation of Parker S. Kennedy, the sole general
partner of Kennedy Enterprises, L.P., is to act as the President of The First
American Financial Corporation and of First American Title Insurance Company.
The address of The First American Financial Corporation and First American Title
Insurance Company is 114 East Fifth Street, Santa Ana, California 92701.
(d) Neither Kennedy Enterprises, L.P. nor Parker S. Kennedy has during the
last five (5) years been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) Neither Kennedy Enterprises, L.P. nor Parker S. Kennedy was during the
last five (5) years a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction nor was or is either of them, as a
result of such proceeding, subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
(f) (1) Kennedy Enterprises, L.P. is a California limited partnership
with its principal executive offices at 114 East Fifth Street, Santa Ana,
California 92701. Parker S. Kennedy is the sole general partner of Kennedy
Enterprises, L.P.
(2) Parker S. Kennedy is a United States citizen and resident of
California.
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CUSIP No. 318 522 307 Page 5 of 7
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The shares of Common Stock of the Issuer owned by Kennedy Enterprises, L.P.
were contributed to such partnership by the partners in consideration of the
issuance to such partners of their partnership interest in Kennedy Enterprises,
L.P. None of such shares were acquired by Kennedy Enterprises, L.P. for cash or
any other type of consideration, except as described above.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the acquisition of securities of the Issuer by Kennedy
Enterprises, L.P. was to consolidate the shares of the Issuer owned by such
partners and by placing such shares into the control of the general partner of
Kennedy Enterprises, L.P. to ensure the continuity and voting of such shares as
a block. The purpose of the acquisition of such shares by the various partners
of Kennedy Enterprises, L.P., prior to their contribution to such partnership,
was primarily for investment purposes.
Neither Kennedy Enterprises, L.P. nor Parker S. Kennedy has any plans or
proposals that relate to: (a) the acquisition by any of the reporting parties
of additional securities of the Issuer, or the disposition of securities of the
Issuer; (b) any extraordinary corporate transaction, (c) any sale or transfer of
a material amount of assets of the Issuer or any of its subsidiaries, (d) any
change in the present Board of Directors or management of the Issuer, (e) any
material change in the present capitalization or dividend policy of the Issuer,
(f) any other material change in the Issuer's business or corporate structure,
(g) any changes in the Issuer's charter, bylaws or instruments corresponding
thereto, or other actions which may impede the acquisition of control of the
Issuer by any person, (h) causing a class of securities of the Issuer to be
delisted from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national securities
association, (i) a class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended, or (j) any other material changes to the
operation, management, structure or financial condition of the Issuer. Both
Kennedy Enterprises, L.P. and Parker S. Kennedy may continue to conduct
investment activities related to the securities of the Issuer in the ordinary
course of business.
ITEM 3. INTEREST IN THE SECURITIES OF THE ISSUER.
(a) (1) Kennedy Enterprises, L.P. owns 734,051 shares of common stock of
the Issuer, which equals approximately 6.3% of the total 11,650,123 outstanding
shares of common stock of the Issuer.
(2) Parker S. Kennedy, in his capacity as general partner of Kennedy
Enterprises, L.P., has the power to control the voting of the shares of Common
Stock of the Issuer owned by Kennedy Enterprises, L.P.
Parker S. Kennedy also owns indirectly, through an employee stock ownership
plan trust, an additional 1,651.1 shares of Common Stock of the Issuer. Parker
S. Kennedy has sole voting power, and no dispositive power, with respect to
these shares. Kennedy Enterprises, L.P. and
<PAGE>
CUSIP No. 318 522 307 Page 6 of 7
each partner of such partnership other than Parker S. Kennedy disclaims
beneficial ownership of any such additional shares.
(1) Donald P. Kennedy, a limited partner of Kennedy Enterprises,
L.P., also beneficially owns: (i) 1,950.2 shares of Common Stock of the Issuer,
indirectly through his interest in an employee stock ownership plan trust, (ii)
257.6 shares of Common Stock of the Issuer, indirectly through his interest in a
401(k) plan trust and (iii) 213,828 shares of Common Stock of the Issuer held of
record by organizations which he may be deemed to control. Of these shares, Mr.
Kennedy shares dispositive power with respect to 213,828 shares, has sole
dispositive power of 257.6 shares, and sole voting power of 2207.8 shares.
Both Kennedy Enterprises, L.P., Parker S. Kennedy and the partners of Kennedy
Enterprises, L.P. other than Donald P. Kennedy disclaim beneficial ownership of
any of such shares beneficially owned by Donald P. Kennedy, directly or
indirectly.
(a) With respect to all shares of common stock of the Issuer held by
either Kennedy Enterprises, L.P. or Parker S. Kennedy as set forth in Item
5(a)(1) above, Parker S. Kennedy has the sole voting power and the sole
disposition power.
(b) Kennedy Enterprises, L.P. acquired 734,051 shares of common stock of
the Issuer in connection with the formation of such a partnership, and in
exchange for units of limited partnership interest (and, with respect to
Parker S. Kennedy, partially in exchange for a general partner's interest) in
such partnership.
(c) No other person has the right to receive or the power to direct the
receipt of dividends from or the proceeds from the sale of common stock of the
Issuer held by Kennedy Enterprises, L.P.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Neither Kennedy Enterprises, L.P. nor Parker S. Kennedy is a party to any
contract, arrangement, understanding or relationship with respect to any
securities of the Issuer, except for the Limited Partnership Agreement by which
Kennedy Enterprises, L.P. was formed. Under that agreement, the General Partner
has all powers of a general partner as provided in the California Uniform
Limited Partnership Act, provided that the General Partner is not permitted to
cause the partnership to sell, exchange or hypothecate any of its shares of
stock of the Issuer without the prior written consent of all of the limited
partners.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Neither Kennedy Enterprises, L.P. nor Parker S. Kennedy is a party to any
transaction for which any document is required to be attached to this Statement
as an exhibit, except for the Agreement of Limited Partnership of Kennedy
Enterprises, L.P., a copy of which is attached hereto.
<PAGE>
CUSIP No. 318 522 307 Page 7 of 7
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Dated: June 21, 1996 KENNEDY ENTERPRISES, L.P.
By: /S/ PARKER S. KENNEDY
---------------------------------------------
Parker S. Kennedy, Sole General Partner
Dated: June 21, 1996 /S/ PARKER S. KENNEDY
---------------------------------------------
Parker S. Kennedy, Personally
<PAGE>
EXHIBIT 99
AGREEMENT OF LIMITED PARTNERSHIP
OF
KENNEDY ENTERPRISES, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I THE PARTNERSHIP. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Place of Business. . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Term of the Partnership. . . . . . . . . . . . . . . . . . . . . 1
1.5 Statutory Compliance . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II PERCENTAGE INTERESTS; CAPITAL CONTRIBUTIONS. . . . . . . . . . . 2
2.1 Percentage Interests . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Initial Capital Contributions. . . . . . . . . . . . . . . . . . 2
2.3 Partner Loans to Partnership . . . . . . . . . . . . . . . . . . 2
2.4 Other Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III ALLOCATION OF NET PROFIT AND NET LOSS. . . . . . . . . . . . . . 3
3.1 General Allocation . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Other Allocation Rules . . . . . . . . . . . . . . . . . . . . . 3
3.3 Tax Allocations: Section 704(c) of the Code . . . . . . . . . . 3
ARTICLE IV DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1 Frequency of Distributions . . . . . . . . . . . . . . . . . . . 4
4.2 Distributable Cash . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE V BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . 4
5.1 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2 Books of Account . . . . . . . . . . . . . . . . . . . . . . . . 4
5.3 Income Tax Returns . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE VI MANAGEMENT OF PARTNERSHIP. . . . . . . . . . . . . . . . . . . . 4
6.1 Powers of the General Partner. . . . . . . . . . . . . . . . . . 4
6.2 Expense Reimbursement. . . . . . . . . . . . . . . . . . . . . . 5
6.3 Devotion of Time . . . . . . . . . . . . . . . . . . . . . . . . 5
6.4 Restrictions on General Partner. . . . . . . . . . . . . . . . . 5
6.5 Limitations of Limited Partners. . . . . . . . . . . . . . . . . 5
ARTICLE VII GENERAL PARTNER PROVISIONS . . . . . . . . . . . . . . . . . . . 5
7.1 Termination of Status as General Partner . . . . . . . . . . . . 5
7.2 Admission of Successor or Additional General Partner . . . . . . 6
7.3 Continuation of Partnership. . . . . . . . . . . . . . . . . . . 6
7.4 Election of New General Partners . . . . . . . . . . . . . . . . 6
7.5 Exculpation and Indemnification of the General Partner . . . . . 7
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ARTICLE VIII RESTRICTION ON TRANSFER OF LIMITED PARTNER INTERESTS . . . . . . 8
8.1 Restriction on Transfer. . . . . . . . . . . . . . . . . . . . . 8
8.2 Permitted Transfers. . . . . . . . . . . . . . . . . . . . . . . 8
8.3 Other Transfer Rules . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IX DISSOLUTION AND WINDING UP OF THE PARTNERSHIP. . . . . . . . . . 9
9.1 Events Causing Dissolution . . . . . . . . . . . . . . . . . . . 9
9.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.3 Rights of Limited Partners . . . . . . . . . . . . . . . . . . . 11
9.4 Date of Termination. . . . . . . . . . . . . . . . . . . . . . . 11
9.5 Notice of Dissolution. . . . . . . . . . . . . . . . . . . . . . 11
9.6 Incapacity of a Limited Partner. . . . . . . . . . . . . . . . . 11
ARTICLE X BANK ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE XI WITHDRAWAL OF A LIMITED PARTNER. . . . . . . . . . . . . . . . . 11
ARTICLE XII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.3 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.4 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . 12
12.5 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE XIII DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.1 Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.2 Agreement or Partnership Agreement . . . . . . . . . . . . . . . 13
13.3 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.4 Capital Account. . . . . . . . . . . . . . . . . . . . . . . . . 13
13.5 Capital Contribution . . . . . . . . . . . . . . . . . . . . . . 14
13.6 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.7 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.8 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.9 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.10 General Partner. . . . . . . . . . . . . . . . . . . . . . . . . 14
13.11 Gross Asset Value. . . . . . . . . . . . . . . . . . . . . . . . 14
13.13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.14 Limited Partner. . . . . . . . . . . . . . . . . . . . . . . . . 15
13.15 Net Profit and Net Loss. . . . . . . . . . . . . . . . . . . . . 16
13.16 Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.17 Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.18 Partnership Property . . . . . . . . . . . . . . . . . . . . . . 17
13.19 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-ii-
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13.20 Substituted Limited Partner. . . . . . . . . . . . . . . . . . . 17
13.21 Transfer,. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.22 Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . 17
-iii-
<PAGE>
INDEX OF DEFINITIONS
Page
----
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Capital Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Dissolving Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Distributable Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
General Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Gross Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Incapacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Limited Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Net Profit and Net Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Partnership Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Partnership Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Percentage Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Substituted Limited Partner. . . . . . . . . . . . . . . . . . . . . . . . . .17
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Treasury Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
-iv-
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
KENNEDY ENTERPRISES, L.P.,
A California Limited Partnership
------------------------------------
THIS AGREEMENT OF LIMITED PARTNERSHIP is entered into and shall be
effective as of January 16, 1996, by and between PARKER S. KENNEDY, as the
General Partner, and the undersigned Limited Partners, whereby the parties
hereto agree to form a limited partnership pursuant to the California Revised
Limited Partnership Act.
ARTICLE I
THE PARTNERSHIP
1.1 NAME. The name under which the Partnership is to be conducted is
KENNEDY ENTERPRISES, L.P., a California limited partnership.
1.2 PURPOSE. The principal purpose of this Partnership is to acquire all
of the shares of First American Financial Corporation stock owned by the
Partners and, by consolidating such shares in the Partnership and under the
control of the General Partner, ensure the continuity and voting power of such
shares as a block. A secondary purpose achieved through the consolidation of
such shares in the Partnership is to facilitate annual gifting by Donald P. and
Dorothy Kennedy by making it possible for them, through the D. and D. Kennedy
Revocable Trust, to give away Interests in the Partnership rather than shares of
such stock.
1.3 PLACE OF BUSINESS. The principal place of business of the Partnership
shall be 114 East Fifth Street, Santa Ana, California 92701, or shall be at such
other place or places as the General Partner from time to time may determine.
1.4 TERM OF THE PARTNERSHIP. The Partnership shall commence as of the
date the Certificate is filed in the office of the California Secretary of State
and shall continue until terminated as a result of the dissolution and winding
up of the Partnership in accordance with Article IX hereof.
1.5 STATUTORY COMPLIANCE. The General Partner shall cause a Certificate
to be prepared, which he shall sign and promptly file in the office of the
California Secretary of State. The General Partner shall take any and all other
actions reasonably necessary to perfect and maintain the status of the
Partnership as a limited partnership under the laws of California. The General
Partner shall cause amendments to the Certificate to be filed whenever required
by the Act. The General Partner shall cause a certified copy of the Certificate
and any amendments thereto to be recorded in the office of the County Recorder
of each county in which the Partnership owns real property.
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ARTICLE II
PERCENTAGE INTERESTS; CAPITAL CONTRIBUTIONS
2.1 PERCENTAGE INTERESTS. The percentages which shall be used to
determine the allocations of Net Profit, Net Loss, and Distributions among the
Partners (as to each Partner, his, her or its PERCENTAGE INTEREST) are as set
forth on Exhibit "A" attached hereto. Unless otherwise agreed by each of the
Partners, no adjustment to the Percentage Interest of any Partner shall be made
except as a result of a Transfer of a Partner's interest pursuant to Article
VIII hereof.
2.2 INITIAL CAPITAL CONTRIBUTIONS. Upon execution of this Agreement, each
Partner shall transfer and assign to the Partnership the money or other property
described opposite such Partner's name on Exhibit "A" attached hereto as such
Partner's initial Capital Contribution. Such assets shall constitute the
original capital of the Partnership. The Partners agree that the initial Gross
Asset Value of the property other than money contributed by the Partners is as
set forth on said Exhibit "A."
2.3 PARTNER LOANS TO PARTNERSHIP. In the event the Partnership has
insufficient funds with which to carry on its business affairs, then, in lieu of
borrowing from third parties or selling assets to provide required funds, the
Partnership may, but shall not be required to, borrow such funds from one or
more of the Partners as may be designated by the General Partner; provided that
the terms of such borrowing shall be no less favorable to the Partnership than
terms available to the Partnership for similar borrowing from commercial lending
institutions, and the Partnership shall not pledge its assets to secure such
borrowing. The amount of any such loan shall not be an increase in the Capital
Account of the lending Partner or entitle such lending Partner to an increase in
such Partner's share of the Net Profit, Net Loss, or Distributions of the
Partnership.
2.4 OTHER MATTERS.
(a) No Partner shall be entitled to any interest, salary or drawing
with respect to such Partner's Capital Contribution or Capital Account or
for services rendered on behalf of the Partnership or otherwise in such
Partner's capacity as a Partner; nor, except as otherwise specifically
provided herein, shall any Partner have the right to demand or to receive
the return of all or any part of such Partner's Capital Contribution or
Capital Account.
(b) Except as otherwise provided by this Agreement, no Limited
Partner shall be liable for the debts, liabilities, contracts or any other
obligations of the Partnership. Except as otherwise provided by any other
agreements among the Partners or applicable state law, a Limited Partner
shall not be required to lend any funds to the Partnership or, after such
Limited Partner's Capital Contribution has been paid, to make any
additional contributions to the Partnership. The General Partner shall not
have any personal liability for the repayment of any Capital Contribution
of any Limited Partner.
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ARTICLE III
ALLOCATION OF NET PROFIT AND NET LOSS
3.1 GENERAL ALLOCATION. Net Profit or Net Loss, as the case may be, for
any fiscal year or other period for which such allocation is made shall be
allocated among the Partners in accordance with their respective Percentage
Interests.
3.2 OTHER ALLOCATION RULES.
(a) For purposes of determining the Net Profit, Net Loss, or any
other items allocable to any period, Net Profit, New Loss, and any such
other items shall be determined on a daily, monthly, or other basis, as
determined by the General Partner using any permissible method under
Section 706 of the Code and the Treasury Regulations thereunder.
(b) Except as otherwise provided in this Agreement, all items of
Partnership income, gain, loss, deduction, and any other allocations not
otherwise provided for shall be allocated among the Partners in the same
proportions as they share Net Profit or Net Loss, as the case may be, for
the fiscal year or other period for which such allocation is made.
3.3 TAX ALLOCATIONS: SECTION 704(c) OF THE CODE. In accordance with
Section 704(c) of the Code and the Treasury Regulations thereunder, income,
gain, loss, and deduction with respect to any Partnership Property contributed
to the capital of the Partnership shall, solely for tax purposes, be allocated
to the Partners so as to take account of the variation between the adjusted
basis of such property to the Partnership for federal income tax purposes and
its initial Gross Asset Value as set forth on Exhibit "A" attached hereto with
respect to the Partnership Property initially contributed to the capital of the
Partnership or as determined as specified in Section 13.12(a) hereof with
respect to any other Partnership Property. The General Partner and the Partner
or Partners who contributed such Partnership Property shall have the sole
discretion to choose among the alternatives set forth in the Treasury
Regulations issued under Section 704(c) of the Code for handling such variation,
and, to the extent allowable under the applicable Treasury Regulations,
different methods may be used for specific assets. In the event the Gross Asset
Value of any Partnership Property is adjusted pursuant to Section 13.12(b) or
(d) hereof, the General Partner shall have the sole discretion to choose among
the alternatives set forth in the Treasury Regulations issued under Section
704(c) of the Code for allocating income, gain, loss, and deduction with respect
to such Partnership Property so as to take account of any variation between the
adjusted basis of such Partnership Property for federal income tax purposes and
its Gross Asset Value. Allocations pursuant to this Section 3.3 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing any Partner's Capital Account or share of Net
Profit, Net Loss, other items, or Distributions pursuant to any provision of
this Agreement.
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ARTICLE IV
DISTRIBUTIONS
4.1 FREQUENCY OF DISTRIBUTIONS. Except as otherwise provided in Section
9.2 hereof relating to the liquidation of the Partnership, Distributable Cash
shall be determined by the General Partner quarterly, and the amount so
determined shall be distributed to the Partners in accordance with their
respective Percentage Interests.
4.2 DISTRIBUTABLE CASH. As used herein, DISTRIBUTABLE CASH for any period
shall mean such portion of the cash on hand or in bank accounts of the
Partnership as, in the reasonable discretion of the General Partner, is
available for distribution to the Partners after (a) reasonable provision has
been made for the current liabilities of the Partnership, and (b) a reasonable
reserve has been allowed for Partnership operating expenses and for the
acquisition of any additional property or properties which the General Partner,
with the consent of the Limited Partners as hereinafter provided, may decide to
acquire.
ARTICLE V
BOOKS AND RECORDS
5.1 FISCAL YEAR. The fiscal year of the Partnership shall be the calendar
year.
5.2 BOOKS OF ACCOUNT. Proper and complete books of account of the
business of the Partnership, together with an executed copy of this Agreement
and of any amendment thereto, shall be kept by the General Partner at the
Partnership's principal place of business and shall be open for reasonable
inspection and examination by any of the Limited Partners or such Limited
Partner's accredited representative at any reasonable time during business
hours. The accounting records shall be maintained in accordance with the cash
method of accounting consistently applied, and shall be compiled as of the close
of each fiscal year by an independent certified public accountant or firm of
independent certified public accountants as may be selected by the General
Partner; and such accountant(s) shall make a report thereof which shall include
an income and expense statement and a balance sheet of the Partnership, copies
of which will be furnished to each of the Partners within seventy-five (75) days
after the end of each fiscal year. Any Limited Partner shall have the right to
cause a separate audit of the books and records of the Partnership to be made at
such Limited Partner's own expense.
5.3 INCOME TAX RETURNS. The General Partner shall cause the United States
and State of California Partnership income tax returns to be prepared for the
Partnership by the accountant(s) referred to in Section 5.2 above, and copies of
said returns shall be furnished to each of the Partners as soon as possible
after the end of each fiscal year.
ARTICLE VI
MANAGEMENT OF PARTNERSHIP
6.1 POWERS OF THE GENERAL PARTNER. Subject to any limitations imposed
elsewhere in this Agreement, the General Partner shall possess and may enjoy and
exercise all of the rights
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and powers of general partners as more particularly provided by the Act.
Without limiting the generality of the foregoing, the General Partner shall
have the authority and power to sell, exchange, convey title to, and grant
options for the sale of all or any portion of Partnership Property; to lease
all or any portion of Partnership Property without limit as to the term of
the lease, whether or not the term (including any renewals and extensions)
shall extend beyond the date of termination of the Partnership; to borrow
money and, as security for the borrowing, to encumber all or any part of the
Partnership Property; and to modify, consolidate, or extend any deed of trust
or other security device encumbering any Partnership Property.
6.2 EXPENSE REIMBURSEMENT. The General Partner shall be entitled to
expend funds of the Partnership for Partnership purposes and shall also be
entitled to reimbursement of reasonable costs and expenses necessarily expended
by him from his own funds in the Partnership business as well as advances made
for the Partnership's account.
6.3 DEVOTION OF TIME. The General Partner shall not be required to devote
his full time to the Partnership business but only such time as shall reasonably
be required. Nothing herein contained shall prevent the General Partner from
devoting a portion of his time to other businesses, whether or not similar in
nature to the business of the Partnership.
6.4 RESTRICTIONS ON GENERAL PARTNER. Notwithstanding anything in this
Agreement to the contrary, the General Partner shall not do any of the following
on behalf of the Partnership without the prior written consent of all the
Limited Partners: (a) sell, exchange, or hypothecate any shares of First
American Financial Corporation stock; (b) purchase any additional property or
properties for the Partnership; (c) do any act in contravention of this
Agreement in its present form or as amended; (d) do any act which would make it
impossible to carry on the ordinary business of the Partnership; (e) confess a
judgment against the Partnership; (f) possess Partnership Property in his
individual name, or assign his rights in specific Partnership Property for other
than a Partnership purpose; or (g) admit any other Person as a General Partner.
6.5 LIMITATIONS OF LIMITED PARTNERS. Except as specifically provided
herein, the Limited Partners shall have no right or authority to act for or bind
the Partnership, nor shall they take any part in the conduct or control of the
Partnership business.
ARTICLE VII
GENERAL PARTNER PROVISIONS
7.1 TERMINATION OF STATUS AS GENERAL PARTNER. A Person shall cease to be
a General Partner upon the Transfer of his entire Interest, upon his Incapacity,
or upon the occurrence of any of the other events set forth in Section 15642 of
the Act. Upon a Person ceasing to be a General Partner, such Person or his
transferee shall have the right to receive Distributions and allocations with
respect to his General Partnership Interest, shall be treated as the transferee
of a Limited Partner, and shall automatically become a Substituted Limited
Partner.
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7.2 ADMISSION OF SUCCESSOR OR ADDITIONAL GENERAL PARTNERS.
(a) With the affirmative vote of all of the Limited Partners, the
General Partner may at any time designate one or more Persons to be
successors to the General Partner or to be additional General Partners, in
each case with such participation in the General Partner's Interest as the
General Partner and such successor or additional General Partner may agree
upon, provided that the Interests of the Limited Partners shall not be
affected thereby.
(b) Except in connection with a Transfer to a successor or additional
General Partner pursuant to paragraph (a) above, no General Partner shall
have any right to retire or withdraw voluntarily from the Partnership or to
Transfer his Interest.
(c) Any Transfer by the General Partner of his Interest shall be
effective only upon the admission in accordance with paragraph (a) above of
a successor or additional General Partner, as the case may be.
7.3 CONTINUATION OF PARTNERSHIP.
(a) It is the intention of the Partners that the Partnership not
dissolve as a result of any Person ceasing to be a General Partner pursuant
to Section 7.1 above; provided, however, that if a dissolution nevertheless
occurs under the Act, the Partnership's assets and business shall continue
to be held and conducted in a new limited partnership under this Agreement
with any remaining General Partner(s) as general partner(s) and the Limited
Partners as limited partners. Notwithstanding any provision of the Act to
the contrary, each Partner (including any successor to the Interest of a
General Partner) hereby (1) waives any rights that such Person may have as
a result of any such unintended dissolution to demand or receive an
accounting of the Partnership or any Distribution in satisfaction of such
Person's Interest or any security for the return or Distribution thereof,
and (2) agrees to indemnify and hold the Partnership and each other Partner
wholly and completely harmless from all costs or damage (including, without
limitation, legal fees and expenses of enforcing this indemnity) that any
such indemnified Person may incur as a result of any action inconsistent
with part (1) of this sentence.
(b) If at the time a Person ceases to be a General Partner such
Person is also a Limited Partner, such cessation shall not affect such
Person's rights and obligations with respect to his Interest as a Limited
Partner.
7.4 ELECTION OF NEW GENERAL PARTNERS. In the event any Person ceases to
be a General Partner pursuant to Section 7.1 above, and as a consequence thereof
the Partnership has no General Partner, any Limited Partner may nominate any
Person for election as General Partner. No Person shall become a General
Partner unless elected by an affirmative vote of all of the Limited Partners.
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7.5 EXCULPATION AND INDEMNIFICATION OF THE GENERAL PARTNER.
(a) The General Partner shall not be liable to any Limited Partner
for any action taken by the General Partner if such action was taken in
good faith and in a manner reasonably believed to be in, or not opposed to,
the best interests of the Partnership. The termination of a proceeding by
judgment, order, or settlement shall not, of itself, create a presumption
that such action was not taken in good faith and in a manner which the
General Partner reasonably believed to be in, or not opposed to, the best
interests of the Partnership or a presumption that the General Partner had
reasonable cause to believe that his conduct was unlawful.
(b) The Partnership, its receiver, or its trustee shall indemnify,
save harmless, and pay all judgments and claims against the General Partner
relating to any liability or damage incurred by reason of any act performed
or omitted to be performed by the General Partner in connection with the
business of the Partnership, as permitted by law, together with attorneys
fees incurred by the General Partner in connection with the defense of any
action based on any such act or omission.
(c) In the event of any action by a Limited Partner against the
General Partner, including a Partnership derivative suit, the Partnership
shall indemnify, save harmless, and pay all expenses of the General
Partner, including attorneys fees, incurred in the defense of such action,
if the General Partner acted in good faith and in a manner it reasonably
believed to be in, or not opposed to, the best interests of the
Partnership. The termination of a proceeding by judgment, order, or
settlement shall not, of itself, create a presumption that the General
Partner did not act in good faith and in a manner which the General Partner
reasonably believed to be in, or not opposed to, the best interests of the
Partnership or a presumption that the General Partner had reasonable cause
to believe that his conduct was unlawful.
(d) The Partnership shall indemnify, save harmless, and pay all
expenses, costs, or liabilities of the General Partner if, for the benefit
of the Partnership, he makes any deposit, acquires any option, or makes any
other similar payment or assumes any obligation in connection with any
property proposed to be acquired by the Partnership and suffers any
financial loss as the result of such action.
(e) Notwithstanding the provisions of paragraphs (b), (c) and (d)
above, the General Partner shall not be indemnified from any liability with
respect to which he has been adjudged guilty of fraud, bad faith, willful
misconduct or gross negligence, unless, and only to the extent that, the
court in which such action was brought, or another court of competent
jurisdiction, should determine upon application that, despite such
adjudication of liability, but in view of all circumstances of the case,
the General Partner is fairly and reasonably entitled to indemnification
for such liabilities and expenses as such court shall deem proper.
(f) Expenses (including legal fees and expenses) incurred in
defending any proceeding shall be paid by the Partnership in advance of the
final disposition of such proceeding upon receipt of an undertaking by or
on behalf of the General Partner to
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repay such amount if it shall ultimately be determined by a court of
competent jurisdiction that the General Partner is not entitled to be
indemnified by the Partnership as authorized hereunder.
(g) The indemnification provided by this Section shall be in addition
to any other rights to which the General Partner may be entitled under any
agreement, vote of the Limited Partners, as a matter of law or otherwise,
both as to action in his capacity as the General Partner and as to action
in another capacity, and shall continue as to the General Partner even
though he has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the General
Partner.
(h) The Partnership may purchase and maintain insurance on behalf of
the General Partner against any liability which may be asserted against or
expense which may be incurred by the General Partner in connection with the
Partnership activities, whether or not the Partnership would have the power
to indemnify the General Partner against such liability under the
provisions of this Agreement.
ARTICLE VIII
RESTRICTION ON TRANSFER OF LIMITED PARTNER INTERESTS
8.1 RESTRICTION ON TRANSFER. No Limited Partner shall be entitled to
Transfer such Limited Partner's Interest without the prior consent of the
General Partner and all of the other Limited Partners, which consent may be
withheld for any reason or for no reason; and any such purported Transfer made
without such prior consent shall be entirely null and void. If the consent to
any such Transfer is obtained from the General Partner and the other Limited
Partners, the transferee shall be admitted to the Partnership as a Substituted
Limited Partner provided that the following conditions are complied with:
(a) The General Partner shall approve of the form and content of the
instrument of assignment;
(b) The transferring Partner and such transferee shall execute and
acknowledge such other instrument or instruments as the General Partner may
deem reasonably necessary or desirable to effectuate such admission;
(c) Such transferee shall in writing accept and adopt all of the
terms and provisions of this Agreement, as the same may have been amended;
and
(d) The transferring Partner or such transferee shall pay or agree to
pay, as the General Partner may determine, all reasonable expenses
connected with such admission, including but not limited to, legal fees and
costs.
8.2 PERMITTED TRANSFERS. The foregoing notwithstanding, the restrictions
of this Article VIII shall not apply to:
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(a) A Transfer of a Limited Partner's Interest by will or by
intestacy, or to a trustee or trustees of a trust revocable by the Limited
Partner and under which the Limited Partner has a significant beneficial
interest; or
(b) A Transfer of an Interest from one Limited Partner to another
Limited Partner.
(c) A Transfer of an Interest by way of gift from a Limited Partner
to a descendant of the Limited Partner, to a custodian for such a
descendant, or to a trustee or trustees of a trust for the benefit of such
a descendant.
Provided, however, that any such transferee shall in writing accept, adopt and
agree to be bound by all of the terms and provisions of this Agreement,
including, without limitation, the restrictions of this Article VIII.
8.3 OTHER TRANSFER RULES.
(a) In the event any Interest is sold or assigned in accordance with
the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred
Interest.
(b) Upon the Transfer of a Partner's Interest during any accounting
period in compliance with the provisions of this Article VIII, Net Profit,
Net Loss, each item thereof, and all other items attributable to such
transferred Interest for such period shall be divided and allocated between
such Partner and the transferee by taking into account their varying
interests during the period in accordance with Section 706(d) of the Code,
using any conventions permitted by law and selected by the General Partner.
All Distributions on or before the date of such Transfer shall be made to
such Partner, and all Distributions thereafter shall be made to the
transferee.
ARTICLE IX
DISSOLUTION AND WINDING UP OF THE PARTNERSHIP
9.1 EVENTS CAUSING DISSOLUTION. The Partnership shall be dissolved upon
the earliest occurrence of any of the following events (DISSOLVING EVENTS):
(a) The expiration of forty (40) years from the date the Certificate
is filed in the office of the California Secretary of State.
(b) The election by a majority in Interest of the Partners to cause
dissolution of the Partnership.
(c) The Incapacity of the last remaining General Partner.
The Partners hereby agree that, notwithstanding any provision of the Act, the
Partnership shall not dissolve prior to the occurrence of a Dissolving Event.
Furthermore, in the event of the
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Incapacity of the General Partner, the Limited Partners may, within ninety
(90) days of the date such event occurs, unanimously vote to elect a
successor General Partner and continue the Partnership business, in which
case the Partnership shall not dissolve. If it is determined, by a court of
competent jurisdiction, that the Partnership dissolved (i) prior to the
occurrence of a Dissolving Event, or (ii) because of the Incapacity of the
General Partner even though the Limited Partners elected a successor General
Partner in accordance with the previous sentence, the Partners hereby agree
to continue the business of the Partnership without a winding up or
liquidation.
9.2 WINDING UP.
(a) The Partnership's books shall be closed as of the date of a
Dissolving Event as if such date were the last day of a Partnership fiscal
year. The Partnership's Net Profit or Net Loss shall be computed for the
period ending on such date and shall be allocated to the Partners according
to the provisions of Article III hereof.
(b) Following the occurrence of a Dissolving Event, the General
Partner (which term, for the purpose of this Article, shall include the
trustees, receivers or other Persons required by law to wind up the affairs
of the Partnership) shall take full account of the Partnership Property and
liabilities of the Partnership. If Partnership Property is liquidated, all
Net Profit or Net Loss, as the case may be, shall be allocated among the
Partners as provided in Article III hereof. To the extent sufficient
therefor, any liquidation proceeds together with Partnership Property to be
distributed in kind shall be applied and distributed, in one or more
installments, in the following order of priority:
(i) To the payment and discharge of all of the
Partnership's debts and liabilities, other than debts to Partners and
transferable debts secured by Partnership Property;
(ii) To the payment and discharge of any loans or advances
made by Partners to the Partnership and all expenses, including
attorneys' fees, incurred by the General Partner in connection with
the winding up and liquidation of the Partnership;
(iii) To the Partners in satisfaction of, and in proportion
to, the positive balances of their respective Capital Accounts as
those accounts are determined after all adjustments required by
Section 1.704-1(b)(2)(ii)(B) of the Treasury Regulations have been
made to such Capital Accounts for the fiscal year of the Partnership
during which the liquidation occurs, such adjustments to be made
within the time specified in such Regulations.
(c) Distributions pursuant to the foregoing provisions may be
distributed to a trust established for the benefit of the Partners for the
purposes of liquidating Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partners arising out of or
in connection with the Partnership. The assets of any such trust shall be
distributed to the Partners from time to time, in the reasonable discretion
of the
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General Partner, in the same proportions as the amount distributed
to such trust by the Partnership would otherwise have been distributed to
the Partners pursuant to the foregoing provisions.
(d) Distributions made pursuant to this Section 9.2 shall be in full
satisfaction of the Partners' claims against the Partnership for
Distributions in liquidation.
9.3 RIGHTS OF LIMITED PARTNERS. Except as otherwise provided in this
Agreement, (a) each Limited Partner shall look solely to the assets of the
Partnership for the return of his Capital Contribution and shall have no right
or power to demand or receive property other than cash from the Partnership, and
(b) no Limited Partner shall have priority over any other Limited Partner as to
the return of his Capital Contribution, Distributions, or allocations.
9.4 DATE OF TERMINATION. The Partnership shall be terminated when all
monies and Partnership Property (other than money) have been applied in the
manner prescribed hereinabove and all known Partnership liabilities have been
satisfied; provided, however, that distribution to a trust established for the
benefit of the Partners (as provided in Section 9.2 above) shall not continue
the term of the Partnership.
9.5 NOTICE OF DISSOLUTION. The General Partner shall cause (a) a notice
of dissolution to be published in a newspaper of general circulation in a place
where the Partnership business was regularly conducted and to be mailed to each
of the Partnership creditors, (b) an affidavit of publication and of mailing to
be filed with the County Clerk within thirty (30) days after the publication,
and (c) the Certificate to be cancelled.
9.6 INCAPACITY OF A LIMITED PARTNER. Under no circumstances shall the
Incapacity of any Limited Partner result in the dissolution or termination of
this Partnership. In the event of the Incapacity of a Limited Partner, the
executor, guardian or other successor to the Interest of such Limited Partner
shall have all the rights of a Limited Partner hereunder.
ARTICLE X
BANK ACCOUNTS
The General Partner shall open and maintain in or at such bank or banks as
the General Partner may from time to time select, one or more accounts in the
name of the Partnership in which shall be deposited all cash Capital
Contributions of the Partners and all other funds of the Partnership.
ARTICLE XI
WITHDRAWAL OF A LIMITED PARTNER
Except as otherwise provided in this Agreement, no Limited Partner shall be
entitled to withdraw or retire from the Partnership.
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ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. Notices given under this Agreement shall be in writing and
shall either be served personally or delivered by first class registered or
certified, return receipt requested U.S. mail, postage prepaid. Notices may
also effectively be given by transmittal over electronic transmitting devices
such as Telex, facsimile or telecopy machine, if the party to whom the notice is
being sent has such a device in its office, provided a complete copy of any
notice so transmitted shall also be mailed in the same manner as required for a
mailed notice. Notices shall be deemed received at the earlier of actual
receipt or three (3) days following deposit in U.S. mail, postage prepaid.
Notices shall be directed to the Partnership or to the General Partner at 421
North Main, Santa Ana, California 92701, and to the Limited Partners at the
addresses shown on Exhibit A hereto, provided that a Limited Partner may change
such Partner's address for notice by giving written notice to all other Partners
in accordance with this Section.
12.2 AUTHORITY. No Person dealing with any General Partner shall be
required to determine such General Partner's authority to make any commitment or
undertaking on behalf of the Partnership, nor to determine any fact or
circumstance bearing upon the existence of such General Partner's authority. In
addition, no purchaser of any Partnership Property shall be required to
determine the sole and exclusive authority of the General Partner to sign and
deliver on behalf of the Partnership any such instrument of transfer or to see
to the application or distribution of revenues or proceeds paid or credited in
connection therewith, unless such purchaser shall have received written notice
affecting the same.
12.3 CAPTIONS. Any titles or captions of Articles or Sections contained in
this Agreement are for convenience only and shall not be deemed part of the
context of this Agreement.
12.4 GENDER AND NUMBER. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identification of the Person or Persons, firm or firms, corporation or
corporations may require. The use of the singular includes the plural, and the
use of the plural includes the singular, wherever the context thereof may
require.
12.5 SUCCESSORS. Except as otherwise herein provided, this Agreement shall
be binding upon and inure to the benefit of the parties hereto, their heirs,
executors, administrators, successors and all Persons hereafter having or
holding an Interest, whether as assignees, Substituted Limited Partners, or
otherwise.
12.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
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ARTICLE XIII
DEFINITIONS
The following words and phrases used in this Agreement shall, unless the
context otherwise requires, have the meanings set forth below.
13.1 ACT shall mean the California Revised Limited Partnership Act, as set
forth in Title 2, Chapter 3 of the California Corporations Code, as amended from
time to time (or any corresponding provisions of succeeding law).
13.2 AGREEMENT or PARTNERSHIP AGREEMENT shall mean this Agreement of
Limited Partnership, as amended, modified or supplemented from time to time.
13.3 BANKRUPTCY shall mean the institution of any proceedings under federal
or state laws for relief of debtors, including filing of a voluntary or
involuntary petition in bankruptcy or the obtaining of an order for relief, or
the assignment of a Person's property for the benefit of creditors, or the
appointment of a receiver, trustee or a conservator of any substantial portion
of a Person's assets or the seizure by a sheriff, receiver, trustee or
conservator of any substantial portion of a Person's assets, and the failure, in
the case of any of these events, to obtain the dismissal of the proceeding or
removal of the conservator, receiver or trustee within sixty (60) days of the
event.
13.4 CAPITAL ACCOUNT shall mean, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
(a) To each Partner's Capital Account there shall be credited such
Partner's Capital Contribution, such Partner's distributive share of Net
Profit, and the amount of any Partnership liabilities that are assumed by
such Partner or that are secured by any Partnership Property distributed to
such Partner.
(b) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Partnership Property
distributed to such Partner pursuant to any provision of this Agreement,
such Partner's distributive share of Net Loss, and the amount of any
liabilities of such Partner that are assumed by the Partnership or that are
secured by any property contributed by such Partner to the Partnership.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section 1.704-
1(b) of the Treasury Regulations, and shall be interpreted and applied in a
manner consistent with such Regulations. In the event the General Partner shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto (including, without limitation, debits or
credits relating to liabilities which are secured by contributed or distributed
property or which are assumed by the Partnership or any of the Partners) are
computed in order to comply with such Regulations, the General Partner may make
such modification, provided that it is not likely to have a material effect on
the amounts distributable to any Partner pursuant to Article IX hereof upon the
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dissolution of the Partnership. The General Partner also shall (a) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Partners and the amount of Partnership capital reflected
on the Partnership's balance sheet, as computed for book purposes, in accordance
with Section 1.704-1(b)(2)(iv)(Q) of the Treasury Regulations, and (b) make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Section 1.704-1(b) of the Treasury
Regulations.
13.5 CAPITAL CONTRIBUTION shall mean, with respect to any Partner, the
aggregate amount of money and the initial Gross Asset Value of any property
(other than money) contributed to the Partnership with respect to the Interest
held by such Partner.
13.6 CERTIFICATE shall mean a Certificate of Limited Partnership pursuant
to Section 15621 of the Act.
13.7 CODE shall mean the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).
13.8 DEPRECIATION shall mean, for each fiscal year or other period, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year of other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
13.9 DISTRIBUTION shall mean any cash or Partnership Property (other than
cash) distributed to Partners arising from their Interests, other than payments
to Partners for services or as repayment of interest or principal on Loans from
Partners.
13.10 GENERAL PARTNER shall mean any Person who (a) is referred to as
such in the first paragraph of this Agreement or has become a General Partner
pursuant to the terms of this Agreement, and (b) has not ceased to be a General
Partner pursuant to the terms of this Agreement.
13.11 GROSS ASSET VALUE shall mean, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the General Partner;
provided that if the contributing Partner is the General Partner, the
determination of the gross fair market value of the contributed asset shall
require the consent of a majority of the Limited Partners;
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<PAGE>
(b) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as determined
by the General Partner (taking the provisions of Section 7701(g) of the
Code into account), as of the following times: (i) the acquisition of an
additional interest in the Partnership by any new or existing Partner in
exchange for more than a DE MINIMIS Capital Contribution; (ii) the
Distribution by the Partnership to a Partner of more than a DE MINIMIS
amount of Partnership Property; (iii) the liquidation of a Partner's
Interest; and (iv) the liquidation of the Partnership within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; provided,
however, that adjustments pursuant to clauses (i), (ii) and (iii) above
shall be made only if the General Partner reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership;
(c) The Gross Asset Value of any Partnership asset distributed to any
Partner shall be the gross fair market value of such asset on the date of
Distribution, as determined by the distributee and the General Partner;
provided that if the distributee is the General Partner, the determination
of the gross fair market value of the distributed asset shall require the
consent of a majority of the Limited Partners;
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Section 734(b) or Section 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury
Regulations and Section 13.15(f) hereof; provided however, that Gross Asset
Values shall not be adjusted pursuant to this paragraph (d) to the extent
the General Partner determines that an adjustment pursuant to paragraph (b)
above is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this paragraph (d); and
(e) If the Gross Asset Value of an asset has been determined or
adjusted pursuant to paragraphs (a), (b), or (d) above, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Profit and Net
Loss.
13.12 INCAPACITY shall mean, as to any Person, the Bankruptcy, death,
adjudication of incompetence, dissolution or termination, as the case may be, of
such Person.
13.13 INTEREST shall mean an ownership interest in the Partnership
including any and all benefits to which the holder of such an Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.
13.14 LIMITED PARTNER shall mean any Person (a) whose name and
signature appear at the end of this Agreement or who has been admitted as a
Substituted Limited Partner pursuant to the terms of this Agreement, and (b) who
holds an Interest.
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<PAGE>
13.15 NET PROFIT AND NET LOSS shall mean, for each fiscal year or other
period, an amount equal to the Partnership's taxable income or loss for such
year or period, determined in accordance with Section 703(a) of the Code (for
this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments:
(a) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Net Profit or Net
Loss pursuant to this Section shall be added to such taxable income or
loss;
(b) Any expenditures of the Partnership described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury
Regulations and not otherwise taken into account in computing Net Profit or
Net Loss pursuant to this Section, shall be subtracted from such taxable
income or loss;
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to Section 13.11(b) or Section 13.11(c) above, the amount
of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Net Profit or Net Loss;
(d) Gain or loss resulting from any disposition of Partnership
Property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Gross Asset Value
of the property disposed of, notwithstanding that the adjusted basis of
such property for federal income tax purposes differs from its Gross Asset
Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year
or other period, computed in accordance with Section 13.8 above; and
(f) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or Section 743(b) of the Code
is required pursuant to Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury
Regulations to be taken into account in determining Capital Accounts as a
result of a Distribution other than in complete liquidation of a Partner's
Interest, the amount of such adjustment shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of the
asset and shall be taken into account for purposes of computing Net Profit
or Net Loss.
13.16 PARTNERS shall mean the General Partner and all the Limited
Partners, where no distinction is required by the context in which the term is
used herein. Partner shall mean any one of the Partners. All references in
this Agreement to a majority in Interest of the Partners shall mean Partners who
hold more than fifty percent (50%) of the Percentage Interests.
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13.17 PARTNERSHIP shall mean the limited partnership formed pursuant to
this Agreement and the partnership continuing the business of this Partnership
in the event of dissolution as herein provided.
13.18 PARTNERSHIP PROPERTY shall mean all real and personal property
acquired by the Partnership and any improvements thereto, and shall include both
tangible and intangible property.
13.19 PERSON shall mean any individual, partnership, corporation, trust
or other legal entity.
13.20 SUBSTITUTED LIMITED PARTNER shall mean any Person admitted to the
Partnership as a Limited Partner pursuant to Section 7.1 or Article VIII hereof.
13.21 TRANSFER, as a noun, shall mean any sale, assignment, transfer,
mortgage, pledge, involuntary transfer, transfer by operation of law, or other
disposition of all or any part of an Interest; and, as a verb, shall mean
voluntarily or involuntarily to transfer, sell, pledge, hypothecate, or
otherwise dispose of.
13.22 TREASURY REGULATIONS shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written.
GENERAL PARTNER: /S/ PARKER S. KENNEDY
--------------------------------------------
PARKER S. KENNEDY
LIMITED PARTNERS: /S/ PARKER S. KENNEDY
--------------------------------------------
PARKER S. KENNEDY
/S/ ELIZABETH K. RINEY
--------------------------------------------
ELIZABETH K. RINEY
/S/ AMY F. HEALY
--------------------------------------------
AMY F. HEALY
/S/ SHARRINGTON D. KENNEDY
--------------------------------------------
SHARRINGTON D. KENNEDY
/S/ DONALD P. KENNEDY II
--------------------------------------------
DONALD P. KENNEDY II
FIRST AMERICAN TRUST COMPANY as Custodian for
KATHRYN KENNEDY under the Uniform Gifts to
Minors Act
By: /S/ DAVID O. RAHN
--------------------------------------------
/S/ DOROTHY S. KENNEDY
--------------------------------------------
DOROTHY S. KENNEDY
D. AND D. KENNEDY REVOCABLE TRUST (also known
as the D.P. KENNEDY REVOCABLE TRUST) dated
January 27, 1988
By:/S/ DONALD P. KENNEDY
--------------------------------------------
Donald P. Kennedy, Trustee
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EXHIBIT A
AGREEMENT OF LIMITED PARTNERSHIP
OF
KENNEDY ENTERPRISES, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------------
Percentage
Name And Address Initial Capital Contribution Interest
- ----------------- ---------------------------- -----------
GENERAL PARTNER
---------------
Parker S. Kennedy 7,341 shares of common 1.00%
655 Ranchwood Trail stock of First American
Orange, CA 92669 Financial Corporation
with a Gross Asset Value
of $186,755.04 ($25.44
per share)
LIMITED PARTNERS
----------------
Parker S. Kennedy 98,483 shares of common 13.42%
655 Ranchwood Trail stock of First American
Orange, CA 92669 Financial Corporation
with a Gross Asset Value
of $2,505,407.52 ($25.44
per share)
Elizabeth K. Riney 69,457 shares of common 9.46%
1227 Montgomery Street stock of First American
San Francisco, CA Financial Corporation
with a Gross Asset Value
of $1,766,986.08 ($25.44
per share)
Amy F. Healey 45,659 shares of common 6.22%
1526 Bonnie Brae stock of First American
Hermosa Beach, CA 90254 Financial Corporation
with a Gross Asset Value
of $1,161,564.96 ($25.44
per share)
Sharrington D. Kennedy 9,194 shares of common 1.25%
655 Ranchwood Trail stock of First American
Orange, CA 92669 Financial Corporation
with a Gross Asset Value
of $233,895.36 ($25.44
per share)
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<PAGE>
Percentage
NAME AND ADDRESS Initial Capital Contribution Interest
- ----------------- ---------------------------- -----------
Donald P. Kennedy II 10,025 shares of common 1.37%
655 Ranchwood Trail stock of First American
Orange, CA 92669 Financial Corporation
with a Gross Asset Value
of $255,036.00 ($25.44
per share)
First American Trust 10,025 shares of common 1.37%
Company stock of First American
as Custodian for Kathryn Financial Corporation
Kennedy with a Gross Asset Value
under CUTMA of $255,036.00 ($25.44
421 N. Main Street per share)
Santa Ana, CA 92701
Dorothy S. Kennedy 5,010 shares of common stock of .68%
1628 La Loma Drive First American Financial
Santa Ana, CA 92705 Corporation with a Gross Asset
Value of $127,454.40
($25.44 per share)
D. and D. Kennedy 478,857 shares of common 65.23%
Revocable Trust stock of First American
dated January 27, 1988 Financial Corporation
P.O. Box 1151 with a Gross Asset Value
Santa Ana, CA 92702 of $12,182,122.08
($25.44 per share)
Total Shares: 734,051
Total Gross Asset Value: $18,674,257.44
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