As filed with the Securities and Exchange Commission on September 19, 1997
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE FIRST AMERICAN FINANCIAL CORPORATION
(Exact Name of registrant as specified in its charter)
CALIFORNIA 6361 95-1068610
(State or other (Primary standard (I.R.S. Employer
jurisdiction of industrial Identification No.)
incorporation classification
or organization) code number)
114 EAST FIFTH STREET
SANTA ANA, CALIFORNIA 92701-4642
(Address of principal executive offices)
FIRST AMERICAN CAPITAL TRUST I
(Exact Name of registrant as specified in its charter)
DELAWARE 6719 33-0771544
(State or other (Primary standard (I.R.S. Employer
jurisdiction of industrial Identification No.)
incorporation classification
or organization) code number)
114 EAST FIFTH STREET
SANTA ANA, CALIFORNIA 92701-4642
(Address of principal executive offices)
<PAGE>
MARK R ARNESEN, ESQ. (Copy to)
SECRETARY NEIL W. RUST, ESQ.
THE FIRST AMERICAN FINANCIAL CORPORATION WHITE & CASE
FIRST AMERICAN CAPITAL TRUST I 633 WEST FIFTH STREET
114 East Fifth Street LOS ANGELES, CALIFORNIA 90071
Santa Ana, California 92701 (213) 620-7700
(714) 558-3211
(Name, address and telephone
number of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
8.50% Junior Subordinated $100,000,000 $1,000 $100,000,000 N/A
Debentures Due April 15,
2012 of The First American
Financial Corporation(2)
8.50% Capital Securities 100,000 $1,000 $100,000,000 $30,303
(Liquidation Amount $1,000
per Capital Security) of
First American Capital
Trust I(3)
Guarantee of The First N/A N/A N/A N/A
American Financial
Corporation(4)
Total $100,000,000(5) $1,000 $100,000,000(5) $30,303
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933.
(2) The 8.50% Junior Subordinated Debentures Due April 15, 2012 of The First
American Financial Corporation (the "Junior Subordinated Debentures")
were originally purchased by First American Capital Trust I with the
proceeds of the 8.50% Capital Securities (Liquidation Amount $1,000 per
Capital Security) of the Trust (the "Capital Securities"). No separate
consideration will be received for the Junior Subordinated Debentures
distributed upon any liquidation of First American Capital Trust I.
(3) This Registration Statement is deemed to cover the Junior Subordinated
Debentures, the rights of the holders of the Junior Subordinated
Debentures under the Indenture (as defined herein), the rights of the
holders of the Capital Securities of First American Capital Trust I under
the Declaration (as defined herein) and the rights of the holders of the
Capital Securities under the Guarantee.
(4) No separate consideration will be received for the Guarantee of The First
American Financial Corporation.
(5) Such amount represents the aggregate liquidation amount of Capital
Securities to be issued and exchanged hereunder and the aggregate
principal amount of Junior Subordinated Debentures that may be
distributed upon liquidation of First American Capital Trust I.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
<PAGE>
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
SHOWING LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
<TABLE>
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus . Outside Front Cover Page; Inside Front Cover
Page; Facing Page
2. Inside Front and Outside Back Cover Pages
of Prospectus . . . . . . . . . . . . . Available Information; Incorporation of
Certain Information by Reference; Table of
Contents; Inside Front Cover Page
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information . . . . . Summary; Risk Factors; Consolidated Ratio of
Earnings to Fixed Charges; The Trust; The
First American Financial Corporation
4. Terms of the Transaction . . . . . . . . Outside Front Cover Page; Summary; Use of
Proceeds; Accounting Treatment;
Capitalization; The Exchange Offer;
Description of New Securities; Relationship
Among the New Capital Securities, the New
Junior Subordinated Debentures and the New
Guarantee; Description of Old Securities;
Certain U.S. Federal Income Tax
Consequences; Book-Entry Issuance; Benefit
Plan Considerations; Plan of Distribution;
Incorporation of Certain Information by
Reference
5. Pro Forma Financial Information . . . . Incorporation of Certain Information by
Reference
6. Material Contacts with the Company Being
Acquired . . . . . . . . . . . . . . . . Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters . . . . . . . . . . . Not Applicable
8. Interests of Named Experts and Counsel . Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . . . Not Applicable
B. INFORMATION ABOUT THE REGISTRANTS
Available Information; Incorporation of
10. Information with Respect to S-3 Certain Information by Reference; The First
Registrants . . . . . . . . . . . . . . American Financial Corporation
11. Incorporation of Certain Information by Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . Reference
12. Information with Respect to S-2 or S-3
Registrants . . . . . . . . . . . . . . Not Applicable
13. Incorporation of Certain Information by
Reference . . . . . . . . . . . . . . . Not Applicable
14. Information with Respect to Registrants
Other Than S-2 or S-3 Registrants . . . Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING
ACQUIRED
<PAGE>
15. Information with Respect to S-3
Companies . . . . . . . . . . . . . . . Not Applicable
16. Information with Respect to S-2 or S-3
Companies . . . . . . . . . . . . . . . Not Applicable
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies . . . . Available Information; The Trusts
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited . . . Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or Incorporation of Certain Information by
in an Exchange Offer . . . . . . . . . . Reference
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 1997
PROSPECTUS
$100,000,000
FIRST AMERICAN CAPITAL TRUST I
Offer to exchange its 8.50% Capital
Securities (Liquidation Amount $1,000
per Capital Security), which have been
registered under the Securities Act of
1933, for any and all of its outstanding
8.50% Capital Securities (Liquidation
Amount $1,000 per Capital Security)
fully and unconditionally guaranteed,
to the extent described herein, by
THE FIRST AMERICAN FINANCIAL CORPORATION
The Exchange Offer and Withdrawal Rights will expire at 5:00 p.m.,
New York City time, on ____________ , 1997, unless extended.
First American Capital Trust I, a Delaware statutory business trust (the
"Trust") hereby offers, upon the terms and subject to conditions set forth in
this Prospectus (as the same may be amended or supplemented from time to time,
the "Prospectus") and in the accompanying Letter of Transmittal (the "Letter
of Transmittal"; together with the Prospectus, the "Exchange Offer"), to
exchange up to $100,000,000 liquidation amount of its 8.50% Capital Securities
(Liquidation Amount $1,000 per Security) (the "New Capital Securities"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), for a like liquidation amount of its outstanding 8.50%
Capital Securities (Liquidation Amount $1,000 per Security) (the "Old Capital
Securities"), of which $100,000,000 aggregate liquidation amount is
outstanding. Pursuant to the Exchange Offer, The First American Financial
Corporation, a California corporation (the "Company"), is also exchanging its
guarantee of the payment of Distributions (as defined herein) and payments on
liquidation or redemption of the Old Capital Securities (the "Old Guarantee")
for a like guarantee of the New Capital Securities (the "New Guarantee") and
all of its 8.50% Junior Subordinated Debentures Due April 15, 2012 (the "Old
Junior Subordinated Debentures"), of which $103,093,000 aggregate principal
amount is outstanding, for a like aggregate principal amount of its 8.50%
Junior Subordinated Debentures Due April 15, 2012 (the "New Junior
Subordinated Debentures"), which New Guarantee and New Junior Subordinated
Debentures also have been registered under the Securities Act. The Old
Capital Securities, the Old Guarantee and the Old Junior Subordinated
Debentures are collectively referred to herein as the "Old Securities" and the
New Capital Securities, the New Guarantee and the New Junior Subordinated
Debentures are collectively referred to herein as the "New Securities."
The terms of the New Securities are identical in all material respects to
the respective terms of the Old Securities, except that (i) the New Securities
have been registered under the Securities Act and therefore will not be
subject to certain of the restrictions on transfer applicable to the Old
Securities, (ii) the New Capital Securities will not provide for any increase
in the rate at which Distributions (as defined herein) accumulate thereon and
<PAGE>
(iii) the New Junior Subordinated Debentures will not provide for any increase
in the interest rate thereon. See "Description of New Securities" and
"Description of Old Securities." The New Securities are being offered for
exchange in order to satisfy certain obligations of the Company and the Trust
under the Registration Rights Agreement, dated as of April 22, 1997 (the
"Registration Rights Agreement"), among the Company, the Trust and the Initial
Purchasers (as defined herein) of the Old Capital Securities. In the event
that the Exchange Offer is consummated, any Old Capital Securities which
remain outstanding after consummation of the Exchange Offer and the New
Capital Securities issued in the Exchange Offer will vote together as a single
class for purposes of determining whether holders of the requisite percentage
in outstanding liquidation amount thereof have taken certain actions
or exercised certain rights under the Declaration (as defined herein).
SEE "RISK FACTORS" BEGINNING ON PAGE 24 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO HOLDERS OF OLD CAPITAL SECURITIES THAT ARE CONSIDERING TENDERING
THEIR OLD CAPITAL SECURITIES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1997.
As used herein and as the context may require, unless expressly stated
otherwise, (i) "Capital Securities" includes the Old Capital Securities and
the New Capital Securities, (ii) "Junior Subordinated Debentures" includes the
Old Junior Subordinated Debentures and the New Junior Subordinated Debentures
and (iii) "Guarantee" includes the Old Guarantee and the New Guarantee.
The New Capital Securities and the Old Capital Securities (collectively,
the "Capital Securities") represent preferred undivided beneficial interests
in the assets of the Trust. The Company is the owner of all of the common
undivided beneficial interests in the assets of the Trust (the "Common
Securities" and, collectively with the Capital Securities, the "Trust
Securities"). The Trust exists for the sole purpose of issuing the Trust
Securities, purchasing and holding the Junior Subordinated Debentures and
engaging in only those activities necessary or incidental thereto. The Junior
Subordinated Debentures will mature on April 15, 2012 (the "Stated Maturity").
The Capital Securities will have a preference under certain circumstances with
respect to cash distributions and amounts payable on liquidation, redemption
or otherwise over the Common Securities. See "Description of New Securities--
Description of New Capital Securities--Subordination of Common Securities."
The New Capital Securities will be issued pursuant to, and entitled to
the benefits of, the Declaration (as defined below) governing the Old Capital
Securities. The New Junior Debentures will be issued pursuant to, and
entitled to the benefits of, the Indenture (as defined below) governing the
Old Debentures.
Except as described herein, the New Capital Securities will be
represented by global New Capital Securities to be deposited with a custodian
for and registered in the name of a nominee for The Depository Trust Company
("DTC"). Beneficial interests in the global New Capital Securities will be
shown on, and transfers thereof will be effected only through, the records
maintained by DTC and its direct and indirect participants. Beneficial
interests in such New Capital Securities will trade in DTC's Same-Day Funds
<PAGE>
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds. The New Capital Securities
will be issued, and may be held or transferred, only in blocks having a
Liquidation Amount of not less than $100,000 (100 New Capital Securities).
Accordingly, each holder must own at least 100 New Capital Securities. See
"Description of New Securities--Description of New Capital Securities--
Restrictions on Transfer."
Holders of the New Capital Securities will be entitled to receive
preferential cumulative cash distributions ("Distributions") accumulating from
the most recent distribution date on the Old Capital Securities surrendered in
exchange for New Capital Securities or, if no distributions have been paid on
such Old Capital Securities, from April 22, 1997. Such Distributions will be
payable semi-annually in arrears on April 15 and October 15 of each year,
commencing on the first such date following the date of original issuance of
the New Capital Securities, at the annual rate of 8.50% of the Liquidation
Amount of $1,000 per New Capital Security. The Distribution rate and the
Distribution payment dates and other payment dates for the New Capital
Securities will correspond to the interest rate and interest payment dates and
other payment dates on the Junior Subordinated Debentures.
Subject to certain exceptions, as described herein, the Company has the
right to defer payment of interest on the Junior Subordinated Debentures at
any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any
such Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the rate of 8.50%, compounded semi-annually
to the extent permitted by applicable law), the Company may elect to begin a
new Extension Period subject to the requirements set forth herein. If interest
payments on the Junior Subordinated Debentures are so deferred, Distributions
on the Capital Securities will also be deferred and the Company may not, and
may not permit any subsidiary of the Company to, (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, the Company's capital stock, (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities that rank pari passu with or junior to the
Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior to
the Junior Subordinated Debentures (other than (a) dividends or distributions
in common stock of the Company or warrants, options or other rights where the
Company's common stock is issuable upon the exercise thereof, (b) payments
under the Guarantee, (c) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (d) as a result of an exchange or conversion (x) of
any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or (y) of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, and (f) purchases of common stock related to the issuance of
common stock or rights under any employment agreement, benefit plan or similar
agreement for the directors, officers, employees and consultants of the
Company and its subsidiaries related to the issuance of common stock or rights
under a dividend reinvestment and stock purchase plan or related to the
issuance of common stock (or securities convertible into or exchangeable for
common stock) as consideration in an acquisition transaction that was entered
into prior to the commencement of such Extension Period). During an Extension
Period, interest on the Junior Subordinated Debentures will continue to accrue
(and the amount of Distributions to which holders of the Capital Securities
are entitled will accumulate) at the rate of 8.50% per annum, compounded
semi-annually to the extent permitted by applicable law, and holders of the
<PAGE>
Capital Securities will be required to recognize income (in the form of
original issue discount) for United States federal income tax purposes prior
to receipt of cash related to such income. See "Risk Factors--Options to Defer
Interest Payments; Tax Consequences; Market Consequences", "Description of New
Securities--Description of New Junior Subordinated Debentures--Option to Defer
Interest Payments" and "Certain United States Federal Income Tax
Consequences--Interest Income and Original Issue Discount."
The Junior Subordinated Debentures are unsecured and subordinate to all
Senior Indebtedness (as defined herein) of the Company and will be
structurally subordinated to all liabilities and obligations of the Company's
subsidiaries. As of June 30, 1997, approximately $13.2 million aggregate
amount of Senior Indebtedness was outstanding, and the Company's subsidiaries
had approximately $609.8 million of liabilities and other obligations. The
terms of the Junior Subordinated Debentures place no limitation on the amount
of Senior Indebtedness that may be incurred by the Company or on the amount of
liabilities and obligations of the Company's subsidiaries. See "Description of
New Securities--Description of New Junior Subordinated
Debentures--Subordination."
The Company has, through the Guarantee, the Declaration, the Junior
Subordinated Debentures and the Indenture (each as defined herein), taken
together, fully, irrevocably and unconditionally guaranteed all of the Trust's
obligations under the Capital Securities. See "Relationship Among the New
Capital Securities, the New Junior Subordinated Debentures and the New
Guarantee" and "Description of New Securities--Description of New Guarantee."
The Guarantee guarantees the payment of Distributions and payments on
liquidation of the Trust or redemption or maturity of the Capital Securities,
but in each case only to the extent of funds held by the Trust. See
"Description of New Guarantee." If the Company does not make interest
payments on the Junior Subordinated Debentures held by the Trust, the Trust
will have insufficient funds to pay Distributions on the Capital Securities.
The Guarantee does not cover payment of Distributions when the Trust has
insufficient funds to pay such Distributions. See "Risk Factors--Enforcement
of Certain Rights by Holders of Capital Securities" and "--Rights under the
New Guarantee." The obligations of the Company under the Guarantee are
subordinate and junior in right of payment to all Senior Indebtedness of the
Company and will be structurally subordinated to all liabilities and
obligations of the Company's subsidiaries.
The Capital Securities are subject to mandatory redemption upon the
repayment of Junior Subordinated Debentures at maturity or their earlier
redemption. The Junior Subordinated Debentures are redeemable prior to
maturity at the option of the Company at any time, in whole but not in part,
in certain circumstances as described under "Description of New Securities--
Description of New Junior Subordinated Debentures--Special Event Redemption"
at a redemption price equal to the principal amount of, plus accrued and
unpaid interest on, the Junior Subordinated Debentures. See "Description of
New Securities--Description of New Capital Securities--Redemption."
The Company has the right at any time to terminate the Trust and cause
the Junior Subordinated Debentures to be distributed to the holders of the
Capital Securities and the Common Securities in liquidation of the Trust. In
the event of any such termination of the Trust, after satisfaction of the
claims of creditors of the Trust, if any, as required by applicable law, the
holders of the Capital Securities will be entitled to receive a Liquidation
Amount of $1,000 per Capital Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount of Junior Subordinated Debentures in exchange
therefor, subject to certain exceptions. See "Description of New Securities--
Description of New Capital Securities--Liquidation Distribution Upon
Dissolution."
The Trust and the Company are making the Exchange Offer of the New
Capital Securities, the New Junior Subordinated Debentures and the New
Guarantee in reliance on the position of the staff of the Division of
<PAGE>
Corporation Finance of the Securities and Exchange Commission (the
"Commission") as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Company nor the Trust has
sought its own interpretive letter, and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Trust and the Company each believes that
New Capital Securities issued pursuant to the Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an "affiliate" of the Company or the Trust within the
meaning of Rule 405 under the Securities Act (an "Affiliate") or who intends
to participate in the Exchange Offer for the purpose of distributing New
Capital Securities, or any broker-dealer who purchased Old Capital Securities
from the Trust to resell pursuant to Rule 144A under the Securities Act ("Rule
144A") or any other available exemption under the Securities Act, (i) will not
be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (ii) will not be entitled to tender such Old Capital
Securities in the Exchange Offer and (iii) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or other transfer of such Old Capital Securities unless such sale is
made pursuant to an exemption from such requirements. In addition, as
described below, if any broker-dealer (a "Participating Broker-Dealer") holds
Old Capital Securities acquired for its own account as a result of
market-making or other trading activities and exchanges such Old Capital
Securities for New Capital Securities, then such Participating Broker-Dealer
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
In addition, the Company may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Company (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds the Old Capital Securities to be exchanged in the Exchange Offer.
Each Participating Broker-Dealer that receives New Capital Securities for its
own account pursuant to the Exchange Offer will be deemed to have acknowledged
by execution of the Letter of Transmittal or delivery of an Agent's Message
(as defined herein) that it acquired the Old Capital Securities for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivery of a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
<PAGE>
Company believes that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities that represent an unsold allotment from the original sale of Old
Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such New Capital Securities. Accordingly, this Prospectus may
be used by a Participating Broker-Dealer during the period referred to below
in connection with resales of New Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making
or other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Company and the Trust have agreed that this
Prospectus may be used by a Participating Broker-Dealer in connection with
resales of such New Capital Securities for a period of 180 days after the
Expiration Date (as defined herein) or, if earlier, when all such Capital
Securities have been disposed of by such Participating Broker-Dealer. See
"Plan of Distribution." Any person, including any Participating
Broker-Dealer, who is an Affiliate may not rely on such interpretive letters
and must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. See "Exchange
Offer--Resales of New Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal or delivery of an Agent's
Message (as defined herein) that, upon receipt of notice from the Company or
the Trust of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in this Prospectus
untrue in any material respect or which causes this Prospectus to omit to
state a material fact necessary in order to make the statements contained or
incorporated by reference herein, in the light of the circumstances under
which they were made, not misleading, or of the occurrence of certain other
events specified in the Registration Rights Agreement, such Participating
Broker-Dealer will suspend the sale of New Securities pursuant to this
Prospectus until the Company or the Trust has amended or supplemented this
Prospectus to correct such misstatement or omission and has furnished copies
of this Prospectus as so amended or supplemented to such Participating
Broker-Dealer, or the Company or the Trust has given notice that the sale of
New Securities may be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary
market and no public market for the Old Capital Securities. The New Capital
Securities will be a new issue of securities for which there currently is no
market. There can be no assurance as to the development or liquidity of any
market for the New Capital Securities. The Company and the Trust currently do
not intend to apply for a listing of the New Capital Securities on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation System or any other system.
Any Old Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to the same rights and will
be subject to the same limitations applicable thereto under the Amended and
Restated Declaration of Trust, dated as of April 22, 1997 (as amended and
supplemented from time to time, the "Declaration"), among the Company,
Wilmington Trust Company, as property and Delaware trustee, and the regular
trustees named therein (except for those rights that terminate upon
consummation of the Exchange Offer). Following the consummation of the
Exchange Offer, the holders of the Old Capital Securities will continue to be
subject to all of the existing restrictions upon transfer thereof and neither
the Company nor the Trust will have any further obligation to such holders
(other than under certain limited circumstances) to provide for registration
under the Securities Act of the Old Capital Securities held by them. To the
extent that Old Capital Securities are tendered and accepted in the Exchange
Offer, a holder's ability to sell untendered Old Capital Securities could be
<PAGE>
adversely affected. See "Risk Factors--Consequences of a Failure to Exchange
Old Capital Securities."
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE OFFER.
Old Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on _____________, 1997 (such time on such date being
hereinafter called, the "Expiration Date"), unless the Exchange Offer is
extended by the Company and the Trust (in which case, the term "Expiration
Date" will mean the latest date and time to which the Exchange Offer is
extended). Tenders of Old Capital Securities may be withdrawn at any time on
or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum of Old Capital Securities being tendered for exchange. However,
the Exchange Offer is subject to certain events and conditions, which may be
waived by the Company (in its sole discretion), and to the terms and
provisions of the Registration Rights Agreement. Old Capital Securities may
be tendered in whole or in any part having a Liquidation Amount of not less
than $100,000 (100 Old Capital Securities) or any integral multiple of $1,000
in excess thereof. The Company has agreed to pay all expenses of the Exchange
Offer, except as otherwise specified herein. See "The Exchange Offer--Fees
and Expenses." Each New Capital Security will pay cumulative Distributions
from the most recent distribution date on the Old Capital Securities
surrendered in exchange for such New Capital Securities or, if no
distributions have been paid on such Old Capital Securities, from April 22,
1997. Holders of the Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated distributions on such Old
Capital Securities for any period from and after the last distribution date on
such Old Capital Securities prior to the original issue date of the New
Capital Securities or, if no such distributions have been paid, will not
receive any accumulated distributions on such Old Capital Securities, and will
be deemed to have waived the right to receive any distributions on such Old
Capital Securities accumulated from and after such distribution date or, if no
such distributions have been paid or duly provided for, from and after April
22, 1997. This Prospectus, together with the Letter of Transmittal, is being
sent to all registered holders of the Old Capital Securities as of
_______________, 1997.
Neither the Company nor the Trust will receive any proceeds from the
issuance of the New Capital Securities offered hereby. No dealer-manager is
being used in connection with this Exchange Offer. See "Use of Proceeds" and
"Plan of Distribution."
THE NEW CAPITAL SECURITIES WILL BE ISSUED, AND MAY BE HELD OR
TRANSFERRED, ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN
$100,000. ANY TRANSFER, SALE OR OTHER DISPOSITION OF NEW CAPITAL SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000, OR RESULTING IN
A HOLDER'S HOLDING NEW CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND BE OF NO LEGAL
EFFECT WHATSOEVER, ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF
SUCH NEW CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE
RECEIPT OF DISTRIBUTIONS ON SUCH NEW CAPITAL SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH NEW CAPITAL SECURITIES.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM MARK R ARNESEN, VICE PRESIDENT AND SECRETARY, THE FIRST AMERICAN
FINANCIAL CORPORATION, 114 EAST FIFTH STREET, SANTA ANA, CALIFORNIA
92701-4642, TELEPHONE NUMBER: (714) 558-3211. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY ____________, 1997.
NO EMPLOYEE BENEFIT OR OTHER PLAN OR INDIVIDUAL RETIREMENT ACCOUNT
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
<PAGE>
(EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO
PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THE NEW CAPITAL
SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASE OR HOLDING IS COVERED
BY THE EXEMPTIVE RELIEF PROVIDED BY U.S. DEPARTMENT OF LABOR PROHIBITED
TRANSACTION CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY
PURCHASER OR HOLDER OF THE NEW CAPITAL SECURITIES OR ANY INTEREST THEREIN WILL
BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER
(A) THE PURCHASER AND HOLDER IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT
PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR
(B) THE PURCHASE AND HOLDING OF THE NEW CAPITAL SECURITIES IS COVERED BY THE
EXEMPTIVE RELIEF PROVIDED BY PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14 OR
ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING. SEE
"BENEFIT PLAN CONSIDERATIONS."
NOTICE TO NEW HAMPSHIRE INVESTORS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER
CHAPTER 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR
THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A
TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE TO ANY
PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH
THE PROVISIONS OF THIS PARAGRAPH.
FOR NORTH CAROLINA RESIDENTS ONLY
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE
COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS
DOCUMENT.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Information by Reference . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Ratio of Earnings to Fixed Charges . . . . . . .
Accounting Treatment . . . . . . . . . . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . . . . . . . . .
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . .
The First American Financial Corporation . . . . . . . . . .
The Exchange Offer . . . . . . . . . . . . . . . . . . . . .
Description of New Securities . . . . . . . . . . . . . . . .
Relationship Among the New Capital Securities, the New
Junior Subordinated Debentures and the New Guarantee . . .
Description of Old Securities . . . . . . . . . . . . . . . .
Certain United States Federal Income Tax Consequences . . . .
Book-Entry Issuance . . . . . . . . . . . . . . . . . . . . .
Benefit Plan Considerations . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE THEREOF OR, IN THE CASE OF INFORMATION
INCORPORATED HEREIN BY REFERENCE, THE DATE OF FILING WITH THE COMMISSION, OR
THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY OR THE TRUST
SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
Commission. Reports, proxy statements and other information filed by the
Company with the Commission pursuant to the informational requirements of the
Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material can be
<PAGE>
obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a Web site (http://www.sec.gov) that contains reports, proxy
statements and other information regarding the Company. In addition, such
materials can be inspected at the office of the New York Stock Exchange, on
which certain securities of the Company are listed. This Prospectus does not
contain all the information set forth in the registration statement of which
this Prospectus forms a part (the "Registration Statement"), which the Company
and the Trust have filed with the Commission under the Securities Act, and to
which reference is hereby made, certain parts of which are omitted in
accordance with the rules and regulations of the Commission.
No separate financial statements of the Trust have been included or
incorporated by reference herein. The Company and the Trust do not believe
such financial statements would be material to holders of the Capital
Securities because (i) all of the voting securities of the Trust are owned,
directly or indirectly, by the Company, a reporting company under the Exchange
Act, (ii) the Trust has no independent operations but exists for the sole
purpose of issuing securities representing undivided beneficial interests in
its assets and investing the proceeds thereof in Junior Subordinated
Debentures issued by the Company, and (iii) the obligations of the Trust under
the Capital Securities are guaranteed by the Company to the extent described
herein. See "Relationship Among the New Capital Securities, the New Junior
Subordinated Debentures and the New Guarantee."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company and the Trust hereby incorporate by reference in this
Prospectus the following documents: (i) the Company's Annual Report on Form
10-K for the year ended December 31, 1996, filed by the Company with the
Commission pursuant to Section 13 of the Exchange Act; (ii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, filed by
the Company with the Commission pursuant to Section 13 of the Exchange Act;
and (iii) the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997, filed by the Company with the Commission pursuant to Section 13
of the Exchange Act.
Each document filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the Exchange Offer made by
this Prospectus shall be deemed to be incorporated herein by reference and to
be a part hereof from the date of filing such document. Any statement
contained herein, or in a document all or a portion of which is incorporated
or deemed to be incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in or incorporated by
reference in this Prospectus. Holders of Old Capital Securities are urged to
read this Prospectus and such incorporated information and financial
statements in their entirety before tendering their Old Capital Securities in
the Exchange Offer.
THE TRUST
First American Capital Trust I (the "Trust") is a statutory business
trust created under the Delaware Business Trust Act, as amended (the "Trust
Act"), pursuant to a declaration of trust (as amended and restated, the
<PAGE>
"Declaration") and the filing of a certificate of trust with the Secretary of
State of the State of Delaware. The Company has acquired and directly owns
Common Securities in an aggregate Liquidation Amount equal to 3% of the total
capital of the Trust. The Trust used all the proceeds derived from the
issuance of the Old Capital Securities and the Common Securities to purchase
the Old Junior Subordinated Debentures. Following the consummation of the
Exchange Offering, the assets of the Trust will consist solely of the New
Junior Subordinated Debentures. The Trust exists for the exclusive purpose of
(i) issuing the Trust Securities representing undivided beneficial ownership
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in and holding the Junior Subordinated Debentures, and (iii)
engaging in only those other activities necessary or incidental thereto.
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Trust and payments made thereunder will be the sole revenue of the Trust. See
"The Trust."
THE COMPANY
The First American Financial Corporation ("First American" or the
"Company") was organized in 1894 as Orange County Title Company, succeeding to
the business of two title abstract companies founded in 1889 and operating in
Southern California. In 1924, the Company commenced issuing title insurance
policies. In 1986, the Company began a diversification program by acquiring
and developing financial service businesses closely related to the real estate
transfer and closing process. The Company is a California corporation with
executive offices located in Santa Ana, California.
The Company believes it is the leading provider of real estate-related
financial and information services to real property buyers and mortgage
lenders in the United States. The Company's products and services include
title insurance; real estate tax monitoring; mortgage credit reporting;
mortgage loan servicing systems; property information; flood zone
determination; home warranty services; appraisal services and mortgage
document preparation. The Company also provides trust and limited banking
services. The title insurance and real estate information segments operate
through networks of offices nationwide. The Company, through its
subsidiaries, transacts its title insurance business through a network of more
than 300 branch offices and over 4,000 independent agents. The Company also
offers its title services in Australia, the Bahamas Islands, Bermuda, Canada,
Guam, Mexico, Puerto Rico, the U.S. Virgin Islands and the United Kingdom.
Home warranty services are available in certain counties of Arizona,
California, Nevada, North Carolina, South Carolina, Texas and Washington. The
trust, banking and thrift businesses operate in Southern California only. See
"The First American Financial Corporation."
THE EXCHANGE OFFER
Up to $100,000,000 aggregate Liquidation Amount of New Capital Securities
are being offered in exchange for a like aggregate Liquidation Amount of Old
Capital Securities. Old Capital Securities may be tendered for exchange in
whole or in part in a Liquidation Amount of $100,000 (100 Old Capital
Securities) or any integral multiple of $1,000 in excess thereof, provided
that if any Old Capital Securities are tendered for exchange in part, the
untendered Liquidation Amount must be $100,000 or any integral multiple of
$1,000 in excess thereof. The Company and the Trust are making the Exchange
Offer in order to satisfy certain of their obligations under the Registration
Rights Agreement, dated as of April 22, 1997 (the "Registration Rights
Agreement"), among the Company, the Trust and the Initial Purchasers (as
defined herein) of the Old Capital Securities. See "The Exchange
Offer--Procedures for Tendering Old Capital Securities."
EXPIRATION DATE
The Expiration Date of the Exchange Offer will be 5:00 p.m., New York
City time, on ________________, 1997, unless the Exchange Offer is extended by
the Company and the Trust (such time on such date, the "Expiration Date").
<PAGE>
See "The Exchange Offer--Expiration Date; Extensions; Amendments."
CONDITIONS TO EXCHANGE OFFER
The Exchange Offer is subject to certain conditions, which may be waived
by the Company in its sole discretion. The Exchange Offer is not conditioned
upon any minimum Liquidation Amount of Old Capital Securities being tendered.
See "The Exchange Offer--Conditions to Exchange Offer." The Company reserves
the right in its sole discretion, subject to applicable law, at any time and
from time to time, (i) to delay the acceptance of the Old Capital Securities
for exchange, (ii) to terminate the Exchange Offer if certain specified
conditions have not been satisfied, (iii) to extend the Expiration Date of the
Exchange Offer and retain all Old Capital Securities tendered pursuant to the
Exchange Offer, subject, however, to the right of holders of Old Capital
Securities to withdraw their tendered Old Capital Securities, or (iv) to waive
any condition or otherwise amend the terms of the Exchange Offer in any
respect. See "The Exchange Offer--Extensions; Amendments."
WITHDRAWAL RIGHTS
Tenders of Old Capital Securities may be withdrawn at any time on or
prior to the Expiration Date by delivering a written notice of such withdrawal
to Wilmington Trust Company, as exchange agent (the "Exchange Agent"), in
conformity with certain procedures set forth under "The Exchange
Offer--Withdrawal Rights."
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
Tendering holders of Old Capital Securities must complete and sign a
Letter of Transmittal in accordance with the instructions contained therein
and forward the same by mail, facsimile or hand delivery, together with any
other required documents, to the Exchange Agent, either with the Old Capital
Securities to be tendered or in compliance with the specified procedures for
guaranteed delivery of Old Capital Securities. Certain brokers, dealers,
commercial banks, trust companies and other nominees may also effect tenders
by book-entry transfer, including an Agent's Message in lieu of the Letter of
Transmittal. Holders of Old Capital Securities registered in the name of a
broker, dealer, commercial bank, trust company or other nominee are urged to
contact such person promptly if they wish to tender Old Capital Securities
pursuant to the Exchange Offer. See "The Exchange Offer--Procedures for
Tendering Old Capital Securities." Letters of Transmittal and certificates
representing Old Capital Securities should not be sent to the Company or the
Trust. Such documents should be sent only to the Exchange Agent. Questions
regarding how to tender and requests for information should be directed to the
Exchange Agent. See "The Exchange Offer--Exchange Agent."
RESALES OF NEW CAPITAL SECURITIES
The Trust and the Company are making the Exchange Offer in reliance on
the position of the staff of the Division of Corporation Finance of the
Commission as set forth in certain interpretive letters addressed to third
parties in other transactions. However, neither the Company nor the Trust has
sought its own interpretive letter, and there can be no assurance that the
staff of the Division of Corporation Finance of the Commission would make a
similar determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance, and subject to the two
immediately following sentences, the Trust and the Company each believes that
New Capital Securities issued pursuant to this Exchange Offer in exchange for
Old Capital Securities may be offered for resale, resold and otherwise
transferred by a holder thereof (other than a holder who is a broker-dealer)
without further compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Capital Securities
are acquired in the ordinary course of such holder's business and that such
holder is not participating, and has no arrangement or understanding with any
person to participate, in a distribution (within the meaning of the Securities
<PAGE>
Act) of such New Capital Securities. However, any holder of Old Capital
Securities who is an Affiliate or who intends to participate in the Exchange
Offer for the purpose of distributing New Capital Securities, or any
broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available exemption under the Securities
Act, (i) will not be able to rely on the interpretations of the staff of the
Division of Corporation Finance of the Commission set forth in the above-
mentioned interpretive letters, (ii) will not be entitled to tender such Old
Capital Securities in the Exchange Offer and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, any Participating Broker-Dealer must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resales of such New Capital Securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
In addition, the Company may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Company (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) on behalf of whom such
holder holds the Old Capital Securities to be exchanged in the Exchange Offer.
Each Participating Broker-Dealer that receives New Capital Securities for its
own account pursuant to the Exchange Offer will be deemed to have acknowledged
by execution of the Letter of Transmittal or delivery of an Agent's Message
(as defined herein) that it acquired the Old Capital Securities for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivery of a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Company believes that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities that represent an unsold allotment from the original sale of Old
Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such New Capital Securities. Accordingly, this Prospectus may
be used by a Participating Broker-Dealer during the period referred to below
in connection with resales of New Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making
or other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Company and the Trust have agreed that this
Prospectus may be used by a Participating Broker-Dealer in connection with
resales of such New Capital Securities for a period of 180 days after the
Expiration Date (as defined herein) or, if earlier, when all such Capital
Securities have been disposed of by such Participating Broker-Dealer. See
"Plan of Distribution." Any person, including any Participating Broker-Dealer,
who is an Affiliate may not rely on such interpretive letters and must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. See "The Exchange
<PAGE>
Offer--Resales of New Capital Securities."
EXCHANGE AGENT
The Exchange Agent is Wilmington Trust Company. The addresses and
telephone and facsimile numbers of the Exchange Agent are set forth under "The
Exchange Offer--Exchange Agent" and in the Letter of Transmittal.
THE NEW SECURITIES
New Capital Securities Up to $100,000,000 aggregate Liquidation Amount
of 8.50% Capital Securities (Liquidation Amount
$1,000 per Capital Security) evidencing
preferred undivided beneficial interests in the
assets of the Trust. The holders thereof will
be entitled to a preference in certain
circumstances with respect to Distributions and
amounts payable on redemption, liquidation or
otherwise over the Common Securities. The New
Capital Securities will be issued and the Old
Capital Securities were issued under the
Declaration. The New Capital Securities and any
Old Capital Securities which remain outstanding
after consummation of the Exchange Offer will
constitute a single series of Capital Securities
under the Declaration and, accordingly, will
vote together as a single class for purposes of
determining whether holders of the requisite
percentage in outstanding liquidation amount
thereof have taken certain actions or exercised
certain rights under the Declaration. The terms
of the New Capital Securities are identical in
all material respects to the respective terms of
the Old Capital Securities, except that the New
Capital Securities have been registered under
the Securities Act and therefore will not be
subject to certain of the restrictions on
transfer applicable to the Old Capital
Securities and the New Capital Securities will
not provide for any increase in the rate at
which Distributions will accumulate thereon.
See "The Exchange Offer--Purpose and Effect of
the Exchange Offer," "Description of New
Securities" and "Description of Old Securities."
Distributions Holders of the New Capital Securities will be
entitled to receive cumulative cash
Distributions at an annual rate of 8.50% of the
Liquidation Amount of $1,000 per New Capital
Security, accumulating from the most recent
distribution date on the Old Capital Securities
surrendered in exchange for such New Capital
Securities or, if no distributions have been
paid on such Old Capital Securities, from April
22, 1997. Such Distributions will be payable
semi-annually in arrears on April 15 and October
15 of each year commencing on October 15, 1997.
Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day
periods. Holders of the Old Capital Securities
whose Old Capital Securities are accepted for
exchange will not receive accumulated
distributions on such Old Capital Securities for
any period from and after the last distribution
date on such Old Capital Securities prior to the
original issue date of the New Capital
<PAGE>
Securities or, if no such distributions have
been paid, will not receive any accumulated
distributions on such Old Capital Securities.
Such holders will be deemed to have waived the
right to receive any distributions on such Old
Capital Securities accumulated from and after
such distribution date or, if no such
distributions have been paid or duly provided
for, from and after April 22, 1997. The
Distribution rate and the Distribution and other
payment dates for the New Capital Securities
will correspond to the interest rate and
interest and other payment dates on the New
Junior Subordinated Debentures. See
"Description of New Securities--Description of
New Capital Securities."
New Junior
Subordinated Debentures The New Junior Subordinated Debentures will be
identical in all material respects to the Old
Junior Subordinated Debentures, except that the
New Junior Subordinated Debentures have been
registered under the Securities Act and
therefore will not be subject to certain of the
restrictions on transfer applicable to the Old
Junior Subordinated Debentures and the New
Junior Subordinated Debentures will not provide
for any increase in the rate at which interest
will accrue thereon. The Junior Subordinated
Debentures will mature on April 15, 2012. The
Junior Subordinated Debentures will rank
subordinate and junior in right of payment to
all Senior Indebtedness of the Company. In
addition, the Company's obligations under the
Junior Subordinated Debentures will be
structurally subordinated to all existing and
future liabilities and obligations of its
subsidiaries. See "Risk Factors--Ranking of
Subordinate Obligations Under the Guarantee and
the Junior Subordinated Debentures," "Risk
Factors--Status of Company as Holding Company"
and "Description of New Securities--Description
of New Junior Subordinated
Debentures--Subordination."
Right to Defer Interest Subject to certain exceptions, the Company has
the right to defer payment of interest on the
Junior Subordinated Debentures by extending the
interest payment period on the Junior
Subordinated Debentures, from time to time, for
up to 10 consecutive semi-annual periods (an
"Extension Period"). If interest payments on
the Junior Subordinated Debentures are so
deferred, Distributions on the New Capital
Securities will also be deferred for an
equivalent period and the Company may not, and
may not permit any subsidiary of the Company to,
(i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to,
the Company's capital stock, (ii) make any
payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt
securities that rank pari passu with or junior
to the Junior Subordinated Debentures or (iii)
make any guarantee payments with respect to any
<PAGE>
guarantee by the Company of the debt securities
of any subsidiary of the Company if such
guarantee ranks pari passu with or junior to the
Junior Subordinated Debentures (other than
(a) dividends or distributions in common stock
of the Company or warrants, options or other
rights where the Company's common stock is
issuable upon the exercise thereof, (b) payments
under the Guarantee, (c) any declaration of a
dividend in connection with the implementation
of a stockholders' rights plan, or the issuance
of stock under any such plan in the future, or
the redemption or repurchase of any such rights
pursuant thereto, (d) as a result of an exchange
or conversion (x) of any class or series of the
Company's capital stock (or any capital stock of
a subsidiary of the Company) for any class or
series of the Company's capital stock or (y) of
any class or series of the Company's
indebtedness for any class or series of the
Company's capital stock, (e) the purchase of
fractional interests in shares of the Company's
capital stock pursuant to the conversion or
exchange provisions of such capital stock or the
security being converted or exchanged, and
(f) purchases of common stock related to the
issuance of common stock or rights under any
employment agreement, benefit plan or similar
agreement for the directors, officers,
employees, and consultants of the Company and
its subsidiaries, related to the issuance of
common stock or rights under a dividend
reinvestment and stock purchase plan or related
to the issuance of common stock (or securities
convertible into or exchangeable for common
stock) as consideration in an acquisition
transaction that was entered into prior to the
commencement of such Extension Period). During
an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue
(and the amount of Distributions to which
holders of the New Capital Securities are
entitled will accumulate) at the rate of 8.50%
per annum, compounded semi-annually, to the
extent permitted by applicable law, and holders
of the New Capital Securities will be required
to recognize income (in the form of original
issue discount) for United States federal income
tax purposes prior to receipt of the cash
related to such income. See "Risk
Factors--Option to Defer Interest Payments; Tax
Consequences; Market Consequences," "Description
of New Securities-- Description of New Junior
Subordinated Debentures-- Option to Defer
Interest Payments" and "Certain United States
Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
New Guarantee The Company has, through the Guarantee, the
Declaration, the Junior Subordinated Debentures
and the Indenture, taken together, fully,
irrevocably and unconditionally guaranteed all
of the Trust's obligations under the New Capital
Securities. The New Guarantee is identical in
all material respects to the Old Guarantee,
except that the New Guarantee has been
<PAGE>
registered under the Securities Act. The
Guarantee guarantees the payment of
Distributions and payments on liquidation of the
Trust or redemption or maturity of the New
Capital Securities, but in each case only to the
extent of funds held by the Trust, as described
herein. If the Company does not make interest
payments on the Junior Subordinated Debentures
held by the Trust, the Trust will have
insufficient funds to pay Distributions on the
New Capital Securities. The Guarantee does not
cover payment of Distributions when the Trust
has insufficient funds to pay such
Distributions. See "Description of New
Securities--Description of New Guarantee" and
"Relationship Among the New Capital Securities,
the New Junior Subordinated Debentures and the
New Guarantee." The obligations of the Company
under the Guarantee are subordinate and junior
in right of payment to all Senior Indebtedness
of the Company and will be structurally
subordinated to all liabilities and obligations
of the Company's subsidiaries. See "Risk
Factors--Ranking of Subordinated Obligations
Under the New Guarantee and the New Junior
Subordinated Debentures" and "Description of New
Securities--Description of New Guarantee."
Redemption The New Capital Securities are subject to
mandatory redemption upon the repayment of
Junior Subordinated Debentures at maturity or
their earlier redemption. The Junior
Subordinated Debentures are redeemable prior to
maturity at the option of the Company at any
time, in whole but not in part, upon the
occurrence of a Special Event (as defined
herein) at a redemption price equal to the
principal amount of, plus accrued and unpaid
interest on, the Junior Subordinated Debentures.
See "Description of New Securities--Description
of New Capital Securities--Redemption" and
"Description of New Securities--Description of
New Junior Subordinated Debentures--Special
Event Redemption."
Liquidation of the Trust The Company has the right at any time to
terminate the Trust and cause the Junior
Subordinated Debentures to be distributed to the
holders of the Capital Securities and the Common
Securities in liquidation of the Trust. In the
event of the termination of the Trust, after
satisfaction of the claims of creditors of the
Trust, if any, as provided by applicable law,
the holders of the Capital Securities will be
entitled to receive a Liquidation Amount of
$1,000 per Capital Security plus accumulated and
unpaid Distributions thereon to the date of
payment, which may be in the form of a
distribution of such amount in Junior
Subordinated Debentures. See "Description of
New Securities--Description of New Capital
Securities-- Liquidation Distribution Upon
Dissolution."
Transfer The New Capital Securities will be issued, and
may be transferred, only in blocks having an
<PAGE>
aggregate Liquidation Amount of not less than
$100,000 (100 New Capital Securities). Any
transfer, sale or other disposition of New
Capital Securities in a block having an
aggregate Liquidation Amount of less than
$100,000, or resulting in a holder's holding New
Capital Securities in a block having a
Liquidation Amount of less than $100,000, shall
be deemed to be void and of no legal effect
whatsoever. See "Description of New
Securities--Description of New Capital
Securities-- Restrictions on Transfer."
Use of Proceeds Neither the Company nor the Trust will receive
any proceeds from the issuance of the New
Securities offered hereby. See "Use of
Proceeds."
Ratings It is expected that the New Capital Securities
will be rated BBB- by Standard & Poor's Ratings
Services ("S&P") and baa3 by Moody's Investors
Service, Inc. ("Moody's"). A security rating is
not a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal or suspension at any time by the
assigning rating organization.
ERISA Considerations Holders of Old Capital Securities must carefully
consider the restrictions on purchase set forth
under "Benefit Plan Considerations" before
tendering such Old Capital Securities for
exchange in the Exchange Offer.
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The summary below should be read in connection with the financial
information included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 and the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30,1997, each of which is incorporated by reference
herein.
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
1992 1993 1994 1995 1996
INCOME STATEMENT DATA: (Dollars in thousands, except per share data)
REVENUES
<S> <C> <C> <C> <C> <C>
Operating revenues $1,102,385 $1,379,781 $1,356,946 $1,227,185 $1,571,168
Investment and other
income 13,082 18,645 19,447 23,031 26,398
1,115,467 1,398,426 1,376,393 1,250,216 1,597,566
Expenses:
Salaries and other
personnel costs 339,229 397,902 423,328 431,984 531,250
Premiums retained by
agents 378,547 504,375 533,598 413,444 516,593
Other operating
expenses 188,361 222,934 232,532 260,611 327,744
Provision for title
losses and other
claims 98,214 125,588 110,230 90,387 86,487
Depreciation and
amortization 15,114 16,333 19,796 18,002 22,207
Interest 6,038 4,419 6,267 6,242 4,796
Minority interest 4,893 5,267 2,944 2,132 2,624
1,030,396 1,276,818 1,328,695 1,222,802 1,491,701
Income before premium
and income taxes 85,071 121,608 47,698 27,414 105,865
Premium taxes 13,613 17,617 15,453 13,627 16,676
Income before income 71,458 103,991 32,245 13,787 89,189
taxes
Income taxes 28,200 41,900 13,300 6,200 35,600
Income before
cumulative effect of
a change in accounting
for income taxes 43,258 62,091 18,945 7,587 53,589
Cumulative effect of a
change in accounting
for income taxes -- 4,200 -- -- --
Net income $ 43,258 $ 66,291 $ 18,945 $ 7,587 $ 53,589
PER SHARE DATA:<F1>
Income before
cumulative effect of a
change in accounting
for income taxes $ 4.55 $ 5.47 $ 1.66 $ 0.67 $ 4.68
Cumulative effect of a
change in accounting
for income taxes -- 0.37 -- -- --
Net income per share $ 4.55 $ 5.84 $ 1.66 $ 0.67 $ 4.68
<PAGE>
Six Months Ended
June 30,
1996 1997
INCOME STATEMENT DATA:
REVENUES
<S> <C> <C>
Operating revenues $745,757 $819,872
Investment and other
income 14,993 13,379
760,750 833,251
Expenses:
Salaries and other
personnel costs 252,982 298,599
Premiums retained by
agents 238,090 251,155
Other operating expenses 157,475 180,668
Provision for title losses
and other claims 42,463 41,049
Depreciation and
amortization 10,007 13,122
Interest 2,510 3,660
Minority interest 1,484 1,294
705,011 789,547
Income before premium and
income taxes 55,739 43,704
Premium taxes 7,930 8,722
Income before income taxes 47,809 34,982
Income taxes 19,800 13,600
Income before cumulative
effect of a change in
accounting for income taxes 28,009 21,382
Cumulative effect of a change
in accounting for income
taxes -- --
Net income $ 28,009 $ 21,382
PER SHARE DATA:<F1>
Income before cumulative
effect of a change in
accounting for income taxes $ 2.45 $ 1.85
Cumulative effect of a change
in accounting for income
taxes -- --
Net income per share $ 2.45 $ 1.85
<PAGE>
December 31,
1992 1993 1994 1995 1996
BALANCE SHEET DATA: (Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Cash and invested assets $ 308,083 $ 359,127 $ 368,999 $ 340,089 $ 364,620
Total assets $ 691,279 $ 786,448 $ 828,649 $ 873,778 $ 979,794
Notes and contracts $ 81,981 $ 85,022 $ 89,600 $ 77,206 $ 71,257
payable
Total stockholders' equity $ 216,842 $ 283,718 $ 292,110 $ 302,767 $ 352,465
OTHER DATA:
Loss ratio 8.9% 9.1% 8.1% 7.4% 5.5%
Ratio of debt to total
capitalization<F2> 25.3% 21.5% 22.1% 19.1% 16.0%
Ratio of earnings
to fixed charges 12.8 24.5 6.1 3.2 19.6
Cash dividends per share $ 0.41 $ 0.51 $ 0.60 $ 0.60 $ 0.69
June 30,
1996 1997
BALANCE SHEET DATA:
<S> <C> <C>
Cash and invested assets $ 349,827 $376,345
Total assets $ 930,596 $1,095,445
Notes and contracts $ 72,402 $39,846
payable
Total stockholders' equity $325,269 $370,594
OTHER DATA:
Loss ratio 5.7% 5.1%
Ratio of debt to total
capitalization<F2> 17.2% 7.8%
Ratio of earnings
to fixed charges 20.0 10.6
Cash dividends per share $ 0.33 $ 0.36
<FN>
<F1> Based upon the weighted average number of common shares outstanding.
<F2> Capitalization includes minority interests and junior subordinated deferrable interest debentures.
</TABLE>
<PAGE>
RISK FACTORS
Prospective purchasers of the New Capital Securities should carefully
review the information contained elsewhere in and incorporated by reference in
this Prospectus and should particularly consider the following matters.
Because holders of New Capital Securities may receive Junior Subordinated
Debentures on termination of the Trust, prospective purchasers of New Capital
Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See
"Description of New Securities--Description of New Capital
Securities--Liquidation Distribution Upon Dissolution" and "Description of New
Securities--Description of New Junior Subordinated Debentures." To the extent
any of the information contained or incorporated by reference in this
Prospectus constitutes a "forward-looking statement" as defined in Section
21E(i)(1) of the Exchange Act, the risk factors set forth below are cautionary
statements identifying important factors that could cause actual results to
differ materially from those in the forward-looking statement.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE JUNIOR
SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee and under the Junior
Subordinated Debentures are unsecured and rank subordinate and junior in right
of payment to all Senior Indebtedness of the Company. At June 30, 1997, the
Senior Indebtedness of the Company aggregated approximately $13.2 million.
Neither the Indenture, the Guarantee nor the Declaration places any limitation
on the amount of secured or unsecured Senior Indebtedness that may be incurred
by the Company. See "Description of New Securities--Description of New
Guarantee--Status of the New Guarantee" and "Description of New Securities--
Description of New Junior Subordinated Debentures--Subordination."
STATUS OF COMPANY AS HOLDING COMPANY
As a holding company, the ability of the Company to make payments of
interest and principal on the Junior Subordinated Debentures will be dependent
primarily upon the receipt of dividends and other distributions from its
subsidiaries. First American Title Insurance Company ("FATICO"), which is the
Company's principal subsidiary, is subject to regulatory restrictions on its
ability to pay dividends or make other payments to the Company. In 1997, the
maximum amount of dividends, loans and advances available to the Company from
FATICO is $49.7 million. In addition, the right of the Company to participate
in any distribution of assets of any subsidiary, including FATICO, upon such
subsidiary's liquidation or reorganization or otherwise, will be subject to
the prior claims of creditors of that subsidiary, except to the extent that
any claims of the Company as a creditor of such subsidiary may be recognized
as such. Accordingly, the New Capital Securities will effectively be
subordinated to all existing and future liabilities and obligations of the
Company's subsidiaries, and holders of the New Capital Securities should look
only to the assets of the Company for payments on the New Capital Securities.
As of June 30, 1997, the Company's subsidiaries had liabilities and
obligations of approximately $609.8 million. See "The First American Financial
Corporation."
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF NEW CAPITAL SECURITIES
If a Trust Enforcement Event (as defined herein) occurs and is
continuing, then the holders of Capital Securities would rely on the
enforcement by the Property Trustee (as defined herein) of its rights as a
holder of the Junior Subordinated Debentures against the Company. The holders
of a majority in aggregate Liquidation Amount of the Capital Securities will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or to direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee to exercise
the remedies available to it as a holder of the Junior Subordinated
<PAGE>
Debentures. If the Property Trustee fails to enforce its rights with respect
to the Junior Subordinated Debentures held by the Trust, any record holder of
New Capital Securities may institute legal proceedings directly against the
Company to enforce the Property Trustee's rights under such Junior
Subordinated Debentures without first instituting any legal proceedings
against the Property Trustee or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust would lack funds for the
payment of Distributions or amounts payable on redemption of the New Capital
Securities or otherwise, and, in such event, holders of the New Capital
Securities would not be able to rely upon the Guarantee for payment of such
amounts. However, in the event the Company failed to pay interest on or
principal of the Junior Subordinated Debentures on any payment date on which
such payment is due and payable, then a holder of New Capital Securities may
(after lapse of any applicable cure period) directly institute a proceeding
against the Company under the Indenture for enforcement of payment to such
holder of the interest on or principal of Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the New
Capital Securities of such holder (a "Direct Action"). In connection with
such Direct Action, the Company will have a right of set-off under the
Indenture to the extent of any payment made by the Company to such holder of
New Capital Securities in such Direct Action. Except as set forth herein,
holders of New Capital Securities will not be able to exercise directly any
other remedy available to the holders of Junior Subordinated Debentures or
assert directly any other rights in respect of the Junior Subordinated
Debentures. See "Description of New Securities--Description of New Capital
Securities-- Trust Enforcement Events," "Description of New Securities--
Description of New Junior Subordinated Debentures--Indenture Events of
Default" and "--Enforcement of Certain Rights by Holders of Capital
Securities" and "Description of New Securities--Description of New Guarantee."
The Declaration provides that each holder of New Capital Securities by
acceptance thereof agrees to the provisions of the Guarantee and the
Indenture.
OPTION TO DEFER INTEREST PAYMENTS; TAX CONSEQUENCES; MARKET CONSEQUENCES
So long as no event of default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture to defer the payment
of interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 10 consecutive semi-annual periods, provided
that no Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of any such deferral, semi-annual
Distributions on the New Capital Securities by the Trust will be deferred
during any such Extension Period but would continue to accumulate at the rate
of 8.50% per annum, compounded (to the extent permitted by applicable law)
semi-annually during any such Extension Period. During any such Extension
Period, the Company may not, and may not permit any subsidiary of the Company
to, (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock, (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company that
rank pari passu with or junior to the Junior Subordinated Debentures or (iii)
make any guarantee payments with respect to any guarantee by the Company of
the debt securities of any subsidiary of the Company if such guarantee ranks
pari passu with or junior to the Junior Subordinated Debentures (other than
(a) dividends or distributions in common stock of the Company and warrants,
options or other rights where the Company's common stock is issuable upon the
exercise thereof, (b) payments under the Guarantee, (c) any declaration of a
dividend in connection with the implementation of a stockholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto, (d) as a result of an
exchange or conversion (x) of any class or series of the Company's capital
stock (or any capital stock of a subsidiary of the Company) for any class or
series of the Company's capital stock or (y) of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
<PAGE>
(e) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock
or the security being converted or exchanged, and (f) purchases of common
stock related to the issuance of common stock or rights under any employment
agreement, benefit plan or similar agreement for the directors, officers,
employees and consultants of the Company and its subsidiaries, related to the
issuance of common stock or rights under a dividend reinvestment and stock
purchase plan or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of
such Extension Period). Prior to the termination of any such Extension
Period, the Company may further extend the Extension Period, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due on
any Interest Payment Date, the Company may elect to begin a new Extension
Period subject to the above requirements. See "Description of New Securities-
- -Description of New Capital Securities--Distributions" and "Description of New
Securities--Description of New Junior Subordinated Debentures--Option to Defer
Interest Payments."
Should the Company defer payment of interest on the Junior Subordinated
Debentures, a holder of New Capital Securities will be required to recognize
income (in the form of original issue discount) for United States federal
income tax purposes in respect of its pro rata share of the Junior
Subordinated Debentures held by the Trust. As a result, a holder of New
Capital Securities will include such interest income in gross income for
United States federal income tax purposes in advance of the receipt of cash
attributable to such interest income, and will not receive the cash related to
such income from the Trust if the holder disposes of the New Capital
Securities prior to the record date for the payment of Distributions with
respect to such Extension Period. See "Certain United States Federal Income
Tax Consequences--Interest Income and Original Issue Discount" and "--Sales of
New Capital Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the New Capital Securities is likely
to be adversely affected. A holder that disposes of its New Capital
Securities during an Extension Period, therefore, might not receive the same
return on its investment as a holder that continues to hold its New Capital
Securities. In addition, as a result of the Company's right to defer interest
payments, the market price of the New Capital Securities (which represent
undivided beneficial interests in the Junior Subordinated Debentures) may be
more volatile than the market prices of other similar securities where the
issuer does not have such right to defer interest payments.
SPECIAL EVENT REDEMPTION
Upon the occurrence of a Special Event (as defined below), the Company
has the right, if certain conditions are met, to redeem the Junior
Subordinated Debentures in whole (but not in part) within 90 days following
the occurrence of such Special Event and thereby causing a mandatory
redemption of the New Capital Securities. See "Description of New Securities-
- -Description of New Junior Subordinated Debentures--Special Event Redemption".
A "Special Event" means a Tax Event or an Investment Company Event. A
"Tax Event" means the receipt by the Company of an opinion of counsel
experienced in such matters to the effect that as a result of any amendment
to, or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying
such laws or regulations, which amendment or change is effective or which
proposed change, pronouncement or decision is announced on or after April 22,
<PAGE>
1997, there is more than an insubstantial risk that (i) the Trust is, or will
be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the Junior
Subordinated Debentures, (ii) interest payable by the Company on the Junior
Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by the Company, in whole or in part, for United States
federal income tax purposes or (iii) the Trust is, or will be within 90 days
of the date of the opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Investment Company Event" means the receipt by the Trust of an opinion
of counsel, rendered by a law firm having a recognized national securities
practice, to the effect that, as a result of the occurrence of a change in law
or regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority ( a "Change in 1940 Act Law"), the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which Change
in 1940 Act Law becomes effective on or after April 22, 1997.
LIQUIDATION DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES
Upon liquidation of the Trust, the Junior Subordinated Debentures may be
distributed to the holders of the Capital Securities and Common Securities in
exchange therefor. Under current United States federal income tax law and
interpretations thereof, a distribution by the Trust of the Junior
Subordinated Debentures pursuant to a liquidation of the Trust should not be a
taxable event to the Trust or to holders of the New Capital Securities, and
should result in a holder of the New Capital Securities receiving directly
such holder's pro rata share of the Junior Subordinated Debentures (previously
held indirectly through the Trust). If, however, the liquidation of the Trust
were to occur because the Trust is subject to United States federal income tax
with respect to income accrued or received on the Junior Subordinated
Debentures as a result of the occurrence of a Special Event or otherwise, the
distribution of Junior Subordinated Debentures to holders of the New Capital
Securities by the Trust would be a taxable event to the Trust and each holder,
and U.S. Holders (as defined in "Certain United States Federal Tax
Consequences") of the New Capital Securities would recognize gain or loss as
if they had exchanged their New Capital Securities for the Junior Subordinated
Debentures they received upon the liquidation of the Trust. See "Certain
United States Federal Income Tax Consequences--Distribution of Junior
Subordinated Debentures or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for New Capital
Securities or Junior Subordinated Debentures that may be distributed in
exchange for New Capital Securities if a liquidation of the Trust occurs.
Accordingly, the New Capital Securities or the Junior Subordinated Debentures
that a holder of New Capital Securities may receive on liquidation of the
Trust, may trade at a discount to the price that the investor paid to purchase
the New Capital Securities offered hereby.
LIMITED VOTING RIGHTS
Holders of New Capital Securities generally will have limited voting
rights relating only to the modification of the New Capital Securities and
certain other matters described herein. Holders of New Capital Securities
will not be entitled to vote to appoint, remove or replace any of the Trustees
(as defined below), which voting rights are vested exclusively in the holder
of the Common Securities. The Trustees and the Company may amend the
Declaration without the consent of holders of New Capital Securities to ensure
that the Trust, (i) will be classified as a grantor trust for United States
federal income tax purposes or (ii) will not be required to register as an
"investment company" under the Investment Company Act unless, in either case,
such action materially and adversely affects the interests of such holders.
See "Description of New Securities--Description of New Capital
Securities--Voting Rights; Amendment of the Declaration."
<PAGE>
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the New Capital Securities the
following payments or distributions (without duplication), to the extent not
paid by or made by or on behalf of the Trust: (i) any accumulated and unpaid
distributions required to be paid on the New Capital Securities, to the extent
that the Trust has funds on hand available therefor at such time, (ii) the
redemption price, including all accrued and unpaid distributions to the date
of the redemption, with respect to any New Capital Securities called for
redemption by the Trust, to the extent that the Trust has funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Trust (unless the Junior
Subordinated Debentures are distributed to holders of the New Capital
Securities in exchange therefor), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment and (b) the amount of assets of the Trust remaining available for
distribution to holders of the New Capital Securities after satisfaction of
the liabilities to creditors of the Trust as required by applicable law.
Wilmington Trust Company will act as the guarantee trustee (the "Guarantee
Trustee") and will hold the Guarantee for the benefit of the holders of the
New Capital Securities. Wilmington Trust Company will also act as Debenture
Trustee for the Junior Subordinated Debentures and as Property Trustee and
Delaware Trustee (as defined below) under the Declaration.
The Guarantee is subordinate to all Senior Indebtedness. See
"Description of New Securities--Description of the New Guarantee--Status of
New Guarantee."
The holders of not less than a majority in aggregate Liquidation Amount
of the New Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of the Guarantee or to direct the exercise of any trust
power conferred upon the Guarantee Trustee under the Guarantee. Any holder of
the New Capital Securities may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding directly against the Trust, the Guarantee
Trustee or any other person or entity. If the Company were to default on its
obligation to pay amounts payable under the Junior Subordinated Debentures,
the Trust would lack funds for the payment of distributions or amounts payable
on redemption of the New Capital Securities or otherwise, and, in such event,
holders of the New Capital Securities would not be able to rely upon the
Guarantee for payment of such amounts. Instead, if an event of default under
the Indenture shall have occurred and be continuing and such event is
attributable to the failure of the Company to pay interest or premium, if any,
on or principal of the Junior Subordinated Debentures on the applicable
payment date, then a holder of New Capital Securities may institute a Direct
Action against the Company pursuant to the terms of the Indenture for
enforcement of payment to such holder of the principal of or interest or
premium, if any, on Junior Subordinated Debentures having a principal amount
equal to the aggregate Liquidation Amount of the New Capital Securities of
such holder.
CONSEQUENCES OF A FAILURE TO EXCHANGE OLD CAPITAL SECURITIES
The Old Capital Securities have not been registered under the Securities
Act or any state securities laws and therefore may not be offered, sold or
otherwise transferred except in compliance with the registration requirements
of the Securities Act and any other applicable securities laws, or pursuant to
an exemption therefrom or in a transaction not subject thereto, and in each
case in compliance with certain other conditions and restrictions. Old
Capital Securities that remain outstanding after consummation of the Exchange
Offer will continue to bear a legend reflecting such restrictions on transfer.
In addition, upon consummation of the Exchange Offer, holders of Old Capital
Securities that remain outstanding will not be entitled to any rights to have
such Old Capital Securities registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to certain
<PAGE>
limited exceptions). The Company and the Trust do not intend to register
under the Securities Act any Old Capital Securities that remain outstanding
after consummation of the Exchange Offer (subject to such limited exceptions,
if applicable).
To the extent that Old Capital Securities are tendered and accepted in
the Exchange Offer, a holder's ability to sell untendered Old Capital
Securities could be adversely affected. To the extent that Old Capital
Securities are tendered and accepted in connection with the Exchange Offer,
any trading market in the Old Capital Securities that remain outstanding after
the Exchange Offer could be adversely affected.
The Old Capital Securities provide, among other things, that, if the
Exchange Offer is not consummated by December 2, 1997 (a "Registration
Default"), the Company will pay additional interest ("Additional Interest") in
respect of the Old Junior Subordinated Debentures and corresponding additional
Distributions ("Additional Distributions") will become payable on the Old
Capital Securities, with respect to the first 30-day period immediately
following the occurrence of such Registration Default, in an amount equal to
0.25% per week per $1,000 Liquidation Amount of Old Capital Securities. The
amount of Additional Interest (and corresponding Additional Distributions)
will increase by an additional 0.25% per week per $1,000 Liquidation Amount of
Old Capital Securities with respect to each subsequent 30-day period until
such Registration Default has been cured, up to a maximum amount of Additional
Interest (and corresponding Additional Distributions) of 0.50% per week per
$1,000 Liquidation Amount of Old Capital Securities. Upon consummation of the
Exchange Offer, holders of Old Capital Securities will not be entitled to any
Additional Distributions or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See
"Description of Old Securities." The New Capital Securities will not be
entitled to any such increase in the Distribution rate thereon.
ABSENCE OF PUBLIC MARKET
The Old Capital Securities have not been registered under the Securities
Act and will be subject to restrictions on transferability to the extent that
they are not exchanged for the New Capital Securities. Although the New
Capital Securities will generally be permitted to be resold or otherwise
transferred by the holders (so long as the holders are not Affiliates) without
compliance with the registration requirements under the Securities Act, they
will constitute a new issue of securities with no established trading market.
The Old Capital Securities and the New Capital Securities may be transferred
by the holders thereof only in blocks having a Liquidation Amount of not less
than $100,000 (100 Old Capital Securities or New Capital Securities, as the
case may be). See "Description of New Securities-- Description of New Capital
Securities--Restrictions on Transfer" and "Description of Old Securities."
The Company and the Trust were advised by Chase Securities Inc. and UBS
Securities LLC (collectively, the "Initial Purchasers") in connection with the
offering of the Old Capital Securities that the Initial Purchasers intended to
make a market in the Old Capital Securities. However, the Initial Purchasers
are not obligated to make a market in the Old Capital Securities or the New
Capital Securities, and any market-making activity with respect to the Old
Capital Securities or the New Capital Securities may be discontinued at any
time without notice. In addition, such market-making activity will be subject
to the limits imposed by the Securities Act and the Exchange Act and may be
limited during the Exchange Offer. Accordingly, no assurance can be given
that an active public or other market will develop for the Old Capital
Securities or the New Capital Securities or as to the liquidity of or the
trading market for the Old Capital Securities or the New Capital Securities.
If an active public market does not develop, the market price and liquidity of
the Old Capital Securities or the New Capital Securities may be adversely
affected.
If a public trading market develops for the New Capital Securities,
future trading prices of such securities will depend on many factors,
including, among other things, prevailing interest rates, results of
<PAGE>
operations and the market for similar securities. Depending on prevailing
interest rates, the market for similar securities and other factors, including
the financial condition of the Company, the New Capital Securities may trade
at a discount.
Notwithstanding the registration of the New Capital Securities in the
Exchange Offer, holders who are Affiliates may publicly offer for sale or
resell the New Capital Securities only in compliance with provisions of Rule
144 under the Securities Act.
Each Participating Broker-Dealer that receives New Capital Securities for
its own account must acknowledge that it will deliver a prospectus in
connection with any resale of such New Capital Securities. See "Plan of
Distribution."
EXCHANGE OFFER PROCEDURES
Delivery of the New Capital Securities in exchange for Old Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Old Capital Securities, a properly
completed and duly executed Letter of Transmittal or Agent's Message in lieu
thereof and all other required documents. Therefore, holders of the Old
Capital Securities desiring to tender such Old Capital Securities in exchange
for New Capital Securities should allow sufficient time to ensure timely
delivery. None of the Company, the Trust or the Exchange Agent is under any
duty to give notification of defects or irregularities with respect to the
tenders of Old Capital Securities for exchange.
USE OF PROCEEDS
Neither the Company nor the Trust will receive any proceeds from the
issuance of the New Capital Securities. In consideration for delivering the
New Capital Securities in exchange for Old Capital Securities as described in
this Prospectus, the Company will receive Old Capital Securities in like
Liquidation Amount. The Old Capital Securities surrendered in exchange for
the New Capital Securities and the Old Junior Subordinated Debentures
surrendered in exchange for a like principal amount of Junior Subordinated
Debentures will be retired and cancelled.
The net proceeds to the Trust from the offering of the Old Capital
Securities was approximately $100,000,000. All of the proceeds from the sale
of Old Capital Securities were invested by the Trust in the Old Junior
Subordinated Debentures. The Company has used approximately $92.7 million of
the proceeds from the sale of the Old Junior Subordinated Debentures as
follows: (i) approximately $27.7 million was used to repay all amounts
outstanding under the variable rate indebtedness portion of the Credit
Facility (as defined herein); (ii) approximately $25.0 million was used in
connection with acquisitions by the Company, including the acquisition of
Strategic Mortgage Services, Inc. (and its subsidiaries) (see "The First
American Financial Corporation--Real Estate Information Services"); and (iii)
approximately $40.0 million was used to repay intercompany debt with the
Company's subsidiary, First American Title Insurance Company. The remaining
$7.3 million of proceeds is expected to be used by the Company for general
corporate purposes, which may include the repayment of amounts outstanding
under the fixed rate indebtedness portion of the Credit Facility, the
repayment of sale/leaseback obligations, the financing of the construction of
a new corporate facility, investments in or extensions of credit to its
subsidiaries and the financing of further acquisitions. The Company's
borrowings under its bank credit agreement (the "Credit Facility") consist of
$6,560,000 of fixed rate indebtedness bearing an interest rate of 9.38% per
annum and maturing in April 1999; and, immediately prior to repayment,
$27,690,000 of variable rate indebtedness bearing an interest rate at the
higher of The Chase Manhattan Bank's prime lending rate or the federal funds
rate plus 50 basis points.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
<PAGE>
The Company's consolidated ratio of earnings to fixed charges for each of
the periods indicated are set forth below:
<TABLE>
<CAPTION> Six Months
Ended June 30, Year Ended December 31
1997 1996 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to
Fixed Charges . . . . . . . . 10.6 20.0 19.6 3.2 6.1 24.5 12.8
</TABLE>
For purposes of computing the ratio of earnings to fixed charges,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges represent interest expense.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Trust will be
included in the consolidated financial statements of the Company. The Capital
Securities will be presented in the consolidated balance sheet of the Company
as a separate line item directly above stockholders' equity under the caption
"Guaranteed Preferred Beneficial Interests in Company's Junior Subordinated
Deferrable Interest Debentures" and appropriate disclosures about the Capital
Securities, the Junior Subordinated Debentures and the Guarantee will be
included in the notes to the consolidated financial statements. For financial
reporting purposes, the Company will record Distributions payable on the
Capital Securities as an expense in the consolidated statements of income.
CAPITALIZATION
The issuance of the New Capital Securities in the Exchange Offer will
have no effect on the capitalization of the Company as of June 30, 1997.
<PAGE>
THE TRUST
The Trust is a statutory business trust created under the Trust Act,
pursuant to a declaration of trust and the filing of a certificate of trust
with the Secretary of State of the State of Delaware. The Company has
acquired and directly owns Common Securities in an aggregate Liquidation
Amount equal to 3% of the total capital of the Trust. The Trust used all of
the proceeds derived from the issuance of the Old Capital Securities and the
Common Securities to purchase the Old Junior Subordinated Debentures.
Following the consummation of the Exchange Offer, the assets of the Trust will
consist solely of the New Junior Subordinated Debentures. The Trust exists
for the exclusive purposes of (i) issuing the Trust Securities representing
undivided beneficial ownership interests in the assets of the Trust, (ii)
investing the gross proceeds of the Trust Securities in and holding the Junior
Subordinated Debentures, and (iii) engaging in only those other activities
necessary or incidental thereto.
Pursuant to the Declaration, there will initially be four Trustees (the
"Trustees") for the Trust. Two of the Trustees (the "Regular Trustees") will
be individuals who are employees or officers of or who are affiliated with the
Company. The third trustee will be a financial institution that is
unaffiliated with the Company (the "Property Trustee"). The fourth trustee
will be an entity that maintains its principal place of business in the State
of Delaware (the "Delaware Trustee"). Initially, Wilmington Trust Company
will act as Property Trustee and as Delaware Trustee until, in each case,
removed or replaced by the holder of the Common Securities.
The Property Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities, and the
Property Trustee will have the power to exercise all rights, powers and
privileges with respect to the Junior Subordinated Debentures under the
Indenture (as defined herein) as the holder of the Junior Subordinated
Debentures. In addition, the Property Trustee will maintain exclusive control
of a segregated non-interest bearing bank account (the "Property Account") to
hold all payments made in respect of the Junior Subordinated Debentures for
the benefit of the holders of the Trust Securities. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Capital
Securities. The Company, as the holder of all the Common Securities, will
have the right to appoint, remove or replace any of the Trustees and to
increase or decrease the number of Trustees, provided that the number of
Trustees shall be at least three; provided further that at least one Trustee
shall be a Delaware Trustee, at least one Trustee shall be the Property
Trustee and at least one Trustee shall be a Regular Trustee.
The Company will pay all fees and expenses related to the organization
and operations of the Trust (including any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States or any other domestic taxing authority upon the Trust)
and the offering of the New Capital Securities and be responsible for all
debts and obligations of the Trust (other than with respect to the Trust
Securities). See "The Exchange Offer--Fees and Expenses."
The Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Capital Securities (including the New Capital
Securities), except that upon the occurrence and during the continuation of an
Event of Default under the Indenture arising as a result of any failure by the
Company to pay any amounts in respect of the Junior Subordinated Debentures
when due, the rights of the holders of the Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Capital
Securities. See "Description of New Securities--Description of New Capital
Securities--Subordination of Common Securities."
For so long as the Capital Securities remain outstanding, the Company
will covenant (i) to maintain 100% ownership of the Common Securities, (ii) to
cause the Trust to remain a statutory business trust and not to voluntarily
<PAGE>
dissolve, wind-up, liquidate or be terminated, except as permitted by the
Declaration, (iii) to use its commercially reasonable efforts to ensure that
the Trust will not be an "investment company" for purposes of the Investment
Company Act, and (iv) to take no action that would be reasonably likely to
cause the Trust to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
The rights of the holders of the New Capital Securities, including
economic rights, rights to information and voting rights, are set forth in the
Declaration and the Trust Act. See "Description of New Securities--Description
of New Capital Securities."
The location of the principal executive office of the Trust is c/o The
First American Financial Corporation, 114 East Fifth Street, Santa Ana,
California 92701-4642, and its telephone number is (714) 558-3211.
THE FIRST AMERICAN FINANCIAL CORPORATION
OVERVIEW
The Company, through its subsidiaries, is engaged in the business of
providing real estate-related financial and information services, including
title insurance, real estate tax monitoring, mortgage credit reporting, flood
zone determination, mortgage loan servicing systems, property information,
home warranty services, appraisal services and mortgage document preparation
to real property buyers and mortgage lenders. The Company also provides trust
and limited banking services.
The location of the principal executive office of the Company is 114 East
Fifth Street, Santa Ana, California 92701-4642, and its telephone number is
(714) 558-3211.
Resales and refinancings of residential properties constitute the major
source of the Company's revenues. Real estate activity is cyclical in nature
and is affected greatly by the cost and availability of long term mortgage
funds. Real estate activity and, in turn, the Company's revenue base, can be
adversely affected during periods of high interest rates and/or limited money
supply. However, this adverse effect is mitigated in part by the continuing
diversification of the Company's operations into areas outside of its
traditional title insurance business. Through growth and acquisitions, the
Company believes it has become the United States' largest provider of real
estate-related financial and information services. The Company has assembled
an array of companies which, together, provide comprehensive services to the
mortgage industry, commercial and residential real estate developers, home
buyers and other customers.
In addition to expanding its title insurance business, during the 1980's,
the Company began expanding into other real estate-related financial and
information services. The Company intends to continue its present acquisition
policy in order to strengthen its position in existing markets as well as
expanding into new markets both nationally and internationally. See "Recent
Developments" below.
BUSINESS SEGMENTS
TITLE INSURANCE
Title insurance policies are insured statements of the condition of title
to real property, showing priority of ownership as indicated by public
records, as well as outstanding liens, encumbrances and other matters of
record, and certain other matters not of public record. Policies are issued
based on a title report prepared after a search of public records, maps, and
documents and are typically requested when a title is transferred.
Unlike other types of insurance policies, title insurance policies do not
<PAGE>
insure against future risk. Before issuing title policies, title insurers
seek to limit their risk of loss by accurately performing title searches and
examinations. The major expenses of a title company relate to such searches
and examinations, the preparation of preliminary reports or commitments and
the maintenance of title plants, and not from claim losses as in the case of
property and casualty insurers. See "--Recent Developments."
The Company, through FATICO and its other subsidiaries, transacts its
title insurance business through a network of more than 300 branch offices and
more than 4,000 independent agents. In 1996, the Company's title insurance
operations generated $1.29 billion in revenues.
Based on industry statistics showing gross title fees in the major areas
in which the Company operates, in 1995 the Company had the largest or second
largest share of the title insurance market in 33 states and in the District
of Columbia. In addition, the Company's market share grew from 9.6% in 1982,
when it became a national company, to 20.4% in 1995. Industry statistics for
1996 are not currently available. The Company's goal is to maintain its
leadership position as a provider of title insurance and to capitalize on its
opportunity for continued growth nationally and internationally.
REAL ESTATE INFORMATION SERVICES
In recent years management has developed a strategy to be a "one-stop"
real estate information service company. To this end, in 1991 the Company
acquired what was believed to be the second largest tax service company, and
in 1995 acquired what were believed to be the largest mortgage credit
reporting company and the largest flood zone determination certification
company in each case, in the U.S. The Company acquired Strategic Mortgage
Services, Inc. in May, 1997 ("SMS"). SMS operates in lines of business
similar to those of the Company. The acquisition of SMS has strengthened the
Company's appraisal and credit reporting services, and has added a new line of
business, mortgage document preparation. With these and other acquisitions,
the Company believes that it is well positioned to expand market share of its
core businesses by aggressive cross-marketing and bundled pricing. The
Company's real estate information service products generate higher margins
than its title insurance products.
The majority of pre-tax profits generated by the Company from non-title
business is derived from the real estate services business, which generated
$52.6 million in pre-tax profits in 1996 and $247.8 million in revenues.
Approximately 40% of the Company's pre-tax profits in 1996 were derived from
its real estate information services businesses. These businesses are not
regulated and hence not constrained by dividend statutes enforceable by the
states in which the Company operates its title business or by constraints
imposed by California on the Company's trust and banking business.
First American Real Estate Information Services, Inc. ("FAREIS") has
grown from its tax service origins into a diversified mortgage services
company. FAREIS and its subsidiaries now serve mortgage originators, mortgage
servicers, title companies, real estate attorneys, consumers as well as
non-lending entities. The business was initially established in 1987 to
advise real property mortgage lenders as to the status of tax payments on real
property securing their loans. The Company's real estate information services
also includes mortgage and other credit reporting services, flood zone
determinations, mortgage loan servicing systems, property inspections,
appraisal services and mortgage document preparation.
The tax service business includes both real estate tax reporting as well
as tax outsourcing and tax certification. The Company's tax service business
reports on 11 million properties annually and is believed to be the second
largest provider of tax services to the real estate market. The Company works
with over 22,000 taxing authorities nationwide.
First American CREDCO, Inc. ("CREDCO"), the Company's mortgage reporting
entity, is believed by the Company to be the largest provider of these
<PAGE>
services in the United States and processes over 500,000 credit reports per
month. CREDCO provides residential mortgage credit reports, prequalifying
reports, merged credit data, resident screening services, business reports,
credit scoring tools and personal credit reports. CREDCO has recently
branched into the consumer lending and risk scoring areas, providing credit
reporting and information management services to automobile dealers, consumers
and home equity lenders nationwide. Approximately 20% of CREDCO's 1996
revenues were from non-real estate related sources.
The Company is the leading provider of flood zone determinations. Flood
compliance services consist of a broad range of information required by
regulatory agencies regarding properties in flood zones. This business
currently processes over 350,000 flood certifications per month.
The property/field services business consists of processing single family
home inspections and conducting field interviews with delinquent mortgagors
and monitoring the condition of properties and assuring timely property
preservation. The Company's acquisition in December 1996 of Ward Associates
places the Company among the leaders in this business.
The appraisal services business utilizes leading technology to provide
national mortgage lenders with property-relative value assessments. With the
acquisition of SMS the appraisal services business operates throughout the
United States. Electronic appraisals are supplemented with qualified local
appraisers.
In April 1996, the Company acquired the Excelis Mortgage Loan Servicing
System (MLS) ("Excelis MLS"), now known as Excelis, Inc. Excelis MLS is the
only commercially available real-time on-line servicing system that has been
developed since 1990 to meet increasingly sophisticated market demands. The
software employs rules-based technology which enables the user to customize
the system to fit its individual servicing criteria and policies.
In May 1997, the Company purchased all of the operations of SMS, other
than SMS' flood zone certification business. SMS is a leading provider of
real estate information services to the U.S. mortgage and title insurance
industries. The acquired businesses include SMS' credit division, which the
Company believes is the third largest provider of U.S. mortgage credit
information; SMS' property appraisal division, which the Company believes is
the second largest provider of U.S. appraisal services; SMS' title division,
which provides title and closing services throughout the United States,
servicing primarily second mortgage originators; SMS' settlement services
business, which provides title plant systems and accounting services, as well
as escrow closing software, to the title industry; and a controlling interest
in what is believed by the Company to be the largest mortgage document
preparation firm.
HOME WARRANTY
The Company currently owns 79% of its home warranty business, with the
remaining balance owned by management of this subsidiary. The home warranty
business issues one-year warranties which protect homeowners against defects
in household systems and appliances such as plumbing, water heaters, and
furnaces. The warranties issued are for household systems and appliances
only, not for the homes themselves. The Company's home warranty business
currently operates in certain counties of Arizona, California, Nevada, North
Carolina, South Carolina, Texas and Washington. The Company believes its home
warranty business is the second largest in the United States based on
contracts under service. First American has realized a 35% growth rate in the
last two years in its home warranty business, generating $41.9 million in
revenues in 1996.
TRUST & THRIFT
Since 1960, the Company has conducted a general trust business in
California. In 1985, the Company formed a banking subsidiary into which its
<PAGE>
subsidiary trust operation was merged. As of December 31, 1996, the trust
operations were administering fiduciary and custodial assets having a market
value in excess of $1 billion.
During 1988, the Company, through a majority owned subsidiary, acquired
an industrial loan corporation (the "Thrift") that accepts thrift deposits and
uses deposited funds to originate and purchase loans secured by commercial
properties in Southern California. The loans made by the Thrift currently
range in amount from $12,000 to $1,000,000 with an average loan balance of
$247,000. Loans are made only on a secured basis, at loan-to-value
percentages no greater than 75%. The Thrift specializes in making commercial
real estate loans and financing commercial equipment leases. In excess of 91%
of the Thrift's loans are made on a variable rate basis. The average yield on
the Thrift's loan portfolio as of December 31, 1996, was 11%. The Thrift's
average loan is 60 months in duration. Current deposits total $51.3 million
and the loan portfolio totals $54.3 million.
RECENT DEVELOPMENTS
In September 1997, the Company announced that it had reached agreement
with Experian Information Solutions, Inc. ("Experian") to form a joint
venture. This joint venture transaction has been approved by the board of
directors of the Company and Experian, but remains subject to satisfactory
documentation, satisfactory due diligence and receipt of required consents and
approvals.
The purpose of the joint venture is to combine FAREIS with Experian's
Real Estate Solution's division ("RES"). The joint venture vehicle will be
80% owned by the Company and 20% owned by Experian, subject to certain put and
call arrangements.
RES is believed to be the nation's foremost supplier of core real estate
data, providing, among other things, property valuation information, title
information, tax information and imaged title documents.
The Company believes that the joint venture will create the nation's
largest and most diverse provider of information technology and decision
support solutions for the mortgage and real estate industries.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of the Old Capital Securities, the Company
and the Trust entered into the Registration Rights Agreement with Chase
Securities Inc. and UBS Securities LLC (collectively, the "Initial
Purchasers"), pursuant to which the Company agreed to file and to use its
reasonable best efforts to cause to be declared effective by the Commission a
registration statement with respect to the exchange of the Old Capital
Securities for capital securities of the Trust with terms substantially
identical to the terms of the Old Capital Securities. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
The Exchange Offer is being made to satisfy the contractual obligations
of the Company and the Trust under the Registration Rights Agreement. The
form and terms of the New Capital Securities are the same as the form and
terms of the Old Capital Securities, except that the New Capital Securities
(i) have been registered under the Securities Act and therefore will not be
subject to certain of the restrictions on transfer applicable to the Old
Capital Securities and (ii) will not provide for any increase in the
Distribution rate thereon. In that regard, the Old Capital Securities
provide, among other things, that, if the Exchange Offer is not consummated by
December [2], 1997 (a "Registration Default"), the Company will pay additional
interest ("Additional Interest") in respect of the Old Junior Subordinated
Debentures and corresponding additional Distributions ("Additional
<PAGE>
Distributions") will become payable on the Old Capital Securities, with
respect to the first 30-day period immediately following the occurrence of
such Registration Default, in an amount equal to 0.25% per week per $1,000
Liquidation Amount of Old Capital Securities. The amount of Additional
Interest (and corresponding Additional Distributions) will increase by an
additional 0.25% per week per $1,000 Liquidation Amount of Old Capital
Securities with respect to each subsequent 30-day period until such
Registration Default has been cured, up to a maximum amount of Additional
Interest (and corresponding Additional Distributions) of 0.50% per week per
$1,000 Liquidation Amount of Old Capital Securities. Upon consummation of the
Exchange Offer, holders of Old Capital Securities will not be entitled to any
Additional Distributions or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Old Capital Securities" and
"Description of Old Securities."
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Old Capital Securities in any
jurisdiction in which the Exchange Offer or the acceptance thereof would not
be in compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to
the Exchange Offer means any person in whose name the Old Capital Securities
are registered on the books of the Trust or any other person who has obtained
a properly completed bond power from the registered holder, or any person
whose Old Capital Securities are held of record by DTC who desires to deliver
such Old Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, the Company will exchange as soon as
practicable after the date hereof, the Old Guarantee for the New Guarantee and
all of the Old Junior Subordinated Debentures, of which $103,093,000 aggregate
principal amount is outstanding, for a like aggregate principal amount of the
New Junior Subordinated Debentures. The New Guarantee and New Junior
Subordinated Debentures have been registered under the Securities Act.
TERMS OF EXCHANGE
The Company hereby offers, upon the terms and subject to the conditions
set forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $100,000,000 aggregate Liquidation Amount of New Capital
Securities for a like aggregate Liquidation Amount of Old Capital Securities
properly tendered on or prior to the Expiration Date and not properly
withdrawn in accordance with the procedures described below. The Company will
deliver, promptly after the Expiration Date, an aggregate Liquidation Amount
of up to $100,000,000 of New Capital Securities in exchange for a like
Liquidation Amount of outstanding Old Capital Securities tendered and accepted
in connection with the Exchange Offer. Holders may tender their Old Capital
Securities in whole or in part in a Liquidation Amount of not less than
$100,000 or any integral multiple of $1,000 in excess thereof provided that if
any Old Capital Securities are tendered in exchange for part, the untendered
Liquidation Amount must be $100,000 or any integral multiple of $1,000 in
excess thereof.
The Exchange Offer is not conditioned upon any minimum Liquidation Amount
of Old Capital Securities being tendered. As of the date of this Prospectus,
Old Capital Securities having an aggregate Liquidation Amount of $100,000,000
are outstanding.
Holders of Old Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Old Capital
Securities that are not tendered, or are tendered but not accepted, in
connection with the Exchange Offer will remain outstanding and will remain
entitled to the benefits of the Declaration, but will not be entitled to any
further registration rights under the Registration Rights Agreement, except
under limited circumstances. See "Risk Factors--Consequences of a Failure to
Exchange Old Capital Securities" and "Description of Old Securities."
<PAGE>
If any tendered Old Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Capital
Securities will be returned, without expense, to the tendering holder thereof
promptly after the Expiration Date.
Holders who tender Old Capital Securities in connection with the Exchange
Offer will not be required to pay brokerage commissions or fees or, subject to
the instructions in the Letter of Transmittal, transfer taxes with respect to
the exchange of Old Capital Securities in connection with the Exchange Offer.
The Company will pay all charges and expenses, other than certain applicable
taxes described below, in connection with the Exchange Offer. See "--Fees and
Expenses."
NEITHER THE BOARD OF DIRECTORS NOR ANY OFFICER OR EMPLOYEE OF THE COMPANY
NOR ANY TRUSTEE OF THE TRUST OR THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS
OF OLD CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
ALL OR ANY PORTION OF THEIR OLD CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF OLD CAPITAL SECURITIES MUST MAKE THEIR OWN
DECISIONS WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF OLD CAPITAL SECURITIES TO TENDER AFTER READING THIS
PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR ADVISERS,
IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
_________ 1997, unless the Exchange Offer is extended by the Company (in which
case the term "Expiration Date" will mean the latest date and time to which
the Exchange offer is extended).
The Company expressly reserves the right in its sole discretion, subject
to applicable law, at any time and from time to time, (i) to delay the
acceptance of the Old Capital Securities for exchange, (ii) to terminate the
Exchange Offer (whether or not any Old Capital Securities have theretofore
been accepted for exchange) if the Company determines, in its sole discretion,
that any of the events or conditions referred to under "--Conditions to the
Exchange Offer" have occurred or exist or have not been satisfied, (iii) to
extend the Expiration Date of the Exchange Offer and retain all Old Capital
Securities tendered pursuant to the Exchange Offer, subject, however, to the
right of holders of Old Capital Securities to withdraw their tendered Old
Capital Securities as described under "--Withdrawal Rights," and (iv) to waive
any condition or otherwise amend the terms of the Exchange Offer in any
respect. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, or if the Company waives a material
condition of the Exchange Offer, the Company will promptly disclose such
amendment by means of an amended or supplemented Prospectus that will be
distributed to the registered holders of the Old Capital Securities, and the
Company will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and
by a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Company may choose to make any public
announcement and subject to applicable law, the Company will have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to an appropriate news agency.
ACCEPTANCE FOR EXCHANGE AND DELIVERY OF NEW CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange, and will deliver to the Exchange Agent, New Capital
<PAGE>
Securities for Old Capital Securities validly tendered and not withdrawn
(pursuant to the withdrawal rights described under "--Withdrawal Rights")
promptly after the Expiration Date.
In all cases, delivery of New Capital Securities in exchange for Old
Capital Securities tendered and accepted for exchange pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of (i) Old
Capital Securities or a book-entry confirmation of a book-entry transfer of
Old Capital Securities into the Exchange Agent's account at DTC, including an
Agent's Message if the tendering holder has not delivered a Letter of
Transmittal, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or (in the
case of a book-entry transfer) an Agent's Message in lieu of the Letter of
Transmittal, and (iii) any other documents required by the Letter of
Transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of Old Capital Securities into the Exchange Agent's account at
DTC. The term "Agent's Message" means a message, transmitted by DTC to and
received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgement
from the tendering participant, which acknowledgement states that such
participant has received and agrees to be bound by the Letter of Transmittal
and that the Company may enforce such Letter of Transmittal against such
participant.
Subject to the terms and conditions of the Exchange Offer, the Company
will be deemed to have accepted for exchange, and thereby exchanged, Old
Capital Securities validly tendered and not withdrawn as, if and when the
Trust gives oral or written notice to the Exchange Agent of the Company's
acceptance of such Old Capital Securities for exchange pursuant to the
Exchange Offer. The Exchange Agent will act as agent for the Company for the
purpose of receiving tenders of Old Capital Securities, Letters of Transmittal
and related documents, and as agent for tendering holders for the purpose of
receiving Old Capital Securities, Letters of Transmittal and related documents
and transmitting New Capital Securities to validly tendering holders. Such
exchange will be made promptly after the Expiration Date. If for any reason
whatsoever, acceptance for exchange or the exchange of any Old Capital
Securities tendered pursuant to the Exchange Offer is delayed (whether before
or after the Company's acceptance for exchange of Old Capital Securities) or
the Company extends the Exchange Offer or is unable to accept for exchange or
exchange Old Capital Securities tendered pursuant to the Exchange Offer, then,
without prejudice to the Company's rights set forth herein, the Exchange Agent
may, nevertheless, on behalf of the Company and subject to Rule 14e-1(c) under
the Exchange Act, retain tendered Old Capital Securities and such Old Capital
Securities may not be withdrawn except to the extent tendering holders are
entitled to withdrawal rights as described under "--Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof,
a holder of Old Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Old Capital Securities, that the Company will acquire
good, marketable and unencumbered title to the tendered Old Capital
Securities, free and clear of all liens, restrictions, charges and
encumbrances, and the Old Capital Securities tendered for exchange are not
subject to any adverse claims or proxies. The holder also will warrant and
agree that it will, upon request, execute and deliver any additional documents
deemed by the Company, the Trust or the Exchange Agent to be necessary or
desirable to complete the exchange, sale, assignment, and transfer of the Old
Capital Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING OLD CAPITAL SECURITIES
VALID TENDER
Except as set forth below, in order for Old Capital Securities to be
<PAGE>
validly tendered pursuant to the Exchange Offer, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or (in the case of a book-entry tender) an Agent's
Message in lieu of the Letter of Transmittal, and any other required
documents, must be received by the Exchange Agent at its address set forth
under "--Exchange Agent," and either (i) tendered Old Capital Securities must
be received by the Exchange Agent, or (ii) such Old Capital Securities must be
tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation, including an Agent's Message if the tendering
holder has not delivered a Letter of Transmittal, must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (iii) the
guaranteed delivery procedures set forth below must be complied with.
If less than all of the Old Capital Securities are tendered, a tendering
holder should fill in the amount of Old Capital Securities being tendered in
the appropriate box on the Letter of Transmittal and the untendered
Liquidation Amount must be $100,000 or any integral of $1,000 in excess
thereof. The entire amount of Old Capital Securities delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER
The Exchange Agent will establish an account with respect to the Old
Capital Securities at DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus. Any financial institution
that is a participant in DTC's book-entry transfer facility system may make a
book-entry delivery of the Old Capital Securities by causing DTC to transfer
such Old Capital Securities into the Exchange Agent's account at DTC in
accordance with DTC's procedures for transfers. However, although delivery of
Old Capital Securities may be effected through book-entry transfer into the
Exchange Agent's account at DTC, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and
any other required documents, must in any case be delivered to and received by
the Exchange Agent at its address set forth under "--Exchange Agent" on or
prior to the Expiration Date, or the guaranteed delivery procedure set forth
below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES
Certificates for the Old Capital Securities need not be endorsed and
signature guarantees on the Letter of Transmittal are unnecessary unless (i) a
certificate for the Old Capital Securities is registered in a name other than
that of the person surrendering the certificate or (ii) such registered holder
completes the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" in the Letter of Transmittal. In the case of (i) or
(ii) above, such certificates for Old Capital Securities must be duly endorsed
or accompanied by a properly executed bond power, with the endorsement or
signature on the bond power and on the Letter of Transmittal guaranteed by a
firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an
"eligible guarantor institution," including (as such terms are defined
therein): (i) a bank; (ii) a broker, dealer, municipal securities broker or
dealer or government securities broker or dealer; (iii) a credit union; (iv) a
national securities exchange, registered securities association or clearing
agency; or (v) a savings association that is a participant in a securities
<PAGE>
transfer association (an "Eligible Institution"), unless surrendered on behalf
of such Eligible Institution. See Instruction 1 to the Letter of Transmittal.
GUARANTEED DELIVERY
If a holder desires to tender Old Capital Securities pursuant to the
Exchange Offer and the certificates for such Old Capital Securities are not
immediately available or time will not permit all required documents to reach
the Exchange Agent on or before the Expiration Date, or the procedures for
book-entry transfer cannot be completed on a timely basis, such Old Capital
Securities may nevertheless be tendered, provided that all of the following
guaranteed delivery procedures are complied with:
(i) such tenders are made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of
Transmittal, is received by the Exchange Agent, as provided below, on or
prior to the Expiration Date; and
(iii) the certificates (or a book-entry confirmation) representing
all tendered Old Capital Securities, in proper form for transfer,
together with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof or Agent's Message in lieu thereof),
with any required signature guarantees and any other documents required
by the Letter of Transmittal, are received by the Exchange Agent within
three New York Stock Exchange, Inc. trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of New Capital
Securities in exchange for Old Capital Securities tendered and accepted for
exchange pursuant to the Exchange Offer will in all cases be made only after
timely receipt by the Exchange Agent of Old Capital Securities, or of a book-
entry confirmation with respect to such Old Capital Securities, and a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof or
Agent's Message in lieu thereof), together with any required signature
guarantees and any other documents required by the Letter of Transmittal.
Accordingly, the delivery of New Capital Securities might not be made to all
tendering holders at the same time, and will depend upon when Old Capital
Securities, book-entry confirmation with respect to Old Capital Securities and
other required documents are received by the Exchange Agent.
The Company's acceptance for exchange of Old Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions of the Exchange Offer.
DETERMINATION OF VALIDITY
All questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tendered Old
Capital Securities will be determined by the Company, in its sole discretion,
whose determination will be final and binding on all parties. The Company
reserves the absolute right, in its sole discretion, to reject any and all
tenders it determines not to be in proper form or the acceptance of which, or
exchange for, may, in the view of counsel to the Company, be unlawful. The
Company also reserves the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under "--Conditions
to the Exchange Offer" or any condition or irregularity in any tender of Old
Capital Securities of any particular holder whether or not similar conditions
or irregularities are waived in the case of other holders.
<PAGE>
The Company's interpretation of the terms and conditions of the Exchange
Offer (including the Letter of Transmittal and the instructions thereto) will
be final and binding. No tender of Old Capital Securities will be deemed to
have been validly made until all irregularities with respect to such tender
have been cured or waived. Neither the Company, the Trust or the Exchange
Agent, nor any affiliates or assigns of the Company, the Trust or the Exchange
Agent, nor any other person shall be under any duty to give any notification
of any irregularities in tenders or incur any liability for failure to give
any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney
or any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Old Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF NEW CAPITAL SECURITIES
The Company and the Trust are making the Exchange Offer for the Old
Capital Securities, the Old Junior Subordinated Debentures and the Old
Guarantee in reliance on the position of the staff of the Division of
Corporation Finance of the Commission as set forth in certain interpretive
letters addressed to third parties in other transactions. However, neither
the Company nor the Trust sought its own interpretive letter, and there can be
no assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange
Offer as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance, and
subject to the two immediately following sentences, the Company and the Trust
each believes that New Capital Securities issued pursuant to this Exchange
Offer in exchange for Old Capital Securities may be offered for resale, resold
and otherwise transferred by a holder thereof (other than a holder who is a
broker-dealer) without further compliance with the registration and prospectus
delivery requirements of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holder's business and
that such holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution (within the meaning of the
Securities Act) of such New Capital Securities. However, any holder of Old
Capital Securities who is an Affiliate or who intends to participate in the
Exchange Offer for the purpose of distributing New Capital Securities, or any
broker-dealer who purchased Old Capital Securities from the Trust to resell
pursuant to Rule 144A or any other available exemption under the Securities
Act, (i) will not be able to rely on the interpretations of the staff of the
Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (ii) will not be permitted or entitled
to tender such Old Capital Securities in the Exchange Offer, and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or other transfer of such Old
Capital Securities unless such sale is made pursuant to an exemption from such
requirements. In addition, as described below, Participating Broker-Dealers
must deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of New Capital securities.
Each holder of Old Capital Securities who wishes to exchange Old Capital
Securities for New Capital Securities in the Exchange Offer will be required
to represent that (i) it is not an Affiliate, (ii) any New Capital Securities
to be received by it are being acquired in the ordinary course of its
business, (iii) it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
<PAGE>
such New Capital Securities, and (iv) if such holder is not a broker-dealer,
such holder is not engaged in, and does not intend to engage in, a
distribution (within the meaning of the Securities Act) of such New Capital
Securities. The Letter of Transmittal contains the foregoing representations.
In addition, the Company may require such holder, as a condition to such
holder's eligibility to participate in the Exchange Offer, to furnish to the
Company (or an agent thereof) in writing information as to the number of
"beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act)
on behalf of whom such holder holds the Old Capital Securities to be exchanged
in the Exchange Offer. Each Participating Broker-Dealer will be deemed to
have acknowledged by execution of the Letter of Transmittal or delivery of an
Agent's Message that it acquired the Old Capital Securities for its own
account as the result of market-making activities or other trading activities
and must agree that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of such New Capital
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
Based on the position taken by the staff of the Division of Corporation
Finance of the Commission in the interpretive letters referred to above, the
Company believes that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the New Capital Securities
received upon exchange of such Old Capital Securities (other than Old Capital
Securities that represent an unsold allotment from the original sale of the
Old Capital Securities) with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an exchange offer so
long as it contains a description of the plan of distribution with respect to
the resale of such New Capital Securities. Accordingly, this Prospectus may
be used by a Participating Broker-Dealer during the period referred to below
in connection with resales of New Capital Securities received in exchange for
Old Capital Securities where such Old Capital Securities were acquired by such
Participating Broker-Dealer for its own account as a result of market-making
or other trading activities. Subject to certain provisions set forth in the
Registration Rights Agreement, the Company and the Trust have agreed that this
Prospectus may be used by a Participating Broker-Dealer in connection with
resales of such New Capital Securities for a period ending 180 days after the
Expiration Date or, if earlier, when all such New Capital Securities have been
disposed of by such Participating Broker-Dealer. See "Plan of Distribution."
Any person, including any Participating Broker-Dealer, who is an Affiliate may
not rely on such interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old
Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal or delivery of an Agent's
Message in lieu thereof, that, upon receipt of notice from the Company or the
Trust of the occurrence of any event or the discovery of any fact that makes
any statement contained or incorporated by reference in this Prospectus untrue
in any material respect or that causes this Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference herein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating Broker-
Dealer will suspend the sale of New Securities pursuant to this Prospectus
until the Company or the Trust has amended or supplemented this Prospectus to
correct such misstatement or omission and has furnished copies of this
Prospectus, as so amended or supplemented, to such Participating
Broker-Dealer, or the Company or the Trust has given notice that the sale of
the New Securities may be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Old Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
<PAGE>
In order for a withdrawal to be effective a written, telegraphic, telex
or facsimile transmission of such notice of withdrawal must be timely received
by the Exchange Agent at its address set forth under "--Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Old Capital Securities to be withdrawn,
the aggregate Liquidation Amount of Old Capital Securities to be withdrawn,
and (if certificates for such Old Capital Securities have been tendered) the
name of the registered holder of the Old Capital Securities as set forth on
the Old Capital Securities, if different from that of the person who tendered
such Old Capital Securities. If Old Capital Securities have been delivered or
otherwise identified to the Exchange Agent, then prior to the physical release
of such Old Capital Securities, the tendering holder must submit the
certificate numbers shown on the particular Old Capital Securities to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution, except in the case of Old Capital Securities tendered
for the account of an Eligible Institution. If Old Capital Securities have
been tendered pursuant to the procedures for book-entry transfer set forth in
"--Procedures for Tendering Old Capital Securities," the notice of withdrawal
must specify the name and number of the account at DTC to be credited with the
withdrawal of Old Capital Securities, in which case a notice of withdrawal
will be effective if delivered to the Exchange Agent by written, telegraphic,
telex or facsimile transmission. Withdrawals of tenders of Old Capital
Securities may not be rescinded. Old Capital Securities properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but
may be retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all
parties. Neither the Company, the Trust or the Exchange Agent, any affiliates
or assigns of the Company, the Trust or the Exchange Agent, nor any other
person shall be under any duty to give any notification of any irregularities
in any notice of withdrawal or incur any liability for failure to give any
such notification. Any Old Capital Securities that have been tendered but
which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
DISTRIBUTIONS ON THE NEW CAPITAL SECURITIES AND OLD CAPITAL SECURITIES
Holders of Old Capital Securities whose Old Capital Securities are
accepted for exchange will not receive accumulated distributions on such Old
Capital Securities for any period from and after the last distribution date
with respect to such Old Capital Securities prior to the original issue date
of the New Capital Securities or, if no such distributions have been made,
will not receive any accumulated distributions on such Old Capital Securities,
and will be deemed to have waived the right to receive any distributions on
such Old Capital Securities accumulated from and after such distribution date
or, if no such distributions have been made, from and after April 22, 1997.
CONDITIONS TO EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept
for exchange, or to exchange, any Old Capital Securities for any New Capital
Securities, and, as described below, may terminate the Exchange Offer (whether
or not any Old Capital Securities have theretofore been accepted for exchange)
or may waive any conditions to or amend the Exchange Offer, if any of the
following conditions has occurred or exists or has not been satisfied:
(a) there occurs a change in the existing interpretations by the
staff of the Commission that permit the New Capital Securities issued
pursuant to the Exchange Offer in exchange for Old Capital Securities to
be offered for resale, resold and otherwise transferred by holders
thereof (other than holders that are broker-dealers or Affiliates)
<PAGE>
without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Capital
Securities are acquired in the ordinary course of such holders' business
and such holders have no arrangement or understanding with any person to
participate in the distributions of such New Capital Securities;
(b) any action or proceeding has been instituted or threatened in
any court or by or before any governmental agency or body with respect to
the Exchange Offer which, in the Company's judgment, would reasonably be
expected to impair the ability of the Company to proceed with the
Exchange Offer;
(c) any law, statute, rule or regulation has been adopted or
enacted which, in the Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with the Exchange Offer;
(d) trading on the New York Stock Exchange, Inc. or generally in
the United states over-the-counter market has been suspended by order of
the Commission or any other governmental authority which, in the
Company's judgment, would reasonably be expected to impair the ability of
the Company to proceed with the Exchange Offer;
(e) a stop order has been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement or proceedings have been initiated or, to the knowledge of the
Company, threatened for that purpose; any governmental approval has not
been obtained, which approval the Company, in its sole discretion, deemed
necessary for the consummation of the Exchange Offer as contemplated
hereby;
(f) any change, or any development involving a prospective change,
in the business or financial affairs of the Trust or the Company or any
of the Company's subsidiaries has occurred which, in the judgment of the
Company might materially impair the ability of the Company to proceed
with the Exchange Offer; or
(g) the Company or the Trust has received an opinion of counsel
experienced in such matters to the effect that, as a result of the
consummation of the Exchange Offer, there is more than an insubstantial
risk that (a) the Trust would be subject to United States federal income
tax with respect to income received or accrued on the Junior Subordinated
Debentures, (b) interest payable by the Company on the Junior
Subordinated Debentures would not be deductible by the Company, in whole
or in part, for United States federal income tax purposes, or (c) the
Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
If the Company determines in its sole discretion that any of the
foregoing events or conditions has occurred or exists or has not been
satisfied, the Company may, subject to applicable law, terminate the Exchange
Offer (whether or not any Old Capital Securities have theretofore been
accepted for exchange) or may waive any such condition or otherwise amend the
terms of the Exchange Offer in any respect. If such waiver or amendment
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of an amended or supplemented Prospectus that
will be distributed to the registered holders of the Old Capital Securities,
and the Company will extend the Exchange Offer to the extent required by Rule
14e-1 under the Exchange Act.
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed
to the Exchange Agent as follows:
<PAGE>
By Mail/Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
_______________________ _______________________
New York, New York _____ New York, New York _____
Attention: _______________ Attention: _______________
Telephone: (212) ___-____
Facsimile: (212) ___-____
Delivery to any place other than the above address or facsimile number
will not constitute a valid delivery.
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. The Company will also pay brokerage houses
and other custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them in forwarding copies of this Prospectus and related
documents to the beneficial owners of Old Capital Securities, and in handling
or tendering for their customers.
Holders who tender their Old Capital Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith. If, however, New
Capital Securities are to be delivered to, or are to be issued in the name of,
any person other than the registered holder of the Old Capital Securities
tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Capital Securities in connection with the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered
holder or any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes
will he billed directly to such tendering holder.
Neither the Company nor the Trust will make any payment to brokers,
dealers or others soliciting acceptances of the Exchange Offer.
DESCRIPTION OF NEW SECURITIES
References to "Capital Securities" means the New Capital Securities
issued pursuant to the Exchange Offer and the Old Capital Securities not
exchanged in the Exchange Offer.
DESCRIPTION OF NEW CAPITAL SECURITIES
Pursuant to the terms of the Declaration, the Regular Trustees caused the
Trust to issue the Old Capital Securities and will cause the Trust to issue
the New Capital Securities. The Capital Securities represent undivided
beneficial ownership interests in the assets of the Trust and the holders
thereof will be entitled to a preference in certain circumstances with respect
to Distributions and amounts payable on redemption or liquidation over the
Common Securities, as well as other benefits as described in the Declaration.
This summary of certain provisions of the New Capital Securities and the
Declaration does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Declaration. Wherever particular defined terms of the Declaration (as
supplemented or amended from time to time) are referred to herein, the
definitions of such defined terms are incorporated herein by reference.
GENERAL
Up to $100,000,000 aggregate Liquidation Amount of New Capital Securities
may be issued in connection with the consummation of the Exchange Offer. The
New Capital Securities will rank pari passu, and payments will be made thereon
from the assets of the Trust pro rata, with the Old Capital Securities that
are not exchanged in the Exchange Offer. The Capital Securities will rank
<PAGE>
pari passu, and payments will be made thereon pro rata, with the Common
Securities except as described under "--Subordination of Common Securities."
Legal title to the Junior Subordinated Debentures will be held by the Property
Trustee in trust for the benefit of the holders of the New Capital Securities.
The Guarantee executed by the Company for the benefit of the holders of the
Capital Securities will be a guarantee on a subordinated basis but will not
guarantee payment of Distributions or amounts payable on redemption or
liquidation of the New Capital Securities when the Trust does not have
sufficient funds available to make such payments. See "Description of New
Securities--Description of New Guarantee." The Company's obligations under the
Guarantee, taken together with its obligations under the Declaration, the
Junior Subordinated Debentures and the Indenture, including its obligation to
pay all costs, expenses and liabilities of the Trust (other than with respect
to the Common Securities and the New Capital Securities), constitute a full
and unconditional guarantee of all of the Trust's obligations under the New
Capital Securities.
The Declaration provides that the holders of New Capital Securities have
no preemptive rights or rights to subscribe for any additional Trust
Securities.
DISTRIBUTIONS
Distributions on each New Capital Security will be payable at the annual
rate of 8.50% of the Liquidation Amount of $1,000, payable semi-annually in
arrears on April 15 and October 15 of each year. Distributions will
accumulate from the most recent distribution date on the Old Capital
Securities surrendered in exchange for New Capital Securities or, if no
distributions have been paid on such Old Capital Securities, from April 22,
1997. The amount of Distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any
date on which Distributions are payable on the New Capital Securities is not a
Business Day (as defined herein), then payment of the Distributions payable on
such date will be made on the next succeeding day that is a Business Day (and
without any additional Distributions or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on the date such payment
was originally payable (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office
of the Property Trustee or the Indenture Trustee (as defined herein) is closed
for business.
Distributions on the New Capital Securities will be paid on the
Distribution Dates payable to the extent that the Trust has funds available
for the payment of such Distributions. The revenue of the Trust available for
distribution to holders of its Capital Securities (including the New Capital
Securities) will be limited to payments under the Junior Subordinated
Debentures. See "Description of New Securities--Description of New Junior
Subordinated Debentures." If the Company does not make interest payments on
the Junior Subordinated Debentures, the Property Trustee will not have funds
available to pay Distributions on the Capital Securities (including the New
Capital Securities).
So long as no Indenture Event of Default (as defined herein) has occurred
and is continuing, the Company will have the right under the Indenture to
defer the payment of interest on the Junior Subordinated Debentures at any
time or from time to time for a period not exceeding 10 consecutive
semi-annual periods (each, an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity of the Junior Subordinated
Debentures. As a consequence of any such extension, semi-annual Distributions
on the New Capital Securities will be deferred by the Trust during any such
Extension Period. Distributions to which holders of the New Capital
<PAGE>
Securities are entitled will accumulate and compound semi-annually at the rate
per annum of 8.50% thereof from the relevant payment date for such
Distributions to the date of payment. The term "Distributions" as used herein
shall include any such compounded amounts unless the context otherwise
requires. During any such Extension Period, the Company may not, and may not
permit any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior to the
Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company or warrants, options or other
rights where the Company's common stock is issuable upon the exercise thereof,
(b) payments under the Guarantee, (c) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (d) as a result of an exchange
or conversion (x) of any class or series of the Company's capital stock (or
any capital stock of a subsidiary of the Company) for any class or series of
the Company's capital stock or (y) of any class or series of the Company's
indebtedness for any class or series of the Company's capital stock, (e) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged and (f) purchases of common stock
related to the issuance of common stock or rights under any employment
agreement, benefit plan or similar agreement for the directors, officers,
employees and consultants of the Company and its subsidiaries, related to the
issuance of common stock or rights under a dividend reinvestment and stock
purchase plan or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of
such Extension Period). Prior to the termination of any such Extension
Period, the Company may further extend the Extension Period, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then
due on any Interest Payment Date, the Company may elect to begin a new
Extension Period subject to the foregoing requirements. See "Description of
New Securities--Description of New Junior Subordinated Debentures--Option to
Defer Interest Payments."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period of the Junior
Subordinated Debentures.
Distributions on the New Capital Securities (other than Distributions on
a Redemption Date) will be payable to the holders thereof as they appear on
the register of the Trust on the relevant record dates, which shall be the
first day of the month of the relevant Distribution Date. Distributions
payable on any New Capital Securities that are not punctually paid on any
Distribution Date will cease to be payable to the person in whose name such
New Capital Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the person in whose name
such New Capital Securities are registered on the special record date or other
specified date determined in accordance with the Declaration.
REDEMPTION
Upon the repayment or redemption of the Junior Subordinated Debentures,
whether at Stated Maturity or upon earlier redemption as provided in the
Indenture, the proceeds from such repayment or redemption shall be applied by
the Property Trustee to redeem a Like Amount (as defined herein) of the New
Capital Securities, upon not less than 30 nor more than 60 days notice prior
<PAGE>
to the date fixed for repayment or redemption, at a redemption price, with
respect to the New Capital Securities (the "Redemption Price"), equal to the
aggregate Liquidation Amount of such New Capital Securities plus accumulated
and unpaid Distributions thereon to the date of redemption (the "Redemption
Date").
The Junior Subordinated Debentures are redeemable prior to maturity at
the option of the Company in whole (but not in part) at any time within 90
days following the occurrence of a Special Event. See "Description of New
Securities--Description of the Junior Subordinated Debentures--Special Event
Redemption." The proceeds of any such redemption will be used by the Trust to
redeem Trust Securities. The Redemption Price shall be equal to 100% of the
Liquidation Amount plus accrued and unpaid Distributions thereon to the
Redemption Date.
REDEMPTION PROCEDURES
New Capital Securities redeemed on a Redemption Date shall be redeemed at
the Redemption Price with the proceeds from the contemporaneous redemption of
the Junior Subordinated Debentures. Redemptions of the New Capital Securities
shall be made and the Redemption Price shall be payable on the Redemption Date
only to the extent that the Trust has sufficient funds available for the
payment of the Redemption Price. See also "--Subordination of Common
Securities."
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each holder of New Capital
Securities to be redeemed at its registered address. If the Trust gives a
notice of redemption in respect of the New Capital Securities, then, by 12:00
noon, New York City time, on the Redemption Date, with respect to New Capital
Securities held in global form, to the extent funds are available, the
Property Trustee will deposit irrevocably with The Depository Trust Company
("DTC") or its nominee funds sufficient to pay the Redemption Price and will
give DTC irrevocable instructions and authority to pay the Redemption Price to
the holders of the New Capital Securities. See "Book-Entry Issuance." If any
New Capital Securities are held in certificated form, the Trust, to the extent
funds are available, will irrevocably deposit with the paying agent for such
New Capital Securities funds sufficient to pay the Redemption Price and will
give the paying agent irrevocable instructions and authority to pay the
Redemption Price to the holders thereof upon surrender of their certificates
evidencing the New Capital Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any New Capital
Security called for redemption shall be payable to the holders of such New
Capital Security on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of
such New Capital Securities so called for redemption will cease, except the
right of the holders of such New Capital Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such New Capital
Securities will cease to be outstanding. In the event that any date fixed for
redemption of New Capital Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on the
date such payment was originally payable. In the event that payment of the
Redemption Price in respect of New Capital Securities called for redemption is
improperly withheld or refused and not paid either by the Trust or by the
Company pursuant to the Guarantee as described under "Description of New
Securities--Description of New Guarantee," Distributions on such New Capital
Securities will continue to accrue at the then applicable rate, from the
Redemption Date originally established by the Trust for the New Capital
Securities to the date such Redemption Price is actually paid, in which case
the actual payment date will be the date fixed for redemption for purposes of
calculating the Redemption Price.
<PAGE>
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding New Capital Securities by tender, in
the open market or by private agreement.
The Trust may not redeem the outstanding New Capital Securities unless
all accrued and unpaid Distributions have been paid on all New Capital
Securities for all semi-annual Distribution periods terminating on or prior to
the date of redemption. If all of the New Capital Securities are in
book-entry form, they will be redeemed as described below under "Book-Entry
Issuance."
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The Company has the right at any time to terminate the Trust and cause
the Junior Subordinated Debentures to be distributed to the holders of the
Capital Securities and the Common Securities in exchange therefor upon
liquidation of the Trust. In the event of any such termination of the Trust,
after satisfaction of the claims of creditors of the Trust, if any, as
required by applicable law, the holders of the New Capital Securities will be
entitled to receive a Liquidation Amount of $1,000 per New Capital Security
plus accumulated and unpaid Distributions thereon to the date of payment,
which may be in the form of a distribution of such amount of Junior
Subordinated Debentures in exchange therefor, subject to certain exceptions.
See "Certain United States Federal Income Tax Consequences--Distribution of
Junior Subordinated Debentures or Cash Upon Liquidation of the Trust."
Junior Subordinated Debentures may be distributed to holders in exchange
for the New Capital Securities and in liquidation of the Trust. Under current
law, such a distribution should be non-taxable, and should result in the
holder receiving directly its pro rata share of the Junior Subordinated
Debentures previously held indirectly through the Trust, with a holding period
and aggregate tax basis equal to the holding period and aggregate tax basis
such holder had in its Old Capital Securities before such distribution. If,
however, the liquidation of the Trust were to occur because the Trust is
subject to United States federal income tax with respect to income accrued or
received on the Junior Subordinated Debentures, the distribution of the Junior
Subordinated Debentures to holders would be a taxable event to the Trust and
to each holder and a U.S. Holder would recognize gain or loss as if the holder
had exchanged its New Capital Securities for the Junior Subordinated
Debentures it received upon liquidation of the Trust. A U.S. Holder would
accrue interest in respect of the Junior Subordinated Debentures received from
the Trust in the manner described under "Certain United States Federal Income
Tax Consequences--Interest Income and Original Issue Discount."
If the Company elects to liquidate the Trust and thereby cause the Junior
Subordinated Debentures to be distributed to holders of the New Capital
Securities in exchange therefor, the Company shall continue to have the right
to redeem the Junior Subordinated Debentures upon the occurrence of a Special
Event, as described under "Description of New Securities--Description of New
Junior Subordinated Debentures--Special Event Redemption."
Pursuant to the Declaration, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Company; (ii)
the distribution of the Junior Subordinated Debentures to the holders of the
Capital Securities and Common Securities; (iii) the repayment of all of the
Capital Securities in connection with the maturity or redemption of all of the
Junior Subordinated Debentures; and (iv) the entry by a court of competent
jurisdiction of an order for the dissolution of the Trust.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Trust shall be liquidated by the Regular Trustees as expeditiously
as such Trustees determine to be possible by distributing, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law, to the
holders of the Capital Securities and Common Securities their pro rata
<PAGE>
interest in the Junior Subordinated Debentures, unless such Distribution is
determined by the Property Trustee not to be practicable, in which event such
holders will be entitled to receive out of the assets of the Trust available
for distribution to holders, after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, an amount equal to the aggregate of
the Liquidation Amount of the Trust Securities plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Capital Securities shall be paid on a pro rata basis. The
holder(s) of the Common Securities will be entitled to receive Liquidation
Distributions upon any such liquidation pro rata with the holders of the
Capital Securities, except that if an Indenture Event of Default has occurred
and is continuing, the Capital Securities shall have a priority over the
Common Securities.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture, allocated to the Common Securities and to the Capital
Securities based upon the relative Liquidation Amounts of such securities and
the proceeds of which will be used to pay the Redemption Price of such Trust
Securities and (ii) with respect to a distribution of Junior Subordinated
Debentures to holders of Trust Securities in connection with a dissolution or
liquidation of the Trust, Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of the Trust Securities of the holders
to whom such Junior Subordinated Debentures are distributed. "Liquidation
Amount" means the stated amount of $1,000 per Capital Security and Common
Security.
If the Company elects not to redeem the Junior Subordinated Debentures
prior to maturity and the Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Trust Securities, the New
Capital Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures at the Stated Maturity.
After the liquidation date is fixed for any Liquidation Distribution of
Junior Subordinated Debentures to holders of the Capital Securities (i) the
Capital Securities will no longer be deemed to be outstanding, (ii) DTC or its
nominee, as a record holder of Capital Securities in global form, will receive
a registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such Distribution and (iii) any
certificates representing Capital Securities held in certificated form will be
deemed to represent Junior Subordinated Debentures having a principal amount
equal to the Liquidation Amount of such Capital Securities, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Capital Securities until such certificates are presented
for cancellation whereupon the Company will issue to such holder, and the
Indenture Trustee will authenticate, a certificate representing such Junior
Subordinated Debentures.
TRUST ENFORCEMENT EVENTS
An Indenture Event of Default constitutes a Trust Enforcement Event under
the Declaration with respect to the Trust Securities; provided, however,
pursuant to the Declaration, the holder of the Common Securities will be
deemed to have waived any Trust Enforcement Event with respect to the Common
Securities until all Trust Enforcement Events with respect to the Capital
Securities have been cured, waived or otherwise eliminated. Until such Trust
Enforcement Event with respect to the Capital Securities has been so cured,
waived or otherwise eliminated, the Property Trustee will be deemed to be
acting solely on behalf of the holders of the Capital Securities and only the
holders of the Capital Securities will have the right to direct the Property
Trustee with respect to certain matters under the Declaration, and therefore
the Indenture. The New Capital Securities and any Old Capital Securities
<PAGE>
which remain outstanding after consummation of the Exchange Offer will
constitute a single series of Capital Securities under the Declaration and,
accordingly, will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding liquidation amount
thereof have taken certain actions or exercised certain rights under the
Declaration.
Upon the occurrence of a Trust Enforcement Event, the Indenture Trustee
(as defined herein) or the Property Trustee as the holder of the requisite
aggregate principal amount of Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the
Junior Subordinated Debentures to be immediately due and payable. Each of the
Company and the Trust is required to file annually with the Property Trustee
an officer's certificate as to its compliance with all conditions and
covenants under the Declaration.
If the Property Trustee fails to enforce its rights with respect to the
Junior Subordinated Debentures held by the Trust, any record holder of Capital
Securities (including New Capital Securities) may institute a Direct Action
against the Company to enforce the Property Trustee's rights under the Junior
Subordinated Debentures without first instituting any legal proceedings
against such Property Trustee or any other person or entity. In addition, if
a Trust Enforcement Event has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest, principal or other
required payments on the Junior Subordinated Debentures issued to the Trust on
the date such interest, principal or other payment is otherwise due and
payable, then a record holder of Capital Securities may, on or after the
respective due dates specified in the Junior Subordinated Debentures (and
after the expiration of any applicable cure period), institute a proceeding
directly against the Company under the Indenture for enforcement of payment on
Junior Subordinated Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Capital Securities held by such holder.
In connection with such Direct Action, the Company will have a right of
set-off under the Indenture to the extent of any payment made by the Company
to such record holder of Capital Securities in such Direct Action.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Capital
Securities and the Common Securities, as applicable, shall be made pro rata
based on the Liquidation Amount of such Capital Securities and Common
Securities; provided, however, that if on any Distribution Date or Redemption
Date or date of payment with respect to a Liquidation Distribution an
Indenture Event of Default (as defined herein) shall have occurred and be
continuing, no payment of any Distribution on, or Redemption Price of, any of
the Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions on
all of the outstanding Capital Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the outstanding
Capital Securities then called for redemption, shall have been made or
provided for, and all funds available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions on, or Redemption
Price of, the Capital Securities then due and payable.
VOTING RIGHTS; AMENDMENT OF THE DECLARATION
Except as provided below and under "Description of New Securities--
Description of New Guarantee--Amendments and Assignment" and as otherwise
required by law and the Declaration, the holders of the New Capital Securities
will have no voting rights.
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
<PAGE>
executing any trust or power conferred on the Property Trustee with respect to
such Junior Subordinated Debentures, (ii) waive any past default that is
waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or such Junior Subordinated Debentures, where
such consent shall be required, without, in each case, obtaining the prior
approval of the holders of a majority in aggregate Liquidation Amount of all
outstanding Capital Securities; provided, however, that where a consent under
the Indenture would require the consent of each holder of Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of Capital Securities. The
Trustees shall not revoke any action previously authorized or approved by a
vote of the holders of the Capital Securities except pursuant to a subsequent
vote of the holders of the Capital Securities. The Property Trustee shall
notify each holder of record of the Capital Securities of any notice of
default which it receives with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the holders of the Capital
Securities, prior to taking any of the foregoing actions, the Trustees shall
receive an opinion of counsel experienced in such matters to the effect that
the Trust will not be classified as other than a grantor trust for United
States federal income tax purposes on account of such action.
The Declaration may be amended from time to time by the Company and the
Regular Trustees (and in certain circumstances the Property Trustee and the
Delaware Trustee), without the consent of the holders of the Capital
Securities, (i) to cure any ambiguity, correct or supplement any provisions in
the Declaration that may be inconsistent with any other provision, or to make
any other provisions with respect to matters or questions arising under the
Declaration that shall not be inconsistent with the other provisions of the
Declaration or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified as a grantor trust for United States federal income tax purposes
at all times that any Capital Securities and Common Securities are outstanding
or to ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that any such
action under clause (i) or (ii) above shall not adversely affect in any
material respect the interests of any holder of Capital Securities or Common
Securities, and any amendments of the Declaration shall become effective when
notice thereof is given to the holders of Capital Securities and Common
Securities. The Declaration may be amended by the Company and the Regular
Trustees with (i) the consent of holders representing not less than a majority
(based upon Liquidation Amounts) of the outstanding Capital Securities and
Common Securities and (ii) receipt by the Regular Trustees of an opinion of
counsel to the effect that such amendment or the exercise of any power granted
to the Regular Trustees in accordance with such amendment will not cause the
Trust to be taxable as a corporation for United States federal income tax
purposes or the Trust's exemption from status as an "investment company" under
the Investment Company Act; provided, further that without the consent of each
holder of Capital Securities and Common Securities affected thereby, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Capital Securities and Common Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Capital Securities and Common Securities as of a specified date or (ii)
restrict the right of a holder of Capital Securities or Common Securities to
institute suit for the enforcement of any such payment on or after such date.
Any required approval of holders of Capital Securities may be given at a
meeting of holders of Capital Securities convened for such purpose or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting
at which holders of Capital Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
given to each holder of record of Capital Securities in the manner set forth
in the Declaration. The New Capital Securities and any Old Capital Securities
which remain outstanding after consummation of the Exchange Offer will
constitute a single series of Capital Securities under the Declaration and,
<PAGE>
accordingly, will vote together as a single class for purposes of determining
whether holders of the requisite percentage in outstanding liquidation amount
thereof have taken certain actions or exercised certain rights under the
Declaration.
No vote or consent of the holders of Capital Securities will be required
for the Trust to redeem and cancel its Capital Securities in accordance with
the Declaration.
Notwithstanding that holders of Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
Securities that are owned by the Company or any affiliate of the Company
(including the Regular Trustees) shall, for purposes of such vote or consent,
be treated as if they were not outstanding.
EXPENSES AND TAXES
Under the terms of the Indenture, the Company, as borrower, has agreed to
pay all debts and other obligations (other than with respect to the Trust
Securities) and all costs and expenses of the Trust (including costs and
expenses relating to the organization of the Trust, the fees and expenses of
the Trustees and the costs and expenses relating to the operation of the
Trust) and to pay any and all taxes and all costs and expenses with respect
thereto (other than United States withholding taxes) to which the Trust might
become subject.
RESTRICTIONS ON TRANSFER
The New Capital Securities will be issued, and may be transferred, only
in blocks having an aggregate Liquidation Amount of not less than $100,000
(100 New Capital Securities). Any attempted transfer, sale or other
disposition of New Capital Securities in a block having an aggregate
Liquidation Amount of less than $100,000 shall be deemed to be void and of no
legal effect whatsoever. Any such transferee shall be deemed not to be a
holder of such New Capital Securities for any purpose, including but not
limited to the receipt of Distributions on such New Capital Securities, and
such transferee shall be deemed to have no interest whatsoever in such New
Capital Securities.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the New
Capital Securities.
Registration of transfers of New Capital Securities will be effected
without charge by or on behalf of the Trust, but upon payment of any tax or
other governmental charges that may be imposed in connection with any transfer
or exchange. The Trust will not be required (i) to register or cause to be
registered the transfer or exchange of the New Capital Securities during a
period beginning at the opening of business 15 days before the day of the
mailing of the relevant notice of redemption and ending at the close of
business on the day of mailing of such notice of redemption or (ii) to
register or cause to be registered the transfer or exchange of any New Capital
Securities so selected for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
a Trust Enforcement Event, undertakes to perform only such duties as are
specifically set forth in the Declaration and, after such Trust Enforcement
Event, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to
this provision, the Property Trustee is under no obligation to exercise any of
the powers vested in it by the Declaration at the request of any holder of
Capital Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Trust
<PAGE>
Enforcement Event has occurred and is continuing and the Property Trustee is
required to decide between alternative causes of action, construe ambiguous
provisions in the Declaration or is unsure of the application of any provision
of the Declaration, and the matter is not one on which holders of Capital
Securities are entitled under the Declaration to vote, then the Property
Trustee may, but shall be under no duty to, take such action as is directed by
the Company and, if not so directed, shall take such action as it deems
advisable and in the best interests of the holders of the Capital Securities
and the Common Securities and will have no liability except for its own bad
faith, negligence or willful misconduct.
PAYMENT AND PAYING AGENCY
Payments in respect of the Global Capital Securities (as defined herein)
shall be made to DTC, which shall credit the relevant accounts at DTC on the
applicable Distribution Dates or, if the New Capital Securities are held in
certificated form, such payments shall be made by check mailed to the address
of the holder entitled thereto as such address shall appear on the register
maintained by the Property Trustee. The paying agent (the "Paying Agent")
shall initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Regular Trustees and the Company. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Property Trustee and the Company. In the event that the
Property Trustee shall no longer be the Paying Agent, the Regular Trustees
shall appoint a successor (which shall be a bank or trust company acceptable
to the Regular Trustees and the Company) to act as Paying Agent.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below. The Trust may, at the request of the Company, with the
consent of the Regular Trustees and without the consent of the holders of the
Capital Securities and the Common Securities, the Delaware Trustee or the
Property Trustee, merge with or into, consolidate, amalgamate, be replaced by
or convey, transfer or lease its properties and assets substantially as an
entirety to a trust organized as such under the laws of any State; provided
that (i) such successor entity (if not the Trust) either (a) expressly assumes
all of the obligations of the Trust with respect to the Capital Securities or
(b) substitutes for the Capital Securities other securities having
substantially the same terms as the Capital Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the Capital
Securities rank in priority with respect to Distributions and payments upon
liquidation, redemption and otherwise, (ii) if the Trust is not the successor
entity, the Company expressly appoints a trustee of such successor entity
possessing the same powers and duties as the Property Trustee as the holder of
the Junior Subordinated Debentures, (iii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Capital Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Capital Securities (including any Successor Securities) in any material
respect, (v) such successor entity has a purpose identical to that of the
Trust, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer, or lease, the Company has received an opinion from
counsel to the Company experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
holders of the Capital Securities (including any Successor Securities) in any
material respect and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, (1) neither the Trust nor such
successor entity will be required to register as an investment company under
the Investment Company Act and (2) the Trust or the successor entity will
continue to be classified as a grantor trust for United States federal income
<PAGE>
tax purposes, (vii) the Company or any permitted successor or assignee owns
all of the Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least
to the extent provided by the Guarantee, and (viii) such successor entity (if
not the Trust) expressly assumes all of the obligations of the Trust with
respect to the Trustees. Notwithstanding the foregoing, the Trust shall not,
except with the consent of holders of 100% in aggregate Liquidation Amount of
the Capital Securities, consolidate, amalgamate, merge with or into, be
replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity to be classified as other
than a grantor trust for United States federal income tax purposes.
MERGER OR CONSOLIDATION OF TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or
any Regular Trustee that is not a natural person may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such Trustee, shall be the successor of such Trustee under the
Declaration, provided such corporation shall be otherwise qualified and
eligible.
MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs
of and to operate the Trust in such a way that the Trust will not be deemed to
be an "investment company" required to be registered under the Investment
Company Act or classified as other than a grantor trust for United States
federal income tax purposes and so that the Junior Subordinated Debentures
will be treated as indebtedness of the Company for United States federal
income tax purposes. In this connection, the Company and the Regular Trustees
are authorized to take any action, not inconsistent with applicable law, the
Certificate of Trust or the Declaration, that the Company and the Regular
Trustees determine in their discretion to be necessary or desirable for such
purposes, as long as such action does not materially and adversely affect the
interests of the holders of the New Capital Securities.
The Trust may not borrow money, issue debt, mortgage nor pledge any of
its assets.
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, dated as of April 22, 1997 (the "Indenture"), between
the Company and Wilmington Trust Company, as trustee (the "Indenture
Trustee"). This summary of certain terms and provisions of the Junior
Subordinated Debentures and the Indenture does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the
Indenture.
GENERAL
Concurrently with the issuance of the Old Capital Securities, the Trust
invested the proceeds thereof and the consideration paid by the Company for
the Common Securities in the Old Junior Subordinated Debentures issued by the
Company. The Company will exchange the Old Junior Subordinated Debentures for
the New Junior Subordinated Debentures as soon as practicable after the date
hereof. No Old Junior Subordinated Debentures will remain outstanding after
such exchange.
The Junior Subordinated Debentures will be in the principal amount equal
to the aggregate Liquidation Amount of the Capital Securities and the Common
<PAGE>
Securities. The Junior Subordinated Debentures will bear interest at the
annual rate of 8.50% of the principal amount thereof, payable semi-annually in
arrears on April 15 and October 15 of each year (each, an "Interest Payment
Date"), commencing October 15, 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the first day of the month of the relevant Interest
Payment Date. It is anticipated that, until the liquidation, if any, of the
Trust, each Junior Subordinated Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Capital
Securities and the Common Securities. The amount of interest payable for any
period will be computed on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on the date such payment
was originally payable. Accrued interest that is not paid on the applicable
Interest Payment Date will bear additional interest on the amount thereof (to
the extent permitted by law) at the rate per annum of 8.50% thereof,
compounded semi-annually. The term "interest" as used herein shall include
semi-annual interest payments and interest on semi-annual interest payments
not paid on the applicable Interest Payment Date, as applicable.
The Junior Subordinated Debentures will mature on April 15, 2012 (such
date, the "Stated Maturity").
The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness (as defined
below) of the Company. The Indenture does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, whether under the
Indenture, any other existing indenture or any other indenture that the
Company may enter into in the future or otherwise. See "--Subordination."
The general provisions of the Indenture do not afford holders of the
Junior Subordinated Debentures protection in the event of a highly leveraged
or other transaction involving the Company that may adversely affect holders
of the Junior Subordinated Debentures.
OPTION TO DEFER INTEREST PAYMENTS
So long as no Indenture Event of Default has occurred and is continuing,
the Company has the right under the Indenture to defer the payment of interest
at any time or from time to time for a period not exceeding 10 consecutive
semi-annual periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. At the end of such Extension Period, the Company
must pay all interest then accrued and unpaid (together with interest thereon
at the annual rate of 8.50%, compounded semi-annually to the extent permitted
by applicable law). During an Extension Period, interest will continue to
accrue and holders of Junior Subordinated Debentures will be required to
recognize income (in the form of original issue discount) for United States
federal income tax purposes prior to receipt of cash related to such income.
See "Certain United States Federal Income Tax Consequences--Interest Income
and Original Issue Discount."
During any such Extension Period, the Company may not, and may not permit
any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior in interest
to the Junior Subordinated Debentures or (iii) make any guarantee payments
with respect to any guarantee by the Company of the debt securities of any
subsidiary of the Company if such guarantee ranks pari passu with or junior in
<PAGE>
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock of the Company or warrants, options or other
rights where the Company's common stock is issuable upon the exercise thereof,
(b) payments under the Guarantee, (c) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (d) as a result of an exchange
or conversion (x) of any class or series of the Company's capital stock (or
any capital stock of a subsidiary of the Company) for any class or series of
the Company's capital stock or (y) of any class or series of the Company's
indebtedness for any class or series of the Company's capital stock, (e) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, and (f) purchases of common stock
related to the issuance of common stock or rights under any employment
agreement, benefit plan or similar agreement for the directors, officers,
employees or consultants of the Company and its subsidiaries, related to the
issuance of common stock or rights under a dividend reinvestment and stock
purchase plan or related to the issuance of common stock (or securities
convertible into or exchangeable for common stock) as consideration in an
acquisition transaction that was entered into prior to the commencement of
such Extension Period). Prior to the termination of any such Extension
Period, the Company may further extend the Extension Period, provided that no
Extension Period may exceed 10 consecutive semi-annual periods or extend
beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then
due on any Interest Payment Date, the Company may elect to begin a new
Extension Period subject to the above requirements. No interest shall be due
and payable during an Extension Period, except at the end thereof. The
Company must give the Property Trustee, the Regular Trustees and the Indenture
Trustee notice of its election of such Extension Period not less than one
Business Day prior to the record date with respect to the interest payment.
The Property Trustee shall give notice of the Company's election to begin a
new Extension Period to the holders of the Capital Securities.
SPECIAL EVENT REDEMPTION
If a Special Event occurs and, if the Junior Subordinated Debentures are
held by the Trust, in the opinion of counsel to the Company experienced in
such matters, there would in all cases, after effecting the termination of the
Trust and the distribution of the Junior Subordinated Debentures to the
holders of the Capital Securities and Common Securities in exchange therefor,
be more than an insubstantial risk that a Special Event would continue to
exist, then the Company shall have the right to redeem the Junior Subordinated
Debentures, in whole but not in part, at any time within 90 days following the
occurrence of the Special Event at a redemption price for the Junior
Subordinated Debentures equal to 100% of the principal amount thereof plus
accrued and unpaid interest to the Redemption Date.
If the Junior Subordinated Debentures are redeemed, the Trust must redeem
Trust Securities, on a pro rata basis, having an aggregate Liquidation Amount
equal to the aggregate principal amount of Junior Subordinated Debentures so
redeemed. See "Description of New Securities--Description of New Capital
Securities--Redemption."
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Junior Subordinated
Debentures at its registered address. Unless the Company defaults in payment
of the redemption price, on and after the redemption date interest shall cease
to accrue on such Junior Subordinated Debentures.
CERTAIN COVENANTS OF THE COMPANY
The Company will covenant in the Indenture that if and so long as the
Trust is the holder of all Junior Subordinated Debentures, the Company, as
borrower, will pay to the Trust all fees and expenses related to the Trust and
<PAGE>
the offering of the Capital Securities and will pay, directly or indirectly,
all ongoing costs, expenses and liabilities of the Trust (including any taxes,
duties, assessments or governmental charges of whatever nature (other than
United States withholding taxes) imposed by the United States or any domestic
taxing authority upon the Trust) but excluding obligations under the Trust
Securities.
The Company will not, and will not permit any of its subsidiaries to, (i)
declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock, (ii) make any payment of principal, interest or premium, if
any, on or repay or repurchase or redeem any debt securities of the Company
that rank pari passu with or junior in interest to the Junior Subordinated
Debentures or (iii) make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock of the Company or warrants, options or other rights where the Company's
common stock is issuable upon the exercise thereof, (b) payments under the
Guarantee, (c) any declaration of a dividend in connection with the
implementation of a stockholders' rights plans, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (d) as a result of an exchange or conversion (x) of
any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or (y) of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, and (f) purchases of common stock related to the issuance of
common stock or rights under any employment agreement, benefit plan or similar
agreement for the directors, officers, employees or consultants of the Company
and its subsidiaries, related to the issuance of common stock or rights under
a dividend reinvestment and stock purchase plan or related to the issuance of
common stock (or securities convertible into or exchangeable for common stock)
as consideration in an acquisition transaction that was entered into prior to
the commencement of such Extension Period) if at such time (x) there shall
have occurred any event of which the Company has actual knowledge that (I)
with the giving of notice or the lapse of time, or both, would constitute an
Indenture Event of Default with respect to Junior Subordinated Debentures and
(II) in respect of which the Company shall not have taken reasonable steps to
cure, (y) the Company shall be in default with respect to its payment of any
obligations under the Guarantee or (z) the Company shall have given notice of
its election of an Extension Period as provided in the Indenture and shall not
have rescinded such notice, and such Extension Period, or any extension
thereof, shall be continuing.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinated and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. During the pendency of any receivership, liquidation,
reorganization, arrangement, adjustment, composition, bankruptcy, insolvency
or similar proceedings relative to the Company, the holders of Senior
Indebtedness will first be entitled to receive payment in full of principal of
and premium, if any, and interest, if any, on such Senior Indebtedness before
the holders of Junior Subordinated Debentures or the Property Trustee on
behalf of the holders of Capital Securities will be entitled to receive or
retain any payment in respect of the principal of or interest on the Junior
Subordinated Debentures.
In the event of the acceleration of the maturity of any Junior
Subordinated Debentures, the holders of all Senior Indebtedness outstanding at
the time of such acceleration will first be entitled to receive payment in
full of all amounts then due thereon (including any amounts due upon
<PAGE>
acceleration) before the holders of Junior Subordinated Debentures will be
entitled to receive or retain any payment in respect of the principal of or
interest on the Junior Subordinated Debentures.
No payments on account of principal of or interest in respect of the
Junior Subordinated Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Indebtedness, or an
event of default with respect to any Senior Indebtedness resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.
"Senior Indebtedness" means with respect to any person, whether recourse
is to all or a portion of the assets of such person and whether or not
contingent, (i) every obligation of such person for money borrowed; (ii) every
obligation of such person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of such person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such person; (iv)
every obligation of such person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) every capital
lease obligation of such person; (vi) every obligation of such person for
claims (as defined in Section 101(4) of the United States Bankruptcy Code of
1978, as amended) in respect of derivative products such as interest rate,
foreign exchange rate and commodity forward contracts, options, swaps and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, such person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor or otherwise;
provided that "Senior Indebtedness" shall not include (a) any obligations of
the Company which, by their terms, are expressly stated to rank pari passu in
right of payment with, or to not be superior in right of payment to, the
Junior Subordinated Debentures, (b) any obligations of the Company which when
incurred and without respect to any election under Section 1111(b) of the
United States Bankruptcy Code of 1978, as amended, was without recourse to the
Company, (c) any indebtedness of the Company to any of its subsidiaries, (d)
any indebtedness of the Company to a person who is an employee of the Company
incurred (i) as the deferred purchase price of property acquired by the
Company and (ii) at the time of such acquisition, such person was not an
employee of the Company, or (e) any indebtedness in respect of debt securities
issued to any trust, or a trustee of such trust, partnership or other entity
affiliated with the Company that is a financing entity of the Company in
connection with the issuance of such financing entity of securities that are
similar to the Capital Securities.
The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Company or any indebtedness or other
liabilities that may be incurred by the Company's subsidiaries. As of June
30, 1997, Senior Indebtedness of the Company aggregated approximately $13.2
million, and the Company's subsidiaries had liabilities and other obligations
of approximately $609.8 million to which the Junior Subordinated Debentures
would be effectively subordinated.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred
and is continuing constitutes an "Indenture Event of Default" with respect to
the Junior Subordinated Debentures:
(i) failure for 30 days to pay any interest on the Junior
Subordinated Debentures when due (subject to the deferral of any due date
in the case of an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated
<PAGE>
Debentures when due whether at maturity, upon redemption by declaration
or otherwise; or
(iii) failure to observe or perform in any material respect any other
covenant contained in the Indenture for 90 days after written notice to
the Company from the Indenture Trustee or the holders of at least 25% in
aggregate outstanding principal amount of outstanding Junior Subordinated
Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of
the Company.
The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of Junior Subordinated Debentures may
declare the principal due and payable immediately upon an Indenture Event of
Default, and, should the Indenture Trustee or such holders of such Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the Capital Securities shall have such
right. The holders of a majority in aggregate outstanding principal amount of
Junior Subordinated Debentures may annul such declaration and waive the
default if the default (other than the non-payment of the principal of Junior
Subordinated Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest
and principal due otherwise than by acceleration has been deposited with the
Indenture Trustee, and should the holders of such Junior Subordinated
Debentures fail to annul such declaration and waive such default, the holders
of a majority in aggregate Liquidation Amount of the Capital Securities shall
have such right.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures may, on behalf of the holders of all the
Junior Subordinated Debentures, waive any past default, except a default in
the payment of principal or interest (unless such default has been cured and a
sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee)
or a default in respect of a covenant or provision which under the Indenture
cannot be modified or amended without the consent of the holder of each
outstanding Junior Subordinated Debenture, and should the holders of such
Junior Subordinated Debentures fail to waive such default, the holders of a
majority in aggregate Liquidation Amount of the Capital Securities shall have
such right. The Company is required to file annually with the Indenture
Trustee a certificate as to whether or not the Company is in compliance with
all the conditions and covenants applicable to it under the Indenture.
In case an Indenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on such Junior Subordinated Debentures and any other amounts payable
under the Indenture to be forthwith due and payable and to enforce its other
rights as a creditor with respect to such Junior Subordinated Debentures.
As a holding company, the ability of the Company to make payments of
interest and principal on the Junior Subordinated Debentures will be dependent
primarily upon the receipt of dividends and other distributions from its
subsidiaries. FATICO, which is the Company's principal subsidiary, is subject
to regulatory restrictions on its ability to pay dividends or make other
payments to the Company. In 1997, the maximum amount of dividends, loans and
advances available to the Company from FATICO is $49.7 million. In addition,
the right of the Company to participate in any distribution of assets of any
subsidiary, including FATICO, upon such subsidiary's liquidation or
reorganization or otherwise, will be subject to the prior claims of creditors
of that subsidiary, except to the extent that any claims of the Company as a
creditor of such subsidiary may be recognized as such. Accordingly, the
Capital Securities will effectively be subordinated to all existing and future
<PAGE>
liabilities and obligations of the Company's subsidiaries, and holders of the
Capital Securities should look only to the assets of the Company for payments
on the Capital Securities. As of June 30, 1997, the Company's subsidiaries
had other liabilities and obligations of approximately $609.8 million.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF CAPITAL SECURITIES
If an Indenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or
principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise due and payable (and after the expiration of any
applicable cure period), a holder of Capital Securities (including New Capital
Securities) may institute a Direct Action for payment. The Company may not
amend the Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of the holders of all of the Capital
Securities. The Company shall have the right under the Indenture to set-off
any payment made by the Company to such holder in any Direct Action. The
holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless (i) the successor
Person is organized under the laws of the United States or any state or the
District of Columbia, and such successor Person expressly assumes the
Company's obligations on the Junior Subordinated Debentures issued under the
Indenture; (ii) immediately after giving effect thereto, no Indenture Event of
Default, and no event which, after notice or lapse of time or both, would
become an Indenture Event of Default, shall have happened and be continuing;
(iii) if at the time any Capital Securities are outstanding, such transaction
is permitted under the Declaration and Guarantee and does not give rise to any
breach or violation of the Declaration or Guarantee; (iv) any such lease shall
provide that it will remain in effect so long as any Junior Subordinated
Debentures are outstanding; and (v) certain other conditions as prescribed in
the Indenture are met.
MODIFICATION OF INDENTURE
From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies (provided that any such
action does not materially and adversely affect the interest of the holders of
Junior Subordinated Debentures or any outstanding Capital Securities) and
qualifying, or maintaining the qualification of, the Indenture under the Trust
Indenture Act of 1939, as amended, if any. The Indenture contains provisions
permitting the Company and the Indenture Trustee, with the consent of the
holders of not less than a majority in principal amount of outstanding Junior
Subordinated Debentures affected, to modify the Indenture in a manner
affecting the rights of the holders of such Junior Subordinated Debentures;
provided that no such modification may, without the consent of the holder of
each outstanding Junior Subordinated Debentures so affected, (i) change the
stated maturity of Junior Subordinated Debentures or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon (except such extension as is contemplated hereby) or (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures the holders
of which are required to consent to any such modification of the Indenture,
provided that, so long as any Capital Securities remain outstanding, no such
modification may be made that adversely affects the holders of such Capital
Securities in any material respect, and no termination of the Indenture may
occur, and no waiver of any Indenture Event of Default or compliance with any
covenant under the Indenture may be effective, without the prior consent of
the holders of at least a majority of the aggregate Liquidation Amount of the
outstanding Capital Securities unless and until the principal of the Junior
<PAGE>
Subordinated Debentures and all accrued and unpaid interest thereon have been
paid in full and certain other conditions are satisfied.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at the Company's option: (a)
will be discharged from any and all obligations in respect of the Junior
Subordinated Debentures (except for certain obligations to register the
transfer or exchange of Junior Subordinated Debentures, replace stolen, lost
or mutilated Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) or (b) need not comply with certain restrictive
covenants of the Indenture (including that described in the second paragraph
under "Certain Covenants of the Company"), in each case if the Company
deposits, in trust with the Indenture Trustee, money or U.S. government
obligations which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount
sufficient to pay all the principal of, and interest and premium, if any, on
the Junior Subordinated Debentures on the dates such payments are due in
accordance with the terms of such Junior Subordinated Debentures. To exercise
any such option, the Company is required to deliver to the Indenture Trustee
an opinion of counsel to the effect that the deposit and related defeasance
would not cause the holders of the Junior Subordinated Debentures to recognize
income, gain or loss for United States federal income tax purposes and, in the
case of a discharge pursuant to clause (a), such opinion shall be accompanied
by a private letter ruling to the effect received by the Company from the
United States Internal Revenue Service or revenue ruling pertaining to a
comparable form of transaction to such effect published by the United States
Internal Revenue Service.
DISTRIBUTIONS OF JUNIOR SUBORDINATED DEBENTURES; BOOK-ENTRY ISSUANCE
Under certain circumstances involving the termination of the Trust,
Junior Subordinated Debentures may be distributed to the holders of the
Capital Securities in liquidation of the Trust after satisfaction of
liabilities to creditors of the Trust as provided by applicable law. If
distributed to holders of Capital Securities in liquidation, the Junior
Subordinated Debentures will initially be issued in the form of global
securities and certificated securities. DTC, or any successor depositary,
will act as depositary for such global securities. It is anticipated that the
depositary arrangements for such global securities would be substantially
identical to those in effect for the Capital Securities. For a description of
global securities and certificated securities, see "Book-Entry Issuance."
There can be no assurance as to the market price of any Junior
Subordinated Debentures that may be distributed to the holders of Capital
Securities.
PAYMENT AND PAYING AGENTS
The Company initially will act as paying agent with respect to the Junior
Subordinated Debentures except that, if the Junior Subordinated Debentures are
distributed to the holders of the Capital Securities in liquidation of such
holders' interests in the Trust, the Indenture Trustee will act as the Paying
Agent. The Company at any time may designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that the Company will be required
to maintain a Paying Agent at the place of payment.
Any moneys deposited with the Indenture Trustee or any Paying Agent, or
then held by the Company in trust, for the payment of the principal of or
interest on any Junior Subordinated Debentures and remaining unclaimed for two
years after such principal or interest has become due and payable shall, at
the request of the Company, be repaid to the Company and the holder of such
Junior Subordinated Debentures shall thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
<PAGE>
GOVERNING LAW
The Indenture and the Old Junior Subordinated Debentures are, and the New
Junior Subordinated Debentures will be, governed by and construed in
accordance with the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Indenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Junior Subordinated Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Indenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
DESCRIPTION OF GUARANTEE
The Old Guarantee was executed and delivered by the Company concurrently
with the issuance by the Trust of the Old Capital Securities for the benefit
of the holders from time to time of such Capital Securities. As soon as
practicable after the date hereof, the Old Guarantee will be exchanged by the
Company for the New Guarantee. Wilmington Trust Company will act as guarantee
trustee ("Guarantee Trustee") under the New Guarantee. This summary of
certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the
provisions of the Guarantee, including the definitions therein of certain
terms. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Trust Securities.
GENERAL
The Company has irrevocably and unconditionally agreed (and under the New
Guarantee will irrevocably and unconditionally agree) to pay in full on a
subordinated basis, to the extent set forth herein, the Guarantee Payments (as
defined below) to the holders of the Trust Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert other than the defense of payment. The following payments with
respect to the Trust Securities, to the extent not paid by or on behalf of the
Trust (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Trust
Securities, to the extent that the Trust has sufficient funds available
therefor at the time, (ii) the redemption price with respect to any Trust
Securities called for redemption, to the extent that the Trust has sufficient
funds available therefor at such time, or (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (unless the
Junior Subordinated Debentures are distributed to holders of the Trust
Securities), the lesser of (a) the aggregate Liquidation Amount of the Trust
Securities and all accrued and unpaid Distributions thereon to the date of
payment and (b) the amount of assets of the Trust remaining available for
distribution to holders of Trust Securities. The Company's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Company to the holders of the applicable Trust Securities or by causing
the Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Trust's obligations under the Trust Securities, but will apply only to the
extent that the Trust has sufficient funds available to make such payments.
If the Company does not make interest payments on the Junior Subordinated
Debentures held by the Trust, the Trust will not be able to pay Distributions
on the Trust Securities and will not have funds legally available therefor.
The Guarantee will rank subordinate and junior in right of payment to all
<PAGE>
Senior Indebtedness of the Company. See "--Status of the Guarantee." The
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, whether under the Indenture, any other existing
indenture or any other indenture that the Company may enter into in the future
or otherwise.
The Company has, through the Guarantee, the Declaration, the Junior
Subordinated Debentures and the Indenture, taken together, fully and
unconditionally guaranteed all of the Trust's obligations under the Capital
Securities. No single document standing alone or operating in conjunction
with fewer than all of the other documents constitutes such guarantee. It is
only the combined operation of these documents that has the effect of
providing a full and unconditional guarantee of the Trust's obligations under
the Capital Securities. See "Relationship Among the New Capital Securities,
the New Junior Subordinated Debentures and the New Guarantee--General."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior
Indebtedness of the Company. The Guarantee does not place a limitation on the
amount of additional Senior Indebtedness that may be incurred by the Company.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding
directly against the Guarantor to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity). The Guarantee will be held for the benefit of the holders of the
Trust Securities. The Guarantee will not be discharged except by payment of
the Guarantee Payments in full to the extent not paid by the Trust or upon
Distribution of the Junior Subordinated Debentures to the holders of the
Capital Securities in exchange for all of the Trust Securities.
The obligations of the Company under the Guarantee will be structurally
subordinated to all liabilities and obligations of the Company's subsidiaries.
See "Risk Factors--Status of Company as Holding Company."
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the Trust Securities (in which case no vote
will be required), the Guarantee may not be amended without the prior approval
of the holders of not less than a majority of the aggregate Liquidation Amount
of the outstanding Trust Securities. The manner of obtaining any such
approval will be as set forth under "Description of New Securities--
Description of New Capital Securities--Voting Rights; Amendment of the
Declaration." All guarantees and agreements contained in the Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of the
Company and shall inure to the benefit of the registered holders of the Trust
Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment or other obligations thereunder.
The holders of a majority in aggregate Liquidation Amount of the Trust
Securities have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee in respect of
the Guarantee or to direct the exercise of any trust or power conferred upon
the Guarantee Trustee under the Guarantee.
Any holder of the Trust Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee
or any other person or entity.
<PAGE>
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance
of a default by the Company in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee at
the request of any holder of any Trust Security unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the redemption price of all of the Trust Securities, upon full
payment of the amounts payable upon liquidation of the Trust or upon
Distribution of Junior Subordinated Debentures to the holders of the Trust
Securities in exchange for all of the Trust Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Trust Securities must restore payment of any sums paid
under the Trust Securities or the Guarantee.
GOVERNING LAW
The New Guarantee will be governed by and construed in accordance with
the laws of the State of New York.
RELATIONSHIP AMONG THE NEW CAPITAL SECURITIES,
THE NEW JUNIOR SUBORDINATED DEBENTURES
AND THE NEW GUARANTEE
Payments of Distributions and other amounts due on the Trust Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of New Securities--Description of New Guarantee."
If and to the extent that the Company does not make payments under the Junior
Subordinated Debentures when such payments are due and payable, the Trust will
not pay Distributions or other amounts due on the Trust Securities. The
Guarantee does not cover payment of Distributions when the Trust does not have
sufficient funds to pay such Distributions. In such event, a holder of
Capital Securities (including New Capital Securities) may institute a legal
proceeding directly against the Company under the Indenture to enforce payment
of such Distributions to such holder after the respective due dates. Taken
together, the Company's obligations under the Junior Subordinated Debentures,
the Indenture, the Declaration and the Guarantee provide, in the aggregate, a
full and unconditional guarantee of payments of distributions and other
amounts due on the Capital Securities. No single document standing alone or
operating in conjunction with fewer than all of the other documents
constitutes such guarantee. It is only the combined operation of these
documents that has the effect of providing a full and unconditional guarantee
of the Trust's obligations under the Capital Securities. The obligations of
the Company under the Guarantee and the Junior Subordinated Debentures are
subordinate and junior in right of payment to all Senior Indebtedness of the
Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the Junior Subordinated Debentures, such payments will be sufficient to cover
<PAGE>
Distributions and other payments due on the Capital Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the sum of the aggregate stated Liquidation Amount
of the Capital Securities and the Common Securities; (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures
will match the Distribution rate and Distribution and other payment dates for
the related Capital Securities; (iii) the Company will pay for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations
under the Trust Securities; and (iv) the Declaration further provides that the
Trust will not engage in any activity that is not consistent with the limited
purposes of the Trust.
Notwithstanding anything to the contrary in the Indenture, the Company
has the right to set-off any payment it is otherwise required to make
thereunder with and to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a related payment under the
Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF CAPITAL SECURITIES
A holder of Trust Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Trust or any
other person or entity.
A default or event of default under any Senior Indebtedness of the
Company will not constitute a default or Indenture Event of Default. In
addition, in the event of payment defaults under, or acceleration of, Senior
Indebtedness of the Company, the subordination provisions of the Indenture
provide that no payments may be made in respect of the Junior Subordinated
Debentures until such Senior Indebtedness has been paid in full or any payment
default thereunder has been cured or waived. Failure to make required
payments on the Junior Subordinated Debentures would constitute an Indenture
Event of Default under the Indenture.
LIMITED PURPOSE OF TRUST
The Capital Securities evidence a beneficial interest in the Trust, and
the Trust exists for the sole purpose of issuing the Capital Securities and
the Common Securities and investing the proceeds thereof in Junior
Subordinated Debentures. A principal difference between the rights of a
holder of Capital Securities and a holder of Junior Subordinated Debentures is
that a holder of Junior Subordinated Debentures is entitled to receive from
the Company the principal amount of and interest accrued on Junior
Subordinated Debentures held, while a holder of Capital Securities is entitled
to receive Distributions from the Trust (or from the Company under the
Guarantee) if and to the extent the Trust has funds available for the payment
of such Distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or liquidation
of the Trust involving the liquidation of the Junior Subordinated Debentures,
the holders of the Capital Securities will be entitled to receive, out of
assets held by the Trust, the Liquidation Distribution in cash. See
"Description of New Securities--Description of New Capital
Securities--Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Junior Subordinated Debentures, would be a subordinated creditor
of the Company, subordinated in right of payment to all Senior Indebtedness,
but entitled to receive payment in full of principal and interest before any
stockholders of the Company receive payments or distributions. Since the
Company is the guarantor under the Guarantee and has agreed to pay for all
costs, expenses and liabilities of the Trust (other than the Trust's
obligations to the holders of the Capital Securities), the position of a
holder of Capital Securities and a holder of the Junior Subordinated
<PAGE>
Debentures relative to other creditors and to stockholders of the Company in
the event of liquidation or bankruptcy of the Company would be substantially
the same.
DESCRIPTION OF OLD SECURITIES
The terms of the Old Securities are identical in all material respects to
the New Securities, except that (i) the Old Securities have not been
registered under the Securities Act, are subject to certain restrictions on
transfer and are entitled to certain rights under the Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange
Offer, except under limited circumstances); (ii) the New Capital Securities
will not provide for any increase in the Distribution rate thereon; and (iii)
the New Junior Subordinated Debentures will not provide for any increase in
the interest rate thereon. The Registration Rights Agreement provides that,
if (i) the Registration Statement of which this Prospectus forms a part (the
"Exchange Registration Statement") is not filed with the Commission by
September 19, 1997 (or, in certain limited circumstances, a shelf registration
statement (the "Shelf Registration Statement") with respect to the resale of
the Old Capital Securities is not filed with the Commission by a specified
date), (ii) the Exchange Registration Statement is not declared effective by
October 19, 1997 (or, in certain limited circumstances, the Shelf Registration
Statement is not declared effective by a specified date) (the "Effectiveness
Target Date"), (iii) the Exchange Offer is not consummated within 30 business
days of the Effectiveness Target Date or (iv) if the Exchange Registration
Statement (or, in certain limited circumstances, the Shelf Registration
Statement) is filed and declared effective but thereafter ceases to be
effective or usable in connection with resales of transfer restricted Trust
Securities without being succeeded within 60 days by an additional
registration statement filed and declared effective that cures such failure
(each, a "Registration Default"), then the Company will pay additional
interest ("Additional Interest") in respect of the Old Junior Subordinated
Debentures and corresponding additional Distributions ("Additional
Distributions") will become payable on the Old Capital Securities, with
respect to the first 30-day period immediately following the occurrence of
such Registration Default, in an amount equal to 0.25% per week per $1,000
Liquidation Amount of Old Capital Securities. The amount of Additional
Interest (and corresponding Additional Distributions) will increase by an
additional 0.25% per week per $1,000 Liquidation Amount of Old Capital
Securities with respect to each subsequent 30-day period until such
Registration Default has been cured, up to a maximum amount of Additional
Interest (and corresponding Additional Distributions) of 0.50% per week per
$1,000 Liquidation Amount of Old Capital Securities. The New Securities are
not, and upon consummation of the Exchange Offer the Old Securities will not
be, entitled to any such Additional Interest or Additional Distributions.
Accordingly, holders of Old Capital Securities should review the information
set forth under "Risk Factors--Consequences of a Failure to Exchange Old
Capital Securities."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the principal United States federal
income tax consequences that may be relevant to the purchase, ownership and
disposition of the New Capital Securities. Unless otherwise stated, this
summary only addresses the United States federal income tax consequences to
U.S. Holders (defined below) who exchange Old Capital Securities for New
Capital Securities pursuant to the Exchange Offer and hold New Capital
Securities as capital assets. As used herein, a "U.S. Holder" means a holder
that is for United States income tax purposes (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any State thereof
(including the District of Columbia) or other partnership treated as a United
States person under any applicable United States Treasury Regulations,
excluding a partnership that meets such definition but is not treated as a
United States person under any such Unites States Treasury Regulations, (iii)
an estate the income of which is subject to United States federal income
<PAGE>
taxation regardless of its source, or (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration
of such trust and one or more United States persons have the authority to
control all the substantial decisions of such trust. Notwithstanding the
preceding sentence, to the extent provided in United States Treasury
Regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons prior to such date, that elect to continue to be treated
as United States persons also will be a U.S. Holder. The tax treatment of a
holder may vary depending on his, her or its particular situation. This
summary does not address all the United States federal income tax consequences
that may be relevant to a particular holder or to holders who may be subject
to special tax treatment, such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers or
traders in securities or currencies, tax-exempt investors, persons that hold
Capital Securities as a position in a "straddle" or as part of a "hedging,"
"conversion" or "integrated" transaction for United States federal income tax
purposes, persons that have a "functional currency" other than the U.S.
dollar or to holders that are not U.S. Holders. In addition, this summary
does not include any description of any alternative minimum tax consequences
or the tax laws of any state, local or foreign government that may be
applicable to a holder of New Capital Securities. This summary is based on
the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
regulations promulgated thereunder and administrative and judicial
interpretations thereof, as of the date hereof, all of which are subject to
change, possibly on a retroactive basis. The authorities on which this
summary is based are subject to various interpretations that are not binding
on the Internal Revenue Service ("IRS"). Moreover, no rulings have been or
will be sought from the IRS with respect to the transactions described herein.
Accordingly, there can be no assurance that the IRS will not challenge the
treatment described herein.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF AN EXCHANGE PURSUANT TO THE
EXCHANGE OFFER AND THE OWNERSHIP AND DISPOSITION OF THE NEW CAPITAL
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS. FOR A DISCUSSION OF THE POSSIBLE REDEMPTION OF THE NEW
CAPITAL SECURITIES UPON THE OCCURRENCE OF CERTAIN SPECIAL EVENTS. SEE
"DESCRIPTION OF NEW SECURITIES--DESCRIPTION OF NEW CAPITAL
SECURITIES--REDEMPTIONS."
EXCHANGE OFFER
The exchange of Old Capital Securities for New Capital Securities
pursuant to the Exchange Offer should not constitute a material modification
of the terms of the Old Capital Securities and, therefore, such exchange
should not constitute an exchange for United States federal income tax
purposes. Accordingly, such exchange should have no United States income tax
consequences to U.S. Holders of Capital Securities and the holding period of
the New Capital Securities will include the holding period of the Old Capital
Securities and the basis of the New Capital Securities will be the same as the
basis of the Old Capital Securities immediately before the exchange.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the New Capital Securities, under
current law and assuming full compliance with the terms of the Declaration and
other documents, the Trust will not be taxable as a corporation for United
States federal income tax purposes. Accordingly, for United States federal
income tax purposes, each holder of New Capital Securities will be required to
include in its gross income its pro rata share of interest income, including,
original issue discount ("OID"), paid or accrued on the Junior Subordinated
Debentures.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
<PAGE>
The Company, the Trust and the holders of the New Capital Securities (by
acceptance of a beneficial interest in a New Capital Security) will agree to
treat the Junior Subordinated Debentures as indebtedness for all United States
tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Except as set forth below, stated interest on the Junior Subordinated
Debentures generally will be taxable to a holder as ordinary income at the
time it is paid or accrued in accordance with such holder's regular method of
tax accounting.
Under Treasury regulations applicable to debt instruments issued on or
after August 13, 1996 (the "Regulations"), a "remote" contingency that stated
interest will not be timely paid will be ignored in determining whether a debt
instrument is issued with OID. The Company believes that the likelihood of
its exercising its option to defer payments of interest is remote. Based on
the foregoing, the Company believes that the Junior Subordinated Debentures
will not be considered to be issued with OID at the time of their original
issuance and, accordingly, a U.S. Holder should include in gross income such
holder's allocable share of stated interest on the Junior Subordinated
Debentures in accordance with such holder's regular method of tax accounting.
Under the Regulations, if the Company exercised its option to defer any
payment of interest, the Junior Subordinated Debentures would at that time be
treated as having been reissued with OID, and all stated interest on the
Junior Subordinated Debentures would thereafter be treated as OID as long as
the Junior Subordinated Debentures remained outstanding. In such event, all
of a U.S. Holder's interest income with respect to the Junior Subordinated
Debentures would be accounted for as OID on an economic accrual basis
regardless of such holder's method of tax accounting, and actual distributions
of stated interest would not be reported as income. Consequently, a U.S.
Holder would be required to include stated interest on the Junior Subordinated
Debentures in gross income, as OID, even though the Company would not make any
actual cash payments with respect to such interest during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and its is possible that the IRS could take a
position contrary to the interpretation herein.
Because income on the New Capital Securities will constitute interest or
OID, corporate U.S. Holders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the New
Capital Securities.
Subsequent use of the term "interest" in this summary includes income in
the form of OID.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE
TRUST
As described under the caption "Description of New Securities--
Description of New Junior Subordinated Debentures--Distributions of New Junior
Subordinated Debentures; Book-Entry Issuance," New Junior Subordinated
Debentures may be distributed to holders in exchange for the New Capital
Securities and in liquidation of the Trust. Under current law, such a
distribution should be non-taxable, and should result in a U.S. Holder
receiving directly its pro rata share of the New Junior Subordinated
Debentures previously held indirectly through the Trust, with a holding period
and aggregate tax basis equal to the holding period and aggregate tax basis
such holder had in its New Capital Securities before such distribution. If,
however, the liquidation of the Trust were to occur because the Trust is
subject to United States federal income tax with respect to income accrued or
received on the New Junior Subordinated Debentures, the distribution of the
New Junior Subordinated Debentures to holders would be a taxable event to the
Trust and to each holder and a U.S. Holder would recognize gain or loss as if
<PAGE>
the holder had exchanged its New Capital Securities for the New Junior
Subordinated Debentures it received upon liquidation of the Trust. A U.S.
Holder would accrue interest in respect of the New Junior Subordinated
Debentures received from the Trust in the manner described above under
"--Interest Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of New
Securities--Description of New Capital Securities--Redemption"), the Junior
Subordinated Debentures may be redeemed for cash, with the proceeds of such
redemption distributed to holders in redemption of their New Capital
Securities. Under current law, such a redemption would constitute a taxable
disposition of the redeemed New Capital Securities for United States federal
income tax purposes, and a U.S. Holder would recognize gain or loss as if it
sold such redeemed New Capital Securities for cash. See "--Sales of New
Capital Securities."
SALES OF NEW CAPITAL SECURITIES
A U.S. Holder that sells New Capital Securities will recognize gain or
loss equal to the difference between the amount realized by such holder on the
sale of the New Capital Securities (except to the extent that such amount
realized is characterized as a payment in respect of accrued but unpaid
interest on such holder's allocable share of the Junior Subordinated
Debentures that the holder had not included in gross income previously) and
the holder's adjusted tax basis in the New Capital Securities sold. Assuming
that the Company does not exercise its option to defer payment of interest on
the Junior Subordinated Debentures, and the New Capital Securities are not
considered issued with OID, a U.S. Holder's adjusted tax basis in the New
Capital Securities generally will be its initial purchase price. If the
Junior Subordinated Debentures are deemed to be issued with OID as result of
the Company's deferral of any interest payment, or otherwise, a U.S. Holder's
tax basis in the New Capital Securities generally will be its initial purchase
price, increased by OID previously includible in such holder's gross income to
the date of disposition and decreased by distributions or other payments
received on the New Capital Securities since and including the date of the
first Extension Period. Such gain or loss generally will be a capital gain or
loss. In the case of a noncorporate U.S. Holder, the maximum marginal U.S.
federal income tax rate applicable to such gain will be lower than the maximum
marginal U.S. federal income tax rate applicable to ordinary income if such
U.S. Holder's holding period for such New Capital Securities exceeds one year
and will be further reduced if such New Capital Securities were held for more
than 18 months. Subject to certain limited exceptions, capital losses cannot
be applied to offset ordinary income for United States federal income tax
purposes.
Should the Company exercise its option to defer any payment of interest
on the Junior Subordinated Debentures, the New Capital Securities may trade at
a price that does not accurately reflect the value of accrued but unpaid
interest with respect to the underlying Junior Subordinated Debentures. In
the event of such a deferral, a U.S. Holder who disposes of its New Capital
Securities between record dates for payments of distributions thereon will be
required to include in income as ordinary income accrued but unpaid interest
on the Junior Subordinated Debentures to the date of disposition as OID, but
may not receive the cash related thereto. However, such holder will add such
amount to its adjusted tax basis in the New Capital Securities. To the extent
the selling price received by a U.S. Holder in respect of such New Capital
Securities is less than the U.S. Holder's adjusted tax basis in such capital
securities, such holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid or accrued on the New Capital
Securities held of record by a U.S. Holder (other than an "exempt recipient",
including a corporation, a payee that is not a U.S. Holder that provides an
<PAGE>
appropriate certification and certain other persons) will be reported to the
IRS. Backup withholding at a rate of 31% will apply to payments of interest
to non-exempt U.S. Holders unless the U.S. Holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of New Capital Securities to
or through the United States office of a broker is subject to information
reporting and backup withholding unless the U.S. Holder establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a U.S. Holder under the backup withholding
rules will be allowed as a refund or a credit against such U.S. Holder's
United States federal income tax liability, provided the required information
is furnished to the IRS.
These backup withholding tax and information reporting rules currently
are under review by the United States Treasury Department and proposed
Treasury regulations issued on April 15, 1996 would modify certain of such
rules generally with respect to payment, made after December 31, 1997.
Accordingly, the application of such rules to the New Capital Securities could
be changed.
BOOK-ENTRY ISSUANCE
The New Capital Securities initially will be represented by one or more
Capital Securities in registered, global form (collectively, the "Global
Capital Securities"). The Global Capital Securities will be deposited upon
issuance with the Property Trustee as custodian for The Depository Trust
Company ("DTC") and registered in the name of Cede & Co. as DTC's nominee, in
each case for credit to an account of a direct or indirect participant in DTC
as described below.
Except as set forth below, the Global Capital Securities may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee only in amounts that would not cause a holder
to own less than 100 New Capital Securities. Beneficial interests in the
Global Capital Securities may not be exchanged for New Capital Securities in
certificated form except in the limited circumstances described below. See
"--Exchange of Book-Entry Capital Securities for Certificated Capital
Securities."
Transfer of beneficial interests in the Global Capital Securities will be
subject to the applicable rules and procedures of DTC and its direct or
indirect participants (including, if applicable, those of the Euroclear System
("Euroclear") and CEDEL, S.A. ("CEDEL")), which may change from time to time.
DEPOSITARY PROCEDURES
DTC has advised the Trust and the Company that DTC is a limited-purpose
trust company organized under the laws of the State of New York, a member of
the Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers
and dealers (including the Purchasers), banks, trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system
is also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or the
<PAGE>
Indirect Participants. The ownership interest and transfer of ownership
interest of each actual purchaser of each security held by or on behalf of DTC
are recorded on the records of the Participants and Indirect Participants.
DTC has also advised the Trust and the Company that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital
Securities, DTC will credit the accounts of Participants designated by the
Initial Purchasers with portions of the aggregate Liquidation Amount of the
Global Capital Securities and (ii) ownership of such interests in the Global
Capital Securities will be shown on, and the transfer of ownership thereof
will be effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Investors in the Global Capital Securities may hold their interests
therein directly through DTC if they are participants in such system, or
indirectly through organizations (including Euroclear and CEDEL) which are
participants in such system. All interest in a Global Capital Security,
including any held through Euroclear or CEDEL, may be subject to the
procedures and requirements of DTC. Those interests held through Euroclear or
CEDEL may also be subject to the procedures and requirements of such system.
The laws of some states require that certain persons take physical delivery in
certificated form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Capital Security to such persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants and certain
banks, the ability of a person having beneficial interests in a Global Capital
Security to pledge such interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing
such interests. For certain other restrictions on the transferability of the
New Capital Securities, see "--Exchange of Book-Entry New Capital Securities
for Certificated New Capital Securities."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL CAPITAL
SECURITIES WILL NOT HAVE NEW CAPITAL SECURITIES REGISTERED IN THEIR NAME, WILL
NOT RECEIVED PHYSICAL DELIVERY OF NEW CAPITAL SECURITIES IN CERTIFICATED FORM
AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF FOR ANY
PURPOSE.
The Property Trustee will treat the persons in whose names the New
Capital Securities, including the Global Capital Securities, are registered as
the owners thereof for the purpose of receiving payments and for any and all
other purposes whatsoever. Accordingly, payments in respect of the Global
Capital Security registered in the name DTC or its nominee will be payable by
the Property Trustee to DTC in its capacity as the registered holder. DTC has
advised the Trust and the Company that its current practice, upon receipt of
any payment in respect of securities such as the New Capital Securities, is to
credit the accounts of the relevant Participants with the payment on the
payment date unless DTC has reason to believe it will not receive payment on
such payment date. Payments by the Participants and the Indirect Participants
to the beneficial owners of New Capital Securities will be governed by
standing instructions and customary practices and will be the responsibility
of the Participants or the Indirect Participants and will not be the
responsibility of DTC, the Company, the Property Trustee or the Trust.
Neither the Trust, the Company nor the Property Trustee will be liable for any
delay by DTC or any of its Participants in identifying the beneficial owners
of the New Capital Securities, and the Trust and the Property Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes. Consequently, neither the Company, the
Trust, the Property Trustee nor any agent thereof has or will have any
responsibility or liability for (i) any aspect of DTC's records or any
Participant's or Indirect Participant's records relating to or payments made
on account of beneficial ownership interests in the Global Capital Securities,
or for maintaining, supervising or reviewing any of DTC's records or any
<PAGE>
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in the Global Capital Securities or (ii) any other matter
relating to the actions and practices of DTC or any of its Participants or
Indirect Participants.
Except for trades involving only Euroclear or CEDEL participants,
interests in the Global Capital Securities will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its Participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds. Transfers between participants in
Euroclear or CEDEL will be effected in the ordinary course in accordance with
their respective rules and operating procedures.
DTC has advised the Trust and the Company that it will take any action
permitted to be taken by a holder of New Capital Securities only at the
direction of one or more Participants to whose account with DTC interests in
the Global Capital Securities are credited and only in respect of such portion
of the aggregate Liquidation Amount of the New Capital Securities represented
by the Global Capital Securities as to which such Participant or Participants
has or have given such direction. However, if there is a Trust Enforcement
Event, DTC reserves the right to exchange the Global Capital Securities for
legended New Capital Securities in certificated form and to distribute such
New Capital Securities to its Participants.
So long as DTC or its nominee is the registered owner of the Global
Capital Securities, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the New Capital Securities represented
by the Global Capital Security for all purposes under the Declaration.
The information in this section concerning DTC and its book-entry systems
has been obtained from sources that the Trust and the Company believe to be
reliable, but neither the Trust nor the Company takes responsibility for the
accuracy thereof.
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interest in the Global Capital Securities among participants in
DTC, it is under no obligation to perform or to continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Company, the Trust nor the Property Trustee will have any responsibility for
the performance by DTC or its respective Participants or Indirect Participants
of their respective obligations under the rules and procedures governing their
operations.
EXCHANGE OF BOOK-ENTRY CAPITAL SECURITIES FOR CERTIFICATED CAPITAL SECURITIES
A Global Capital Security is exchangeable for New Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company in its sole discretion elects to cause the issuance of the New Capital
Securities in certificated form or (iii) there shall have occurred and be
continuing a Trust Enforcement Event or any event which after notice or lapse
of time or both would be a Trust Enforcement Event under the Declaration. In
addition, beneficial interests in a Global Capital Security may be exchanged
for certificated New Capital Securities upon request but only upon at least 20
days' prior written notice given to the Property Trustee by or on behalf of
DTC in accordance with customary procedures. In all cases, certificated New
Capital Securities delivered in exchange for any Global Capital Security or
beneficial interests therein will be registered in the names, and issued in
any authorized denominations, requested by or on behalf of DTC (in accordance
with its customary procedures).
BENEFIT PLAN CONSIDERATIONS
<PAGE>
Before authorizing an investment in the New Capital Securities,
fiduciaries of pension, profit sharing or other employee benefit plans subject
to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Code ("Plans") should consider, among other matters,
(a) ERISA's fiduciary standards (including its prudence and diversification
requirements), (b) whether such fiduciaries have authority to make such
investment in the New Capital Securities under the applicable Plan (as defined
herein) investment policies and governing instruments, and (c) rules under
ERISA and the Code that prohibit Plans from engaging in "prohibited
transactions."
Section 406 of ERISA and Section 4975 of the Code prohibit Plans,
including individual retirement accounts and Keogh plans subject to Section
4975 of the Code, from, among other things, engaging in certain transactions
involving "plan assets" with persons who are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Plan. A
violation of these "prohibited transaction" rules may result in an excise tax
or other liabilities under ERISA and/or Section 4975 of the Code for such
persons, unless exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental plans
(as defined in Section 3(32) of ERISA), certain church plans (as defined in
Section 3(33) of ERISA) and foreign plans (as described in Section 4(b)(4) of
ERISA) are not subject to the requirements of ERISA or Section 4975 of the
Code but may be subject to similar rules, as discussed below.
The Department of Labor ("DOL") has issued a regulation (29 C.F.R.
Section 2510.3-101) (the "Plan Assets Regulation") concerning the definition
of what constitutes the assets of a Plan. The Plan Assets Regulation provides
that as a general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan acquires an
"equity interest" will be deemed for purposes of ERISA to be assets of the
investing Plan unless certain exceptions apply.
Pursuant to an exception contained in the Plan Assets Regulation, the
assets of the Trust would not be deemed to be "plan assets" of investing Plans
if, immediately after the most recent acquisition of any equity interest in
the Trust, less than 25% of the value of each class of equity interest in the
Trust were held by Plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church and foreign plans) and
entities holding assets deemed to be "plan assets" of any Plan (collectively,
"Benefit Plan Investors"). No assurance can be given that the value of the
New Capital Securities held by Benefit Plan Investors will be less than 25% of
the total value of such New Capital Securities at the completion of the
initial offering or thereafter, and no monitoring or other measures will be
taken with respect to the satisfaction of the conditions to this exception.
All of the Common Securities have been purchased, and will be held directly,
by the Company.
It is also possible that New Capital Securities received as the result of
the Exchange Offer may qualify as "publicly offered securities" under the Plan
Assets Regulation if, in addition to being offered pursuant to any effective
registration statement, they are also "widely held" and "freely transferable"
at the time of the Exchange Offer. Under the Plan Assets Regulation, a class
of securities is "widely held" only if it is a class of securities owned by
100 or more investors independent of the issuer and each other. Although it
is possible that at the time of the Exchange Offer the New Capital Securities
will be "widely held", no assurances can be given that will be true. If the
New Capital Securities are "publicly offered securities" at the time of the
Exchange Offer, the assets of the Trust would not be assets of the investing
Plans.
There can be no assurance that any of the exceptions set forth in the
Plan Assets Regulation will apply to the purchase of New Capital Securities
offered hereby and, as a result, an investing Plan's assets could be
considered to include an undivided interest in the Junior Subordinated
Debentures held by the Trust. In the event that assets of the Trust are
<PAGE>
considered assets of an investing Plan, the Trustees, the Company and other
persons, in providing services with respect to the Junior Subordinated
Debentures, may be considered fiduciaries to such Plan and subject to the
fiduciary responsibility provisions of Title I of ERISA. In addition, certain
transactions involving the Trust and/or the New Capital Securities could be
deemed to constitute direct or indirect prohibited transactions under ERISA
and Section 4975 of the Code with respect to a Plan. For example, if the
Company is a Party in Interest with respect to an investing Plan, extensions
of credit between the Company and the Trust (as represented by the Junior
Subordinated Debentures and the New Guarantee) would likely be prohibited
transactions under Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of
the Code unless covered by statutory or administrative exemptive relief. In
addition, if the Company were considered to be a fiduciary with respect to the
Trust as a result of certain powers it holds (such as the power to appoint,
remove or replace the Trustees), the optional redemption or acceleration of
the Junior Subordinated Debentures could be considered to be a prohibited
transaction under Section 406(b) of ERISA and Section 4975(c)(1)(E) of the
Code. In order to avoid such prohibited transactions, each investing Plan, by
purchasing the New Capital Securities, will be deemed to have directed the
Trust to invest in the Junior Subordinated Debentures and to have appointed
the Property Trustee.
The DOL has issued five prohibited transaction class exemptions ("PTCEs")
that may provide exemptive relief for direct or indirect prohibited
transactions resulting from the purchase or holding of the New Capital
Securities by a Plan or an entity using "plan assets." Those class exemptions
are PTCE 96-23 (for certain transactions determined by in-house asset
managers), PTCE 91-38 (for certain transactions involving bank collective
investment funds), PTCE 95-60 (for certain transactions involving insurance
company general accounts) PTCE 90-1 (for certain transactions involving
insurance company pooled separate accounts) and PTCE 84-14 (for certain
transactions determined by independent qualified professional asset managers).
Because of ERISA's prohibitions and those of Section 4975 of the Code,
the New Capital Securities may not be purchased or held by any Plan, any
entity whose underlying assets include "plan assets" by reason of any Plan's
investment in the entity (a "Plan Asset Entity") or any person investing "plan
assets" of any Plan, unless such purchase or holding is covered by the
exemptive relief provided by PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption. If a purchaser or holder of the New Capital
Securities that is a Plan or a Plan Asset Entity or investing "plan assets" of
any Plan elects to rely on an exemption other than PTCE 96-23, 95-60, 91-38,
90-1 or 84-14, the Company and the Trust may require a satisfactory opinion of
counsel or other evidence with respect to the availability of such exemption
for such purchase and holding. Any purchaser or holder of the New Capital
Securities or any interest therein will be deemed to have represented by its
purchase and holding thereof that either (a) the purchaser and holder is not a
Plan or a Plan Asset Entity and is not purchasing such securities on behalf of
or with "plan assets" of any Plan or (b) the purchase and holding of the New
Capital Securities is covered by the exemptive relief provided by PTCE 96-23,
95-60, 91-38, 90-1, or 84-14 or another applicable exemption.
Any Plans or other entities whose assets include Plan assets subject to
ERISA or Section 4975 of the Code proposing to acquire New Capital Securities
or New Capital Securities should consult with their own counsel.
Governmental Plans, as defined in Section 3(32) of ERISA, are not subject
to ERISA, and are also not subject to the prohibited transaction provisions of
Section 4975 of the Code. However, state laws or regulations governing the
investment and management of the assets of such plans may contain fiduciary
and prohibited transaction provisions similar to those under ERISA and the
Code discussed above. Accordingly, fiduciaries of government plans, in
consultation with their advisers, should consider the impact of their
respective state laws on investments in the New Capital Securities, and the
considerations discussed above, to the extent applicable.
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of New Securities received
in exchange for Old Securities where such Old Securities were acquired as a
result of market-making activities or other trading activities. Each of the
Company and the Trust has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, for a period of 90 days after the Expiration Date, all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.
Neither the Company nor the Trust will receive any proceeds from any sale
of New Securities by broker-dealers. New Securities received by
broker-dealers for their own account pursuant to the Exchange Offer may be
sold from time to time in one or more transactions in the over-the-counter
market, in negotiated transactions, through the writing of options on the New
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such New Securities. Any broker-dealer that resells New
Securities that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Securities may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of New Securities and any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company and
the Trust will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company and the Trust have
jointly and severally agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the holders of the Old
Securities) other than commissions or concessions of any broker-dealers and
will indemnify the holders of the Old Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the New
Capital Securities will be passed upon for the Trust by Morris James Hitchens
& Williams, Wilmington, Delaware, as special Delaware counsel to the Trust.
The validity of the New Junior Subordinated Debentures and the New Guarantee
will be passed upon for the Company and the Trust by White & Case, Los
Angeles, California. White & Case will rely as to certain matters of Delaware
law on the opinion of Morris James Hitchens & Williams. Certain United States
federal income taxation matters also will be passed upon for the Company and
the Trust by White & Case as special tax counsel to the Company.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1996, have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
<PAGE>
accounting.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The First American Financial Corporation (the "Company") is a California
corporation.
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 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 Company 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 this
provision is to exculpate directors from any liability to the Company, or
anyone claiming on the Company'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 Company 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 Company 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 Company: 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 Company means any person appointed to serve
on the Company's board of directors either by its shareholders or by the
remaining board members.
The Company's 1996 Stock Option Plan and the Company's 1997 Directors'
Stock Plan (each, a "Plan") provide 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
<PAGE>
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."
Under the Amended and Restated Declaration (the "Declaration") of First
American Capital Trust I (the "Trust"), the Company has agreed to indemnify
the (i) Property Trustee, (ii) the Delaware Trustee, (iii) each Affiliate of
the Property Trustee or the Delaware Trustee, and (iv) any officers,
directors, shareholders, members, partners, employees or agents of the
Property Trustee and the Delaware Trustee (each, an "Indemnified Person") for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes based
on the income of such Indemnified Person) incurred without gross negligence or
bad faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the
exercise or performance of any of its powers or duties under the Declaration.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Registrants, however, the Registrants have 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 21. EXHIBITS.
Exhibit Number Description
* 4.1 Junior Subordinated Indenture, dated as of April 22, 1997,
between The First American Financial Corporation and Wilmington
Trust Company, as Indenture Trustee (incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).
4.2 Form of New 8.50% Junior Subordinated Deferrable Interest
Debenture.
4.3 Certificate of Trust of First American Capital Trust I.
4.4 Declaration of Trust of First American Capital Trust I, dated
as of April 11, 1997.
* 4.5 Amended and Restated Declaration of Trust of First American
Capital Trust I, dated as of April 22, 1997 (incorporated by
reference from the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997).
4.6 Form of New 8.50% Capital Security (Liquidation Amount $1,000
per Capital Security).
4.7 Form of New Guarantee Agreement.
* 4.8 Registration Rights Agreement, dated as of April 22, 1997,
among The First American Financial Corporation, First American
Capital Trust I, Chase Securities Inc. and UBS Securities LLC
(incorporated by reference from the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997).
** 5.1 Opinion of White & Case as to the legality of the New Junior
Subordinated Debentures and the New Guarantee.
** 5.2 Opinion of Morris James Hitchens & Williams as to the legality
of the New Capital Securities.
** 8.1 Opinion of White & Case as to certain tax matters.
12.1 Computation of Consolidated Ratio of Earnings to Fixed Charges.
23.1 Consent of Price Waterhouse LLP.
** 23.2 Consent of White & Case (contained in the opinion filed as
Exhibit 5.1 to this Registration Statement).
** 23.3 Consent of Morris James Hitchens & Williams (contained in the
opinion filed as Exhibit 5.2 to this Registration Statement).
<PAGE>
** 23.4 Consent of White & Case (contained in the opinion filed as
Exhibit 8.1 to this Registration Statement).
24 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of Wilmington Trust Company to act as trustee under the
Junior Subordinated Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of Wilmington Trust Company to act as trustee under the
Amended and Restated Declaration of Trust of First American
Capital Trust I.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of Wilmington Trust Company to act as trustee under the
New Guarantee Agreement.
99.1 Form of Letter of Transmittal and instructions thereto.
99.2 Form of Notice of Guaranteed Delivery.
** 99.3 Form of Exchange Agency Agreement.
* Incorporated by reference.
** To be filed by amendment.
ITEM 22. UNDERTAKINGS.
(a) Each of the undersigned Registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
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 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.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act") may be permitted to directors,
officers and controlling persons of the Registrants pursuant to the foregoing
provisions, or otherwise, the Registrants have 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 of indemnification against such
liabilities (other than the payment by a Registrant of expenses incurred or
paid by a director, officer or controlling person of such 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, each 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 its is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) Each of the undersigned Registrants hereby undertakes to respond to
requests for information that is incorporated by reference into this
prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.
(d) Each of the undersigned Registrants hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-4 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 September 18, 1997.
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: September 18, 1997 By: /s/ D. P. Kennedy
D.P. Kennedy, Chairman
and Director
Date: September 18, 1997 By: /s/ Parker S. Kennedy*
Parker S. Kennedy, President
and Director
Date: September 18, 1997 By: /s/ Thomas A. Klemens
Thomas A. Klemens, Executive
Vice President,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
*By /s/ Mark R Arnesen
Mark R. Arnesen
Attorney-in-Fact
<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: August 28, 1997 By: /s/ George L. Argyros*
George L. Argyros, Director
Date: August 28, 1997 By: /s/ Gary J. Beban*
Gary J. Beban, Director
Date: August 28, 1997 By: /s/ J. David Chatham*
J. David Chatham, Director
Date: August 28, 1997 By: /s/ William G. Davis*
William G. Davis, Director
Date: August 28, 1997 By: /s/ James L. Doti*
James L. Doti, Director
Date: August 28, 1997 By: /s/ Lewis W. Douglas, Jr.*
Lewis W. Douglas, Jr., Director
Date: August 28, 1997 By: /s/ Paul B. Fay, Jr.*
Paul B. Fay, Jr., Director
Date: August 28, 1997 By: /s/ Dale F. Frey*
Dale F. Frey, Director
Date: August 28, 1997 By: /s/ Robert B. Mclain*
Robert B. McLain, Director
Date: August 28, 1997 By: /s/ Anthony R. Moiso*
Anthony R. Moiso, Director
Date: August 28, 1997 By: /s/ R. J. Munzer*
Rudolph J. Munzer, Director
Date: August 28, 1997 By: /s/ Frank E. O'Bryan*
Frank E. O'Bryan, Director
Date: August 28, 1997 By: /s/ Roslyn B. Payne*
Roslyn B. Payne, Director
Date: August 28, 1997 By: /s/ Virginia Ueberroth*
Virginia Ueberroth, Director
*By: /s/ Mark R Arnesen Mark R Arnesen
Attorney-in-Fact
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-4 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 September 18, 1997.
FIRST AMERICAN CAPITAL TRUST I
By: /s/ Parker S. Kennedy*
Parker S. Kennedy,
Regular Trustee
By: /s/ Thomas A. Klemens
Thomas A. Klemens
Regular Trustee
*By /s/ Mark R Arnesen
Mark R. Arnesen
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
* 4.1 Junior Subordinated Indenture, dated as of April 22, 1997,
between The First American Financial Corporation and
Wilmington Trust Company, as Indenture Trustee
(incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
4.2 Form of New 8.50% Junior Subordinated Deferrable Interest
Debenture.
4.3 Certificate of Trust of First American Capital Trust I.
4.4 Declaration of Trust of First American Capital Trust I,
dated as of April 11, 1997.
* 4.5 Amended and Restated Declaration of Trust of First
American Capital Trust I, dated as of April 22, 1997
(incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
4.6 Form of New 8.50% Capital Security (Liquidation Amount
$1,000 per Capital Security).
4.7 Form of New Guarantee Agreement.
* 4.8 Registration Rights Agreement, dated as of April 22, 1997,
among The First American Financial Corporation, First
American Capital Trust I, Chase Securities Inc. and UBS
Securities LLC (incorporated by reference from the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
** 5.1 Opinion of White & Case as to the legality of the New
Junior Subordinated Debentures and the New Guarantee.
** 5.2 Opinion of Morris James Hitchens & Williams as to the
legality of the New Capital Securities.
** 8.1 Opinion of White & Case as to certain tax matters.
12.1 Computation of Consolidated Ratio of Earnings to Fixed
Charges.
23.1 Consent of Price Waterhouse LLP.
** 23.2 Consent of White & Case (contained in the opinion filed as
Exhibit 5.1 to this Registration Statement).
** 23.3 Consent of Morris James Hitchens & Williams (contained in
the opinion filed as Exhibit 5.2 to this Registration
Statement).
** 23.4 Consent of White & Case (contained in the opinion filed as
Exhibit 8.1 to this Registration Statement).
24 Powers of Attorney.
25.1 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Wilmington Trust Company to act
as trustee under the Junior Subordinated Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Wilmington Trust Company to act
as trustee under the Amended and Restated Declaration of
Trust of First American Capital Trust I.
25.3 Form T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Wilmington Trust Company to act
as trustee under the New Guarantee Agreement.
99.1 Form of Letter of Transmittal and instructions thereto.
99.2 Form of Notice of Guaranteed Delivery.
** 99.3 Form of Exchange Agency Agreement.
_________________
* Incorporated by reference.
** To be filed by amendment.
<PAGE>
EXHIBIT 4.2
FORM OF
NEW 8.50% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
[Form of Face of Security]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK,
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF."
THE FIRST AMERICAN FINANCIAL CORPORATION
8.50% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
CUSIP ____
No.______ $103,093,000
THE FIRST AMERICAN FINANCIAL CORPORATION, a corporation organized and
existing under the laws of the state of California (hereinafter called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE
&or registered assigns, the principal sum of One Hundred Three Million and
Ninety Three Thousand Dollars ($103,093,000) on April 15, 2012. The Company
further promises to pay interest on said principal sum from April 22, 1997, or
from the most recent interest payment date (each such date, an "Interest
Payment Date") on which interest has been paid or duly provided for, semi-
annually (subject to deferral as set forth herein) in arrears on April 15 and
October 15 of each year, commencing October 15, 1997, at the rate of 8.50% per
annum, until the principal hereof shall have become due and payable, plus
Additional Interest, if any, until the principal hereof is paid or duly
provided for or made available for payment and on any overdue principal and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at
the rate of 8.50% per annum, compounded semi-annually. The amount of interest
payable for any period shall be computed on the basis of twelve 30-day months
and a 360-day year. The amount of interest payable for any partial period
shall be computed on the basis of the number of days elapsed in a 360-day year
of twelve 30-day months. In the event that any date on which interest is
payable on this Security is not a Business Day, then a payment of the interest
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date the payment
was originally payable. A "Business Day" shall mean any day other than (i) a
Saturday or Sunday, (ii) a day on which banking institutions in The City of
New York are authorized or required by law or executive order to remain closed
or (iii) a day on which the Corporate Trust Office of the Trustee or the
corporate trust office of the Property Trustee under the Declaration is closed
<PAGE>
for business. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities is registered at the close of business on the Regular Record Date
for such interest installment, which shall be (i) if this Security is
represented by one or more Global Securities, the Business Day next preceding
such Interest Payment Date and (ii) if this Security is not represented by one
or more Global Securities, the date which is fifteen days next preceding such
Interest Payment Date (whether or not a Business Day). Any such interest
installment not so punctually paid or duly provided for shall forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange or automated quotation system on which the Securities of this series
may be listed or traded, and upon such notice as may be required by such
exchange or self-regulatory organization, all as more fully provided in said
Indenture.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right at any time during the term of this Security to
defer payment of interest on this Security, at any time or from time to time,
for up to ten (10) consecutive semi-annual interest payment periods with
respect to each deferral period (each an "Extension Period"), during which
Extension Periods the Company shall have the right to make partial payments or
no payments of interest on any Interest Payment Date, and at the end of which
the Company shall pay all interest then accrued and unpaid (together with
Additional Interest thereon to the extent permitted by applicable law);
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security; provided, further, that during any
such Extension Period, the Company shall not, and shall not permit any
Subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank pari passu with or junior to this
Securities or (iii) make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any Subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to this Security other
than (a) dividends or distributions in Common Stock of the Company or
warrants, options or other rights where the Company's Common Stock is issuable
upon the exercise thereof, (b) payments under the Guarantee with respect to
this Security, (c) any declaration of a dividend in connection with the
implementation of a Rights Plan, or the issuance of stock under any such
Rights Plan in the future, or the redemption or repurchase of any such rights
pursuant to a Rights Plan, (d) as a result of an exchange or conversion (x) of
any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or (y) of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged, and (f) purchases of Common Stock related to the issuance of
Common Stock or rights under any employment agreement, benefit plan or similar
agreement for the directors, officers, employees and consultants of the
Company and its subsidiaries, related to the issuance of Common Stock or
rights under a dividend reinvestment and stock purchase plan or related to the
issuance of Common Stock (or securities convertible into or exchangeable for
Common Stock) as consideration in an acquisition transaction that was entered
into prior to the commencement of such Extension Period. Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest, provided that no Extension Period shall exceed ten (10)
consecutive semi-annual periods or extend beyond the Stated Maturity of the
<PAGE>
principal of this Security. Upon the termination of any such Extension Period
and upon the payment of all accrued and unpaid interest and any Additional
Interest then due, the Company may elect to begin a new Extension Period,
subject to the above requirements. No interest shall be due and payable during
an Extension Period except at the end thereof. The Company shall give the
Holder of this Security and the Trustee notice of its election to begin any
Extension Period at least one Business Day prior to the record date for the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral or, with respect to the Securities issued to
a Trust, so long as such Securities are held by such Trust, prior to the
earlier of (i) the next succeeding date on which Distributions on the
Preferred Securities would be payable but for such deferral or (ii) the date
the Regular Trustees are required to give notice to any securities exchange or
other applicable self-regulatory organization or to holders of such Preferred
Securities of the record date or the date such Distributions are payable, but
in any event not less than one Business Day prior to such record date.
Payment of principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for
that purpose in the United States, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company
payment of interest may be made (i) by check mailed to the address of the
Person entitled thereto as such address shall appear in the Securities
Register or (ii) by wire transfer in immediately available funds at such place
and to such account as may be designated in writing at least 15 days before
the relevant Interest Payment Date by the Person entitled thereto as specified
in the Securities Register.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take
such actions as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact
for any and all such purposes. Each Holder hereof, by his acceptance hereof,
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder
upon said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By:_______________________________
[President or Vice President]
Attest:
<PAGE>
_____________________________________
[Secretary or Assistant Secretary]
[Form of Reverse of Security]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under a Junior Subordinated Indenture, dated as of April 22, 1997
(herein called the "Indenture"), between the Company and Wilmington Trust
Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof, limited in
aggregate principal amount to $103,093,000.
All terms used in this Security that are defined in the Indenture or in
the Amended and Restated Declaration of Trust, dated as of April 22, 1997, as
amended (the "Declaration"), for First American Capital Trust I among The
First American Financial Corporation, as Sponsor, and the Trustees named
therein, shall have the meanings assigned to them in the Indenture or the
Declaration, as the case may be.
Upon the occurrence and during the continuation of a Tax Event and in the
opinion of counsel to the Company experienced in such matters, there would in
all cases, after effecting the termination of the Trust and the distribution
of the Securities of this series to the holders of the Preferred Securities in
exchange therefor, be more than an insubstantial risk that a Tax Event would
continue to exist, then the Company shall have the right to redeem the
Securities of this series, in whole but not in part, at any time within 90
days following the occurrence of the Tax Event at a Redemption Price equal to
100% of the principal amount thereof plus accrued and unpaid interest,
including Additional Interest, if any, to the Redemption Date.
Upon the occurrence and during the continuation of an Investment Company
Event and in the opinion of counsel to the Company experienced in such
matters, there would in all cases, after effecting the termination of the
Trust and the distribution of the Securities of this series to the holders of
the Preferred Securities in exchange therefor, be more than an insubstantial
risk that an Investment Company Event would continue to exist, then the
Company shall have the right to redeem the Securities of this series, in whole
but not in part, at any time within 90 days following the occurrence of the
Investment Company Event at a Redemption Price equal to 100% of the principal
amount thereof plus accrued and unpaid interest, including Additional
Interest, if any, to the Redemption Date.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with
certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of all series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of all series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof
<PAGE>
or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
As provided in, and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities of this series at the time
Outstanding occurs and is continuing, then and in every such case the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of this series may declare the principal amount of all the
Securities of this series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), provided
that, in the case of the Securities of this series issued to a Trust, if upon
an Event of Default, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of this series fails to declare
the principal of all the Securities of this series to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
Preferred Securities then outstanding shall have such right by a notice in
writing to the Company and the Trustee; and upon any such declaration the
principal amount of and the accrued interest (including any Additional
Interest) on all the Securities of this series shall become immediately due
and payable, provided that the payment of principal and interest (including
any Additional Interest) on such Securities shall remain subordinated to the
extent provided in Article XIII of the Indenture.
Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of
the principal of and interest, if any, on this Security shall terminate.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee
or transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for
all purposes, whether or not this Security be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of such series of a different authorized
denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agree that for United States federal, state and
<PAGE>
local tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
[Form of Trustee's Certificate of Authentication]
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:______________ WILMINGTON TRUST COMPANY,
as Trustee
By:_______________________________
Authorized Signatory
EXHIBIT 4.3
CERTIFICATE OF TRUST
OF
FIRST AMERICAN CAPITAL TRUST I
THIS Certificate of Trust of First American Capital Trust I (the "Trust")
is being duly executed and filed by the undersigned, as trustees, to form a
business trust under the Delaware Business Trust Act (12 Del. C. Section 3801,
et seq.).
1. Name. The name of the business trust formed hereby is First
American Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware are
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890, Attention: Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned trustees of the Trust have duly
executed this Certificate of Trust.
WILMINGTON TRUST COMPANY, not in its individual
capacity, but solely as
trustee
By: /s/ Donald G. MacKelcan
Name: Donald G. MacKelcan
Title: Assistant Vice President
Thomas A. Klemens, not in his individual capacity,
<PAGE>
but solely as trustee
/s/ Thomas A. Klemens
Thomas A. Klemens
EXHIBIT 4.4
DECLARATION OF TRUST
OF
FIRST AMERICAN CAPITAL TRUST I
THIS DECLARATION OF TRUST dated as of April 11, 1997 (the "Declaration"),
is made by and among The First American Financial Corporation, a California
corporation, as sponsor (the "Sponsor"), Wilmington Trust Company, as trustee
(the "Delaware Trustee"), and Thomas A. Klemens, as trustee (the "Regular
Trustee") (the Delaware Trustee and the Regular Trustee, collectively, the
"Trustees"). The Sponsor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "First American Capital
Trust I" (the "Trust"), in which name the Trustees or the Sponsor, to the
extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to the
Trustees the sum of $10. The Trustees hereby acknowledge receipt of such
amount in trust from the Sponsor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust
estate in trust for the Sponsor. It is the intention of the parties hereto
that the Trust created hereby constitute a business trust under the Delaware
Business Trust Act, 12 Del. C. Section 3801, et seq. (the "Business Trust
Act"), and that this Declaration constitute the governing instrument of the
Trust. The Trustees are hereby authorized and directed to execute and file a
certificate of trust with the Delaware Secretary of State in such form as the
Trustees may approve.
3. The Sponsor and the Trustees will enter into an Amended and Restated
Declaration of Trust satisfactory to each such party to provide for the
contemplated operation of the Trust created hereby and the issuance of the
Capital Securities and Common Securities referred to therein. Prior to the
execution and delivery of such Amended and Restated Declaration of Trust, the
Delaware Trustee shall not have any duty or obligation hereunder or with
respect to the trust estate, except as otherwise required by applicable law,
and the Regular Trustee or the Sponsor shall take any action as may be
necessary to obtain prior to such execution and delivery any licenses,
consents or approvals required by applicable law or otherwise.
Notwithstanding the foregoing, the Trustees may take all actions deemed proper
as are necessary to effect the transactions contemplated herein.
4. The Sponsor hereby agrees to (i) reimburse the Trustees for all
reasonable expenses (including reasonable fees and expenses of counsel and
other skilled professionals) and (ii) indemnify, defend and hold harmless the
Trustees and their officers, directors, employees and agents (collectively,
the "Indemnified Persons") from and against any and all losses, damages,
liabilities, claims, actions, suits, costs, expenses, disbursements (including
the reasonable fees and expenses of counsel), taxes and penalties of any kind
and nature whatsoever (collectively, "Expenses"), to the extent that such
<PAGE>
Expenses arise out of or are imposed upon or asserted at any time against such
Indemnified Persons with respect to the performance of this Trust Agreement,
the creation, operation or termination of the Trust or the transactions
contemplated hereby; provided, however, that the Sponsor shall not be required
to indemnify an Indemnified Person for Expenses incurred by such Indemnified
Person to the extent such Expenses are incurred as a result of the willful
misconduct, bad faith or gross negligence of such Indemnified Person.
5. The Sponsor and the Regular Trustee are hereby authorized,
individually and/or collectively, in their discretion, (i) to prepare and
distribute one or more offering memoranda in preliminary and final form,
including any necessary or desirable amendments and supplements, relating to
the offering and sale of Capital Securities of the Trust in a transaction
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and such forms or filings as may be required by the
1933 Act, the Securities Exchange Act of 1934, as amended, or the Trust
Indenture Act of 1939, as amended, in each case relating to the Capital
Securities of the Trust; (ii) to file and execute on behalf of the Trust, such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents that shall be
necessary or desirable to register or establish the exemption from
registration of the Capital Securities of the Trust under the securities or
"Blue Sky" laws of such jurisdictions as the Sponsor, on behalf of the Trust,
may deem necessary or desirable; (iii) to execute and file an application, and
all other applications, statements, certificates, agreements and other
instruments that shall be necessary or desirable, to have the Capital
Securities listed on the Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market and, if and at such time as determined by
the Sponsor, with the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing or quotation of the Capital
Securities of the Trust; (iv) to execute and deliver letters or documents to,
or instruments for filing with, a depository relating to the Capital
Securities of the Trust; (v) to execute, deliver and perform on behalf of the
Trust one or more purchase agreements, registration rights agreements, dealer
manager agreements, escrow agreements, subscription agreements and other
similar or related agreements providing for or relating to the sale of the
Capital Securities of the Trust; and (vi) to execute on behalf of the Trust
any and all documents, papers and instruments as may be desirable in
connection with any of the foregoing.
In the event that any filing referred to in this Section 5 is required by
the rules and regulations of the Securities and Exchange Commission (the
"Commission"), PORTAL or state securities or Blue Sky laws to be executed on
behalf of the Trust by the Trustees, the Trustees, in their capacities as
trustees of the Trust are hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing, it
being understood that the Trustees, in their capacities as trustees of the
Trust, shall not be required to join in any such filing or execute on behalf
of the Trust any such document unless required by the rules and regulations of
the Commission, PORTAL or state securities or Blue Sky laws.
6. This Declaration may be executed in one or more counterparts.
7. The number of trustees of the Trust initially shall be two (2) and
thereafter the number of trustees of the Trust shall be such number as shall
be fixed from time to time by a written instrument signed by the Sponsor which
may increase or decrease the number of trustees of the Trust; provided,
however, that to the extent required by the Business Trust Act, one trustee of
the Trust shall either be a natural person who is a resident of the State of
Delaware or, if not a natural person, an entity which has its principal place
of business in the State of Delaware and otherwise meets the requirements of
applicable law. Subject to the foregoing, the Sponsor is entitled to appoint
and to remove (with or without cause) any trustee of the Trust at any time.
Any trustee of the Trust may resign upon thirty (30) days' prior written
notice to the Sponsor.
<PAGE>
8. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Declaration to be
duly executed as of the day and year first above written.
THE FIRST AMERICAN FINANCIAL
CORPORATION, as Sponsor
By: /s/ Thomas A. Klemens
Name: Thomas A. Klemens
Title: Executive Vice President and
Chief Financial Officer
WILMINGTON TRUST COMPANY, not in its individual
capacity, but solely as
trustee
By: /s/ Donald G. MacKelcan
Name: Donald G. MacKelcan
Title: Assistant Vice President
Thomas A. Klemens, not in his individual capacity,
but solely as trustee
/s/ Thomas A. Klemens
Thomas A. Klemens
EXHIBIT 4.6
FORM OF
NEW 8.50% CAPITAL SECURITY
THIS CAPITAL SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITORY"), OR A
NOMINEE OF THE DEPOSITORY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO FIRST AMERICAN CAPITAL TRUST I OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
<PAGE>
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL
SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE
HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED
TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH
TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES.
CERTIFICATE NO. NUMBER OF CAPITAL SECURITIES:
CUSIP NO.
CERTIFICATE EVIDENCING CAPITAL SECURITIES
OF
FIRST AMERICAN CAPITAL TRUST I
8.50% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
FIRST AMERICAN CAPITAL TRUST I, a statutory business trust created under
the laws of the State of Delaware (the "Trust"), hereby certifies that Cede &
Co. (the "Holder") is the registered owner of ____________________ capital
securities of the Trust representing undivided beneficial ownership interests
in the assets of the Trust designated the 8.50% Capital Securities
(liquidation amount $1,000 per Capital Security) (the "Capital Securities").
The Capital Securities are transferable on the books and records of the Trust,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer as provided in the Declaration
(as defined below). The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities
represented hereby are set forth in and shall in all respects be subject to
the provisions of, the Amended and Restated Declaration of Trust of the Trust,
dated as of April 22, 1997 (as the same may be amended from time to time (the
"Declaration")), among The First American Financial Corporation, as Sponsor,
Parker S. Kennedy and Thomas A. Klemens, as Regular Trustees, Wilmington Trust
Company, as Property Trustee, and Wilmington Trust Company, as Delaware
Trustee. Capitalized terms used herein but not defined shall have the meaning
given them in the Declaration. The Holder is entitled to the benefits of the
Guarantee to the extent described therein. The Sponsor will provide a copy of
the Declaration, the Guarantee and the Indenture to a Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of undivided indirect beneficial ownership interests in the
Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day
of _____, 19__.
FIRST AMERICAN CAPITAL TRUST I
By:
Name:
Title:
This is one of the Securities referred to in the within mentioned
Declaration.
<PAGE>
Dated: _____ ___, 19__ WILMINGTON TRUST COMPANY,
as Trustee
By:
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Capital Security to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Capital Security on the books of the Trust. The agent
may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Capital Security
certificate)
Signature Guarantee:*
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
EXHIBIT 4.7
FORM OF
NEW GUARANTEE
GUARANTEE AGREEMENT
<PAGE>
Between
THE FIRST AMERICAN FINANCIAL CORPORATION
(as Guarantor)
and
WILMINGTON TRUST COMPANY
(as Trustee)
dated as of
__________________, 1997
<PAGE>
<TABLE>
CROSS-REFERENCE TABLE*
<CAPTION>
Section of Trust Indenture Act Section of
of 1939, as amended Guarantee
Agreement
<S> <C>
310(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(a)
310(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(c), 2.8
310(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
311(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
311(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
311(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
312(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(a)
312(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
314(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4
314(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
314(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
314(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1, 2.5, 3.2
314(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1, 3.2
315(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(d)
315(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.7
315(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
315(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(d)
316(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1, 2.6, 5.4
316(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.3
316(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.2
317(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
317(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Inapplicable
318(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1(b)
318(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1
318(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1(a)
* This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the
interpretation of any of its terms or provisions.
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I.
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II.
TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1. Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2. List of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3. Reports by the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4. Periodic Reports to the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.5. Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.6. Events of Default; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.7. Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.8. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE . . . . . . . . . . . . . . 6
Section 3.1. Powers and Duties of the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2. Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV.
GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.1. Guarantee Trustee: Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee . . . . . . . . . . . . . . . . . . 10
ARTICLE V.
GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.2. Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.3. Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.4. Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.5. Guarantee of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.6. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.7. Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI.
COVENANTS AND SUBORDINATION . . . . . . . . . . . . . . . . . . . 13
Section 6.1. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.2. Pari Passu Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII.
TERMINATION AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . 14
Section 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 7.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII.
<PAGE>
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.4. Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.5. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of _______________, 1997, is executed and
delivered by THE FIRST AMERICAN FINANCIAL CORPORATION, a California
corporation (the "Guarantor"), having its principal office at 114 East Fifth
Street, Santa Ana, California 92701, and Wilmington Trust Company, a Delaware
banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of
the Holders (as defined herein) from time to time of the Securities (as
defined herein) of First American Capital Trust I, a Delaware statutory
business trust (the "Trust").
W I T N E S S E T H :
WHEREAS, pursuant to an Amended and Restated Declaration of Trust, dated as
of April 22, 1997 (the "Declaration"), among the Guarantor, as Sponsor, the
Property Trustee and the Delaware Trustee named therein, the Regular Trustees
named therein and the Holders from time to time of undivided beneficial
ownership interests in the assets of the Trust, the Trust issued on April 22,
1997, $100,000,000 aggregate liquidation amount of its 8.50% Capital
Securities (liquidation amount $1,000 per Capital Security) (the "Old Capital
Securities") representing undivided beneficial ownership interests in the
assets of the Trust and having the terms set forth in the Declaration;
WHEREAS, the proceeds of the Old Capital Securities, together with the
proceeds from the issuance of the Trust's Common Securities (as defined
herein), were used by the Trust to purchase the Debentures (as defined in the
Declaration) of the Guarantor which were deposited with Wilmington Trust
Company, as Property Trustee under the Declaration, as trust assets;
WHEREAS, the Old Capital Securities and Common Securities were guaranteed
by the Guarantor to the extent and on the terms and conditions set forth in
the Guarantee Agreement, dated as of April 22, 1997 (the "Old Guarantee"),
from the Guarantor to the Guarantee Trustee for the benefit of the holders of
the Old Capital Securities and the Common Securities;
WHEREAS, pursuant to the Registration Rights Agreement, dated as of April
22, 1997 (the "Registration Rights Agreement"), among the Trust, the Guarantor
and the initial purchasers of the Old Capital Securities, the Trust agreed to
offer for exchange up to $100,000,000 aggregate liquidation amount of its
8.50% Capital Securities (liquidation amount $1,000 per Capital Security) (the
"New Capital Securities," and, together with the Old Capital Securities, the
"Capital Securities"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), for a like liquidation amount of its
Old Capital Securities;
WHEREAS, pursuant to the Registration Rights Agreement, the Guarantor and
the Guarantee Trustee wish to exchange the Old Guarantee for this Guarantee
Agreement, which is substantially the same as the Old Guarantee except that it
has been registered under the Securities Act and qualified under the Trust
Indenture Act (as defined herein), and does not contain restrictions on
transfer, and which is for the benefit of the Holders of New Capital
Securities, Old Capital Securities not exchanged for New Capital Securities
and the Common Securities (collectively, the "Securities"); and
WHEREAS, as incentive for the Holders to retain the Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Securities the Guarantee Payments
(as defined herein) and to make certain other payments on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Securities.
ARTICLE I.
<PAGE>
DEFINITIONS
Section 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall, unless
the context otherwise requires, have the following meanings. Capitalized or
otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Declaration as in effect on the date
hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of
the Guarantor shall not be deemed to be an Affiliate of the Trust. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means either the board of directors of the Guarantor or
any committee of that board duly authorized to act hereunder.
"Common Securities" means the 8.50% Common Securities (liquidation amount
$1,000 per Common Security) representing undivided beneficial ownership
interests in the assets of the Trust.
"Event of Default" means a default by the Guarantor on any of its payment or
other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 90 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Securities, to the extent not paid or made by
or on behalf of the Trust: (i) any accumulated and unpaid Distributions (as
defined in the Declaration) required to be paid on the Securities, to the
extent the Trust shall have funds on hand available therefor at such time,
(ii) the redemption price, including all accrued and unpaid Distributions to
the date of redemption (the"Redemption Price"), with respect to any Securities
called for redemption by the Trust, to the extent the Trust shall have funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary termination, winding up or liquidation of the Trust, unless
Debentures are distributed to the Holders, the lesser of (a) the aggregate of
the liquidation amount of the Securities plus accrued and unpaid Distributions
to the date of payment and (b) the amount of assets of the Trust remaining
available for distribution to Holders in liquidation of the Trust after
satisfaction of liabilities to creditors of the Trust as required by
applicable law (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means each
such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Trust, of any Securities; provided, however, that in determining whether the
holders of the requisite percentage of Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor,
the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee
Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of April 22,
1997, as supplemented and amended between the Guarantor and Wilmington Trust
Company, as trustee.
<PAGE>
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the Trust
Indenture Act, Holder(s) of outstanding Securities, voting together as a
single class, or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities, voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date
upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman or a Vice Chairman of the Board of Directors of such
Person or the President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Responsible Officer" when used with respect to the Guarantee Trustee means
any officer of the Guarantee Trustee within the Corporate Trust Office with
direct responsibility for the administration of this Guarantee Agreement.
"Successor Guarantee Trustee" means a successor Guarantee Trustee possessing
the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II.
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
Section 2.2. List of Holders.
(a) The Guarantor shall provide the Guarantee Trustee with a list, in such
form as the Guarantee Trustee may reasonably require, of the names and
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addresses of the Holders of the Securities ("List of Holders"):
(i) semi-annually, not more than 15 days after January 15 and July
15 in each year of the names and addresses of the Holders as of such January
1 and July 1; and
(ii) at such other times as the Guarantee Trustee may request in
writing, within 30 days after the receipt by the Guarantor of any such
request, a list of similar form and content as of a date not more than 15
days prior to the time such list is furnished,
excluding from any such list names and addresses received by the Guarantee
Trustee in its capacity as Security Registrar.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.3. Reports by the Guarantee Trustee.
The Guarantee Trustee shall transmit to Holders such reports concerning the
Guarantee Trustee and its actions under this Guarantee Agreement as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Guarantee Trustee shall, within sixty days after each May
15 following the first anniversary of the date of this Guarantee Agreement
deliver to Holders a brief report, dated as of such May 15, which complies
with the provisions of such Section 313(a).
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information,
if any, as required by Section 314 of the Trust Indenture Act and the
compliance certificate required by Section 314 of the Trust Indenture Act, in
the form, in the manner and at the times required by Section 314 of the Trust
Indenture Act. Delivery of such reports, information and documents to the
Guarantee Trustee is for informational purposes only and the Guarantee
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein, including the Guarantor's compliance with any
of its covenants hereunder (as to which the Guarantee Trustee is entitled to
rely exclusively on Officers' Certificates).
Section 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
Section 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Securities may, by
vote, on behalf of the Holders, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent therefrom.
Section 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the Guarantee Trustee
has knowledge of the occurrence of an Event of Default, transmit by mail,
<PAGE>
first class postage prepaid, to the Holders, notices of all Events of Default
actually known to the Guarantee Trustee, unless such defaults have been cured
before the giving of such notice, provided, that, except in the case of a
default in the payment of a Guarantee Payment, the Guarantee Trustee shall be
protected in withholding such notice if and so long as one or more Responsible
Officers of the Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any Event
of Default unless the Guarantee Trustee shall have received written notice, or
a Responsible Officer of the Guarantee Trustee shall have actual knowledge of
such Event of Default.
Section 2.8. Conflicting Interests.
The Declaration shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III.
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except a Holder exercising his or her rights
pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance
by such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, upon acceptance
by such Successor Guarantee Trustee of its appointment hereunder, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) If an Event of Default of which the Guarantee Trustee has knowledge has
occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee
Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default of
which the Guarantee Trustee has knowledge and after the curing of all Events
of Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Guarantee Agreement, and no implied
covenants or obligations shall be read into this Guarantee Agreement against
the Guarantee Trustee. In case an Event of Default of which the Guarantee
Trustee has knowledge has occurred (that has not been cured or waived pursuant
to Section 2.6), the Guarantee Trustee shall exercise such of the rights and
powers vested in it by this Guarantee Agreement, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default of which the
Guarantee Trustee has knowledge and after the curing or waiving of all such
Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee Agreement, and
the Guarantee Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Guarantee
Agreement; and
<PAGE>
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof or of the Trust
Indenture Act are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Guarantee
Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation
Amount of the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee,
or exercising any trust or power conferred upon the Guarantee Trustee under
this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of such
request from the Guarantee Trustee, shall be promptly delivered by the
Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel of its
selection, and the written advice or opinion of such legal counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken
by it hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee shall have
the right at any time to seek instructions concerning the administration of
this Guarantee Agreement from any court of competent jurisdiction.
<PAGE>
(v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default of which the Guarantee Trustee has
knowledge, of its obligation to exercise the rights and powers vested in it
by this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive written
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Guarantee Trustee (A) may request instructions
from the Holders, (B) may refrain from enforcing such remedy or right or
taking such other action until such written instructions are received, and
(C) shall be protected in acting in accordance with such written
instructions.
(ix) The Guarantee Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without gross
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Guarantee
Agreement.
(b) No provision of this Guarantee Agreement shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in
any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty to act in accordance with such power
and authority.
Section 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold it
harmless against, any loss, liability or expense incurred without negligence
or bad faith on the part of the Guarantee Trustee, arising out of or in
connection with the acceptance or administration of this Guarantee Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder.
ARTICLE IV.
GUARANTEE TRUSTEE
<PAGE>
Section 4.1. Guarantee Trustee: Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or other Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such Person publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 4.1(a)(ii), the combined capital and
surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee
Trustee and Guarantor shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor Guarantee
Trustee has been appointed and has accepted such appointment by written
instrument executed by such Successor Guarantee Trustee and delivered to the
Guarantor. If an instrument of acceptance by a Successor Guarantee Trustee
shall not have been delivered to the Guarantee Trustee within 30 days after
such removal, the Guarantee Trustee being removed may petition any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after delivery to
the Guarantor of an instrument of resignation, the resigning Guarantee Trustee
may petition, at the expense of the Guarantor, any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Guarantee Trustee.
ARTICLE V.
GUARANTEE
Section 5.1. Guarantee.
<PAGE>
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Trust), as and when due, regardless of any
defense, right of set-off or counterclaim which the Trust may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Trust to pay such amounts to the Holders.
Section 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee Agreement
and of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Guarantee
Trustee, Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and
all other notices and demands.
Section 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Securities to be performed or
observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period
on the Debentures as provided in the Indenture), Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the
foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will
<PAGE>
be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Guarantee Trustee,
the Trust or any other Person.
Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Trust) or upon distribution of Debentures to Holders as provided
in the Declaration.
Section 5.6. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Guarantee Agreement, if, at the time
of any such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
Section 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent of
the obligations of the Trust with respect to the Securities and that the
Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI.
COVENANTS AND SUBORDINATION
Section 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate
and junior in right of payment to all Senior Indebtedness (as defined in the
Indenture) of the Guarantor, except those made pari passu or subordinate to
such obligations expressly by their terms in the same manner as set forth in
Article XIII of the Indenture.
Section 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall rank
pari passu with the obligations of the Guarantor under any similar Guarantee
Agreements issued by the Guarantor on behalf of the holders of securities
similar to the Securities issued by any trust, partnership or other entity
affiliated with the Guarantor that is a financing entity of the Guarantor.
ARTICLE VII.
TERMINATION AND INDEMNIFICATION
<PAGE>
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Securities, (ii)
the distribution of Debentures to the Holders in exchange for all of the
Securities or (iii) full payment of all amounts payable in accordance with the
Declaration upon liquidation of the Trust. Notwithstanding the foregoing,
this Guarantee Agreement will continue to be effective or will be reinstated,
as the case may be, if at any time any Holder must restore payment of any sums
paid with respect to Securities or this Guarantee Agreement.
Section 7.2. Indemnification.
The Guarantor agrees to indemnify the (i) Guarantee Trustee, (ii) each
Affiliate of the Guarantee Trustee and (iii) any officers, directors,
shareholders, members, partners, employees or agents of the Guarantee Trustee
(each of the Persons in (i) through (iii) being referred to as a "Fiduciary
Indemnified Person") for, and to hold each Fiduciary Indemnified Person
harmless against, any and all loss, liability, damage, claim or expense,
including taxes (other than taxes based on the income of such Fiduciary
Indemnified Person) incurred without gross negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 7.2 shall survive the termination of
this Guarantee Agreement and the removal or resignation of the Guarantee
Trustee.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Securities then
outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor that is permitted under Article VIII of the Indenture
and pursuant to which the successor or assignee agrees in writing to perform
the Guarantor's obligations hereunder, the Guarantor shall not assign its
obligations hereunder.
Section 8.2. Amendments.
Except with respect to any changes which do not adversely affect the rights
of the Holders or the Guarantee Trustee in any material respect (in which case
no consent of the Holders or the Guarantee Trustee, as the case may be, will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of
all the outstanding Securities and of the Guarantee Trustee. The provisions of
Article 11 of the Declaration concerning meetings of the Holders shall apply
to the giving of such approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be given
hereunder shall be in writing, duly signed by the party giving such notice,
and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or such other
address, facsimile number or to the attention of such other Person as the
Guarantor may give notice to the Guarantee Trustee and the Holders:
<PAGE>
The First American Financial Corporation
114 East Fifth Street
Santa Ana, California 90271
Facsimile No.: (714)-836-1841
Attention: Mark R Arnesen
(b) if given to the Trust, in care of the Guarantee Trustee, at the Trust's
(and the Guarantee Trustee's) address set forth below or such other address as
the Guarantee Trustee on behalf of the Trust may give notice to the Holders
and the Guarantor:
First American Capital Trust I
c/o The First American Financial Corporation
114 East Fifth Street
Santa Ana, California 92071
Facsimile No.: (714)-836-1841
Attention: Mark R Arnesen
with a copy to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington Delaware 19890-0001
Facsimile No.: 302-427-4749
Attention: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on the books and
records of the Trust.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is not
separately transferable from the Securities.
Section 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in Section
1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same meaning
throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections are
to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used
in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
<PAGE>
(g) the masculine, feminine or neuter genders used herein shall include the
masculine, feminine and neuter genders.
Section 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By:
Name:Thomas A. Klemens
Title:Executive Vice President and
Chief Financial Officer
WILMINGTON TRUST COMPANY,
as Guarantee Trustee
By:
Name:
Title:
EXHIBIT 12.1
COMPUTATION OF
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratio of earnings to fixed charges for each of
the periods indicated are calculated as follows:
<TABLE> Six Months
Year Ended December 31, Ended June 30,
<CAPTION>
1992 1993 1994 1995 1996 1996 1997
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
EARNINGS
NET INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE $71,458 $103,991 $32,245 $13,787 $89,189 $47,809 $34,982
Add:
Fixed charges interest expense 6,038 4,419 6,267 6,242 4,796 2,510 3,660
Adjusted earnings 77,496 108,410 38,512 20,029 93,985 50,319 38,642
FIXED CHARGES
INTEREST EXPENSE 6,038 4,419 6,267 6,242 4,796 2,510 3,660
CONSOLIDATED RATIO OF EARNINGS TO FIXED
CHARGES 12.8 24.5 6.1 3.2 19.6 20.0 10.6
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of The First
American Financial Corporation of our report dated February 11, 1997 appearing
on page 21 of The First American Financial Corporation's Annual Report on Form
10-K for the year ended December 31, 1996. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Costa Mesa, California
September 19, 1997
EXHIBIT 24
POWERS OF ATTORNEY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ Gary J. Beban
Gary J. Beban
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ J. David Chatham
J. David Chatham
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ William G. Davis
William G. Davis
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ James L. Doti
James L. Doti
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ Lewis W. Douglas, Jr.
Lewis W. Douglas, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ Paul B. Fay, Jr.
Paul B. Fay, Jr.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ Dale F. Frey
Dale F. Frey
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in his name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ Anthony R. Moiso
Anthony R. Moiso
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in her name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ Roslyn B. Payne
Roslyn B. Payne
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Director of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitutes and appoints 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, including power of substitution
and resubstitution, in said agents and attorneys-in-fact, and in either or
both of them, to sign for the undersigned and in her name as Director of the
Corporation a Registration Statement on Form S-4 to be filed with the
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 8.50% Capital Securities (Liquidation Amount $1,000
per Capital Security) of First American Capital Trust I, the Guarantee of the
Corporation related thereto and the 8.50% Junior Subordinated Debentures of
the Corporation, and the undersigned ratifies and confirms all acts taken by
such agents and attorneys-in-fact, or either or both of them, as herein
authorized.
Date: August 28, 1997 By: /s/ Virginia Ueberroth
Virginia Ueberroth
EXHIBIT 25.1
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
(Exact name of obligor as specified in its charter)
California 95-1068610
(State of incorporation) (I.R.S. employer identification no.)
114 East Fifth Street
Santa Ana, California 92701-4642
(Address of principal executive offices) (Zip Code)
8.50% Junior Subordinated Debentures
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor is
not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 18th
day of April, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ Emmett R. Harmon By:/s/ Norma P. Closs
Assistant Secretary Name: Norma P. Closs
Title: Vice President
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an
amendment filed in the Office of the Secretary of State on March 18, A.D.
1903, and the Charter or Act of Incorporation of which company has been from
time to time amended and changed by merger agreements pursuant to the
corporation law for state banks and trust companies of the State of Delaware,
does hereby alter and amend its Charter or Act of Incorporation so that the
same as so altered and amended shall in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is WILMINGTON TRUST COMPANY
whose address is Rodney Square North, in said City. In addition to
such principal office, the said corporation maintains and operates
branch offices in the City of Newark, New Castle County, Delaware, the
Town of Newport, New Castle County, Delaware, at Claymont, New Castle
County, Delaware, at Greenville, New Castle County Delaware, and at
Milford Cross Roads, New Castle County, Delaware, and shall be
empowered to open, maintain and operate branch offices at Ninth and
Shipley Streets, 418 Delaware Avenue, 2120 Market Street, and 3605
Market Street, all in the City of Wilmington, New Castle County,
Delaware, and such other branch offices or places of business as may be
authorized from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require, to
make by-laws not inconsistent with the Constitution or laws of the
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of
the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate
or interests therein, and to guarantee the holder of such property,
real or personal, against any claim or claims, adverse to his
interest therein, and to prepare and give certificates of title for
any lands or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
<PAGE>
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in all
its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and individuals, and from
all corporations whether state, municipal, corporate or private,
and to rent boxes, safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or
underwriting the stock, bonds or other obligations of any
corporation, association, state or municipality, and may receive
and manage any sinking fund therefor on such terms as may be agreed
upon between the two parties, and in like manner may act as
Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding places
of responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any trust, office, duty,
contract or agreement, either by itself or in conjunction with any
other person, or persons, corporation, or corporations, or in like
manner become surety upon any bond, recognizance, obligation,
judgment, suit, order, or decree to be entered in any court of
record within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court in the
State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian
or bailee by any persons, corporations, court, officer, or
authority, in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation, court,
officer or authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not be
required to give bond with surety, but its capital stock shall be
taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of
the duties which it may undertake or be called upon to perform, or
for the assumption of any responsibility the said Corporation may
be entitled to receive a proper compensation.
<PAGE>
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or of
any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for,
and dispose of interest, dividends and income upon and from any of
the bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in respect of
all such bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of
indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to
vote thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or realize such
investments; to issue bonds and secure the same by pledges or deeds
of trust or mortgages of or upon the whole or any part of the
property held or owned by the Corporation, and to sell and pledge
such bonds, as and when the Board of Directors shall determine, and
in the promotion of its said corporate business of investment and
to the extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and personal
property of any name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and
to undertake the whole or any part of the assets and liabilities
of any person, firm, association or corporation, and to pay for the
same in cash, stock of this Corporation, bonds or otherwise; to
hold or in any manner to dispose of the whole or any part of the
property so purchased; to conduct in any lawful manner the whole or
any part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and
to lease, sell, exchange, transfer, or in any manner whatever
dispose of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and,
without limit as to amount, to draw, make, accept, endorse,
discount, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other negotiable or
transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent
as natural persons might or could do, to purchase or otherwise
acquire, to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every class and
description, in any State, District, Territory or Colony of the
United States, and in any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
<PAGE>
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock");
and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding; and,
subject to the provisions of subparagraph 1 of Paragraph (c) of this
Article FOURTH, the Board of Directors of the Corporation is hereby
expressly granted authority to fix by resolution or resolutions adopted
prior to the issuance of any shares of a particular series of Preferred
Stock, the voting powers and the designations, preferences and
relative, optional and other special rights, and the qualifications,
limitations and restrictions of such series, including, but without
limiting the generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number
may be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall
be paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes,
or series of the same or other class of stock and whether such
dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any
other class or classes of stock of the Corporation and the terms
and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation.
<PAGE>
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of such
series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under
such circumstances and on such conditions as the Board of Directors
may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article FOURTH), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article FOURTH), and subject further
to any conditions which may be fixed in accordance with the provisions
of section (b) of this Article FOURTH, then and not otherwise the
holders of Common Stock shall be entitled to receive such dividends as
may be declared from time to time by the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred
Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding-up, of the
Corporation, the holders of the Common Stock shall be entitled to
receive all of the remaining assets of the Corporation, tangible
and intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted by
the Board of Directors pursuant to section (b) of this Article
FOURTH, each holder of Common Stock shall have one vote in respect
of each share of Common Stock held on all matters voted upon by the
stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
<PAGE>
or resolutions adopted pursuant to authority granted in section (b) of
this Article FOURTH and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article FOURTH
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such terms
and for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from any increase
in the directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect
a successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time without cause, but only by the affirmative vote of
<PAGE>
the holders of two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agent and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
<PAGE>
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be from
time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by law,
and except as otherwise expressly provided in sections (b) and (c) of
this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any Interested
Stockholder (as hereinafter defined) or (ii) any other corporation
(whether or not itself an Interested Stockholder), which, after
such merger or consolidation, would be an Affiliate (as hereinafter
defined) of an Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market value
of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or
more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any merger
or consolidation of the Corporation with any of its Subsidiaries or
any similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Stockholder, or any Affiliate of
any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of
the outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that
some lesser percentage may be specified, by law or in any agreement with any
national securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any one
or more of clauses (A) through (E) of paragraph 1 of the section
<PAGE>
(a).
(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of
stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities
Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December 31,
1981.
<PAGE>
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect in December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis
of information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4) whether
the assets subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market value
of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH
or SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph shall
not adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
<PAGE>
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the
Board of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time
to time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one
vote, either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the
Company, provided, however, that this limitation shall not apply to any person
who was serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined
by a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time
or place of any regular meeting, stating the time and place of such meeting,
which shall be mailed not less than two days before the time of holding such
meeting.
<PAGE>
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which
the vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President who
may be the same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person, may appoint
at any time such other committees and elect or appoint such other officers as
it may deem advisable. The Board of Directors may also elect at such meeting
one or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and
in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined
by a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be
held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the
Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the
Company by its directors and officers as contemplated by these By-Laws any two
available members of the Executive Committee as constituted immediately prior
to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in
accordance with the provisions of Article III of these By-Laws; and if less
than three members of the Trust Committee is constituted immediately prior to
such disaster shall be available for the transaction of its business, such
Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the
<PAGE>
event of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time
for that purpose, and any provisions of these By-Laws (other than this
Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary Resolutions shall be
suspended during such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its affairs
and business under all of the other provisions of these By-Laws.
<PAGE>
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority
of whom shall be members of the Board of Directors and who shall hold office
during the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of
the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office
during the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure
<PAGE>
of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any
such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time
confer and direct. He shall also exercise such powers and perform such duties
as may from time to time be agreed upon between himself and the President of
the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such
further authority and powers and shall perform such duties as the Board of
Directors or the Chairman of the Board may from time to time confer and
direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of
the Board the President shall have the powers and duties of the Chairman of
the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings
and to recording the same in the minute books of the Company. In addition to
the other notice requirements of these By-Laws and as may be practicable under
the circumstances, all such notices shall be in writing and mailed well in
advance of the scheduled date of any other meeting. He shall have custody of
the corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
<PAGE>
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new
certificate or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such security as may be
satisfactory to the Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment
or rights, or to exercise any rights in respect of any change, conversion or
<PAGE>
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall
go into effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full
power and authority to enter into, make, sign, execute, acknowledge and/or
deliver and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds,
notes, mortgages and all other instruments incident to the business of this
Company or in acting as executor, administrator, guardian, trustee, agent or
in any other fiduciary or representative capacity by any and every method of
appointment or by whatever person, corporation, court officer or authority in
the State of Delaware, or elsewhere, without any specific authority,
ratification, approval or confirmation by the Board of Directors or the
Executive Committee, and any and all such instruments shall have the same
force and validity as though expressly authorized by the Board of Directors
and/or the Executive Committee.
<PAGE>
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the Company
for such special services as the Board of Directors may from time to time
determine and shall be paid for such special services so performed reasonable
compensation as may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be
made a party or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "proceeding") by
reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation
shall indemnify a person in connection with a proceeding initiated by such
person only if the proceeding was authorized by the Board of Directors of the
Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director
or officer to repay all amounts advanced if it should be ultimately determined
that the Director or officer is not entitled to be indemnified under this
Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In
any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of
such repeal or modification.
ARTICLE XI
<PAGE>
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
<PAGE>
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon requests
therefor.
WILMINGTON TRUST COMPANY
Dated: April 18, 1997 By: /s/ Norma P. Closs
Name: Norma P. Closs
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
Name of Bank City
in the State of DELAWARE , at the close of business on December 31, 1996.
<PAGE>
<TABLE>
<S> <C>
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . 213,895
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,818
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,297
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,634,003
LESS: Allowance for loan and lease losses. . . . . . 51,847
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . 3,582,156
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . . 89,129
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . . 52
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,593
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,300
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,359,950
</TABLE>
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,749,697
Noninterest-bearing . . . . . . . . 852,790
Interest-bearing. . . . . . . . . . 2,896,907
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,825
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . 192,295
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,526
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . 714,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . 43,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,756
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,929,099
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367,371
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . 862
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,851
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . 5,359,950
</TABLE>
EXHIBIT 25.2
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification
no.)
Rodney Square North
1100 North Market Street
<PAGE>
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
THE FIRST AMERICAN FINANCIAL CORPORATION
FIRST AMERICAN CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
California 95-1068610
Delaware
(State of incorporation) (I.R.S. employer identification no.)
114 East Fifth Street
Santa Ana, California 92701-4642
(Address of principal executive offices) (Zip Code)
8.50% Capital Securities of First American Capital Trust I
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes
the certificate of authority of Wilmington Trust Company to
commence business and the authorization of Wilmington Trust
Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 18th
day of April, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Emmett R. Harmon By:/s/ Norma P. Closs
Assistant Secretary Name: Norma P. Closs
Title: Vice President
H: ... trinact t1 fstamfin.prs
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate
the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and
the name of which company was changed to "WILMINGTON TRUST COMPANY" by an
amendment filed in the Office of the Secretary of State on March 18, A.D.
1903, and the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements pursuant to the
corporation law for state banks and trust companies of the State of
Delaware, does hereby alter and amend its Charter or Act of Incorporation
so that the same as so altered and amended shall in its entirety read as
follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of law
or equity and to make and use a common seal, and alter the seal
at pleasure, to hold, purchase, convey, mortgage or otherwise
deal in real and personal estate and property, and to appoint
such officers and agents as the business of the Corporation
shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive
deposits of money, or securities for money, to buy gold and
silver bullion and foreign coins, to buy and sell bills of
exchange, and generally to use, exercise and enjoy all the
powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of
the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of such
property, real or personal, against any claim or claims, adverse
to his interest therein, and to prepare and give certificates of
<PAGE>
title for any lands or premises in the State of Delaware, or
elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in all
its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators, guardians,
public officers, courts, receivers, assignees, trustees, and
from all fiduciaries, and from all other persons and
individuals, and from all corporations whether state, municipal,
corporate or private, and to rent boxes, safes, vaults and other
receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law,
judge, officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity in the receiving, holding, managing, and
disposing of any and all estates and property, real, personal or
mixed, and to be appointed as such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of
Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
<PAGE>
duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise
of any of its powers hereby given, or for the performance of any
of the duties which it may undertake or be called upon to
perform, or for the assumption of any responsibility the said
Corporation may be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or
of any state, territory, colony, or possession thereof, or of
any foreign government or country; to receive, collect, receipt
for, and dispose of interest, dividends and income upon and from
any of the bonds, mortgages, debentures, notes, shares of
capital stock, securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property, any and
all the rights, powers and privileges of individual owners
thereof, including the right to vote thereon; to invest and deal
in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper,
and from time to time to vary or realize such investments; to
issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held
or owned by the Corporation, and to sell and pledge such bonds,
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to
the extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and personal
property of any name and nature and any estate or interest
therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation, and
to pay for the same in cash, stock of this Corporation, bonds or
otherwise; to hold or in any manner to dispose of the whole or
any part of the property so purchased; to conduct in any lawful
manner the whole or any part of any business so acquired, and to
exercise all the powers necessary or convenient in and about the
conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed, wherever
situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept, endorse,
discount, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other negotiable or
<PAGE>
transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every class
and description, in any State, District, Territory or Colony of
the United States, and in any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited
or restricted by reference to or inference from the terms of any
other clause of this or any other paragraph in this charter, but
that the objects, purposes and powers specified in each of the
clauses of this paragraph shall be regarded as independent
objects, purposes and powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number
may be increased (except where otherwise provided by the Board
of Directors) or decreased (but not below the number of shares
thereof then outstanding) from time to time by like action of
the Board of Directors;
(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if any,
of such dividends to the dividends payable on any other class or
classes, or series of the same or other class of stock and
whether such dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
<PAGE>
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of such
series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of
the foregoing include the right, voting as a series or by itself
or together with other series of Preferred Stock or all series
of Preferred Stock as a class, to elect one or more directors of
the Corporation if there shall have been a default in the
payment of dividends on any one or more series of Preferred
Stock or under such circumstances and on such conditions as the
Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b) of
this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common Stock
shall be entitled to receive all of the remaining assets of the
Corporation, tangible and intangible, of whatever kind available
for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article FOURTH, each holder of Common Stock shall have one vote
in respect of each share of Common Stock held on all matters
voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
<PAGE>
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be twenty-
four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
<PAGE>
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
<PAGE>
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of any
Interested Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate fair
market value of $1,000,000 or more, or
<PAGE>
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors, considered for the purpose of
this Article FIFTEENTH as one class ("Voting Shares"). Such affirmative
vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other provisions
of the Charter or Act of Incorporation of By-Laws if such
business combination has been approved by a majority of the
whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession shall
have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning
of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
<PAGE>
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or indirectly,
or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person is
an Affiliate or Associate of another, (3) whether a person has
an agreement, arrangement or understanding with another as to
the matters referred to in paragraph (3) of section (c), or (4)
whether the assets subject to any business combination or the
consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
<PAGE>
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall
not adversely affect any right or protection of a Director of
the Corporation existing hereunder with respect to any act or
omission occurring prior to the time of such repeal or
modification."
<PAGE>
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or
at such other date, time, or place as may be designated by resolution by
the Board of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the
President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said
meeting, at his last known address, a written or printed notice fixing the
time and place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined,
shall constitute a quorum at all meetings of stockholders for the
transaction of any business, but the holders of a small number of shares
may adjourn, from time to time, without further notice, until a quorum is
secured. At each annual or special meeting of stockholders, each
stockholder shall be entitled to one vote, either in person or by proxy,
for each shares of stock registered in the stockholder's name on the books
of the Company on the record date for any such meeting as determined
herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the
Company, provided, however, that this limitation shall not apply to any
person who was serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of
the Board of Directors or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President,
and shall be called upon the written request of a majority of the
directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the
time or place of any regular meeting, stating the time and place of such
<PAGE>
meeting, which shall be mailed not less than two days before the time of
holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of
Directors, although less than a quorum, shall have the right to elect the
successor who shall hold office for the remainder of the full term of the
class of directors in which the vacancy occurred, and until such director's
successor shall have been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President
who may be the same person. The Board of Directors shall also elect at
such meeting a Secretary and a Treasurer, who may be the same person, may
appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect
at such meeting one or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may
deem advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of
the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend
all investments that may be made of the funds of the Company, and shall
direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business
of the Company by its directors and officers as contemplated by these By-
Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that
Committee for the full conduct and management of the affairs and business
of the Company in accordance with the provisions of Article III of these
By-Laws; and if less than three members of the Trust Committee is
<PAGE>
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be
empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at
such time, of a minimum of two members of such Executive Committee, any
three available directors shall constitute the Executive Committee for the
full conduct and management of the affairs and business of the Company in
accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose,
and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any interim
Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its
affairs and business under all of the other provisions of these By-Laws.
<PAGE>
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall
hold office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members
who shall be selected by the Board of Directors from its own members, none
of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention
by the officer in charge of the Audit Division, review all reports of
examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such
recommendations to the Board of Directors with respect thereto or with
respect to any other matters pertaining to auditing the Company as it shall
deem desirable.
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction
of its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors
from its own members who are not officers of the Company and who shall hold
office during the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected
<PAGE>
by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in
the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers
and shall perform such duties as the Board of Directors may from time to
time confer and direct. He shall also exercise such powers and perform
such duties as may from time to time be agreed upon between himself and the
President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of Directors shall preside at all meetings of the Board of
Directors at which the Chairman of the Board shall not be present and shall
have such further authority and powers and shall perform such duties as the
Board of Directors or the Chairman of the Board may from time to time
confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and
shall at all times exercise general supervision over the interest, affairs
and operations of the Company and perform all duties incident to his
office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and
such other powers and duties as may from time to time be assigned to them
by the Board of Directors, the Executive Committee, the Chairman of the
Board or the President and by the officer in charge of the department or
division to which they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings
and to recording the same in the minute books of the Company. In addition
to the other notice requirements of these By-Laws and as may be practicable
under the circumstances, all such notices shall be in writing and mailed
well in advance of the scheduled date of any other meeting. He shall have
custody of the corporate seal and shall affix the same to any documents
<PAGE>
requiring such corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and
of all the transactions of the Company. He shall have general supervision
of the expenditures of the Company and shall report to the Board of
Directors at each regular meeting of the condition of the Company, and
perform such other duties as may be assigned to him from time to time by
the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including
accounting, and shall render to the Board of Directors at appropriate times
a report relating to the general condition and internal operations of the
Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller
and such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board
of Directors shall prescribe, shall report to and be directly responsible
only to the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the
Auditor and such duties as may be prescribed by the officer in charge of
the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined
from time to time by the Board of Directors, who shall ex officio hold the
office Assistant Secretary of this Company and who may perform such duties
as may be prescribed by the officer in charge of the department or division
to whom they are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices,
subject to the direction of the Board of Directors, the Executive
Committee, Chairman of the Board of Directors or the President and the
officer in charge of the department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of
stock shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of
Directors and countersigned by the Secretary or Treasurer or an Assistant
Secretary, and the seal of the corporation shall be engraved thereon. Each
certificate shall recite that the stock represented thereby is
transferrable only upon the books of the Company by the holder thereof or
his attorney, upon surrender of the certificate properly endorsed. Any
certificate of stock surrendered to the Company shall be cancelled at the
time of transfer, and before a new certificate or certificates shall be
issued in lieu thereof. Duplicate certificates of stock shall be issued
only upon giving such security as may be satisfactory to the Board of
Directors or the Executive Committee.
<PAGE>
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders
entitled to notice of, and to vote at, any meeting of stockholders and any
adjournment thereof, or entitled to receive payment of any dividend, or to
any allotment or rights, or to exercise any rights in respect of any
change, conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection
with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full
power and authority to enter into, make, sign, execute, acknowledge and/or
deliver and the Secretary or any Assistant Secretary shall have full power
and authority to attest and affix the corporate seal of the Company to any
and all deeds, conveyances, assignments, releases, contracts, agreements,
bonds, notes, mortgages and all other instruments incident to the business
of this Company or in acting as executor, administrator, guardian, trustee,
agent or in any other fiduciary or representative capacity by any and every
method of appointment or by whatever person, corporation, court officer or
authority in the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of Directors
or the Executive Committee, and any and all such instruments shall have the
same force and validity as though expressly authorized by the Board of
Directors and/or the Executive Committee.
<PAGE>
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable
honoraria or fees for attending meetings of the Board of Directors as the
Board of Directors may from time to time determine. Directors and
associate directors who serve as members of committees, other than salaried
employees of the Company, shall be paid such reasonable honoraria or fees
for services as members of committees as the Board of Directors shall from
time to time determine and directors and associate directors may be
employed by the Company for such special services as the Board of Directors
may from time to time determine and shall be paid for such special services
so performed reasonable compensation as may be determined by the Board of
Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or
may hereafter be amended, any person who was or is made or is threatened to
be made a party or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "proceeding")
by reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or
of a partnership, joint venture, trust, enterprise or non-profit entity,
including service with respect to employee benefit plans, against all
liability and loss suffered and expenses reasonably incurred by such
person. The Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be
ultimately determined that the Director or officer is not entitled to be
indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file
suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of
payment of expenses under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions
of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior
to the time of such repeal or modification.
<PAGE>
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all
the members of the Board of Directors then in office.
<PAGE>
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission
upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: April 18, 1997 By: /s/ Norma P. Closs
Name: Norma P. Closs
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks
with state publication requirements. It has not been approved by any state
banking authorities. Refer to your appropriate state banking authorities
for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of
WILMINGTON
Name of Bank City
in the State of DELAWARE , at the close of business on December 31,
1996.
<PAGE>
<TABLE>
<S> <C>
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . 213,895
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,818
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,297
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . . . . 3,634,003
LESS: Allowance for loan and lease losses. . . . . . . . . 51,847
LESS: Allocated transfer risk reserve. . . . . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . 3,582,156
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . 89,129
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . 52
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,593
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,300
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,359,950
</TABLE>
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,749,697
Noninterest-bearing . . . . . . . . 852,790
Interest-bearing. . . . . . . . . . 2,896,907
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,825
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . 192,295
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,526
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . 714,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . 43,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,756
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,929,099
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367,371
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . 862
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,851
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . 5,359,950
</TABLE>
EXHIBIT 25.3
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification
no.)
Rodney Square North
1100 North Market Street
<PAGE>
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
THE FIRST AMERICAN FINANCIAL CORPORATION
(Exact name of obligor as specified in its charter)
California 95-1068610
(State of incorporation) (I.R.S. employer identification no.)
114 East Fifth Street
Santa Ana, California 92701-4642
(Address of principal executive offices) (Zip Code)
Guarantee by The First American Financial Corporation with
respect to 8.50% Capital Securities of First American Capital Trust I
(Title of the indenture securities)
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes
the certificate of authority of Wilmington Trust Company to
commence business and the authorization of Wilmington Trust
Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 18th
day of April, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Emmett R. Harmon By:/s/ Norma P. Closs
Assistant Secretary Name: Norma P. Closs
Title: Vice President
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate
the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and
the name of which company was changed to "WILMINGTON TRUST COMPANY" by an
amendment filed in the Office of the Secretary of State on March 18, A.D.
1903, and the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements pursuant to the
corporation law for state banks and trust companies of the State of
Delaware, does hereby alter and amend its Charter or Act of Incorporation
so that the same as so altered and amended shall in its entirety read as
follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of law
or equity and to make and use a common seal, and alter the seal
at pleasure, to hold, purchase, convey, mortgage or otherwise
deal in real and personal estate and property, and to appoint
such officers and agents as the business of the Corporation
shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State, to
discount bills, notes or other evidences of debt, to receive
deposits of money, or securities for money, to buy gold and
silver bullion and foreign coins, to buy and sell bills of
exchange, and generally to use, exercise and enjoy all the
powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of
the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of such
property, real or personal, against any claim or claims, adverse
to his interest therein, and to prepare and give certificates of
<PAGE>
title for any lands or premises in the State of Delaware, or
elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in all
its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators, guardians,
public officers, courts, receivers, assignees, trustees, and
from all fiduciaries, and from all other persons and
individuals, and from all corporations whether state, municipal,
corporate or private, and to rent boxes, safes, vaults and other
receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of Delaware or
elsewhere, or which may now or hereafter be required by any law,
judge, officer or court in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in any
other trust capacity in the receiving, holding, managing, and
disposing of any and all estates and property, real, personal or
mixed, and to be appointed as such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian or bailee by any persons,
corporations, court, officer, or authority, in the State of
Delaware or elsewhere; and whenever this Corporation is so
appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
<PAGE>
duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise
of any of its powers hereby given, or for the performance of any
of the duties which it may undertake or be called upon to
perform, or for the assumption of any responsibility the said
Corporation may be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or
of any state, territory, colony, or possession thereof, or of
any foreign government or country; to receive, collect, receipt
for, and dispose of interest, dividends and income upon and from
any of the bonds, mortgages, debentures, notes, shares of
capital stock, securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages, debentures,
notes, shares of capital stock, securities, obligations,
contracts, evidences of indebtedness and other property, any and
all the rights, powers and privileges of individual owners
thereof, including the right to vote thereon; to invest and deal
in and with any of the moneys of the Corporation upon such
securities and in such manner as it may think fit and proper,
and from time to time to vary or realize such investments; to
issue bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property held
or owned by the Corporation, and to sell and pledge such bonds,
as and when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and to
the extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and personal
property of any name and nature and any estate or interest
therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation, and
to pay for the same in cash, stock of this Corporation, bonds or
otherwise; to hold or in any manner to dispose of the whole or
any part of the property so purchased; to conduct in any lawful
manner the whole or any part of any business so acquired, and to
exercise all the powers necessary or convenient in and about the
conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed, wherever
situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept, endorse,
discount, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other negotiable or
<PAGE>
transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every class
and description, in any State, District, Territory or Colony of
the United States, and in any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited
or restricted by reference to or inference from the terms of any
other clause of this or any other paragraph in this charter, but
that the objects, purposes and powers specified in each of the
clauses of this paragraph shall be regarded as independent
objects, purposes and powers.
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions thereof,
if any, may differ from those of any and all other series at any
time outstanding; and, subject to the provisions of subparagraph 1
of Paragraph (c) of this Article FOURTH, the Board of Directors of
the Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number
may be increased (except where otherwise provided by the Board
of Directors) or decreased (but not below the number of shares
thereof then outstanding) from time to time by like action of
the Board of Directors;
(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if any,
of such dividends to the dividends payable on any other class or
classes, or series of the same or other class of stock and
whether such dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
<PAGE>
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of such
series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of
the foregoing include the right, voting as a series or by itself
or together with other series of Preferred Stock or all series
of Preferred Stock as a class, to elect one or more directors of
the Corporation if there shall have been a default in the
payment of dividends on any one or more series of Preferred
Stock or under such circumstances and on such conditions as the
Board of Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b) of
this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common Stock
shall be entitled to receive all of the remaining assets of the
Corporation, tangible and intangible, of whatever kind available
for distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article FOURTH, each holder of Common Stock shall have one vote
in respect of each share of Common Stock held on all matters
voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
<PAGE>
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased or
decreased from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote
thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be twenty-
four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
<PAGE>
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
<PAGE>
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of any
Interested Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an aggregate fair
market value of $1,000,000 or more, or
<PAGE>
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any similar transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which has
the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds
of the outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors, considered for the purpose of
this Article FIFTEENTH as one class ("Voting Shares"). Such affirmative
vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business combination
and such business combination shall require only such
affirmative vote as is required by law and any other provisions
of the Charter or Act of Incorporation of By-Laws if such
business combination has been approved by a majority of the
whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within
two years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share
of capital stock of the Corporation which were at any time
within two years prior thereto beneficially owned by any
Interested Stockholder, and such assignment or succession shall
have occurred in the course of a transaction or series of
transactions not involving a public offering within the meaning
of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
<PAGE>
(A) which such person or any of its Affiliates and Associates
(as hereafter defined) beneficially own, directly or indirectly,
or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of capital stock of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the
basis of information known to them, (1) the number of Voting
Shares beneficially owned by any person (2) whether a person is
an Affiliate or Associate of another, (3) whether a person has
an agreement, arrangement or understanding with another as to
the matters referred to in paragraph (3) of section (c), or (4)
whether the assets subject to any business combination or the
consideration received for the issuance or transfer of
securities by the Corporation, or any Subsidiary has an
aggregate fair market value of $1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
<PAGE>
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall
not adversely affect any right or protection of a Director of
the Corporation existing hereunder with respect to any act or
omission occurring prior to the time of such repeal or
modification."
<PAGE>
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or
at such other date, time, or place as may be designated by resolution by
the Board of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the
President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said
meeting, at his last known address, a written or printed notice fixing the
time and place of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined,
shall constitute a quorum at all meetings of stockholders for the
transaction of any business, but the holders of a small number of shares
may adjourn, from time to time, without further notice, until a quorum is
secured. At each annual or special meeting of stockholders, each
stockholder shall be entitled to one vote, either in person or by proxy,
for each shares of stock registered in the stockholder's name on the books
of the Company on the record date for any such meeting as determined
herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the
Company, provided, however, that this limitation shall not apply to any
person who was serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of
the Board of Directors or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President,
and shall be called upon the written request of a majority of the
directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the
time or place of any regular meeting, stating the time and place of such
<PAGE>
meeting, which shall be mailed not less than two days before the time of
holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of
Directors, although less than a quorum, shall have the right to elect the
successor who shall hold office for the remainder of the full term of the
class of directors in which the vacancy occurred, and until such director's
successor shall have been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect
from its own members a Chairman of the Board of Directors and a President
who may be the same person. The Board of Directors shall also elect at
such meeting a Secretary and a Treasurer, who may be the same person, may
appoint at any time such other committees and elect or appoint such other
officers as it may deem advisable. The Board of Directors may also elect
at such meeting one or more Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may
deem advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more
than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of
the Board of Directors when it is not in session to transact all business
for and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend
all investments that may be made of the funds of the Company, and shall
direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business
of the Company by its directors and officers as contemplated by these By-
Laws any two available members of the Executive Committee as constituted
immediately prior to such disaster shall constitute a quorum of that
Committee for the full conduct and management of the affairs and business
of the Company in accordance with the provisions of Article III of these
By-Laws; and if less than three members of the Trust Committee is
<PAGE>
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be
empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at
such time, of a minimum of two members of such Executive Committee, any
three available directors shall constitute the Executive Committee for the
full conduct and management of the affairs and business of the Company in
accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose,
and any provisions of these By-Laws (other than this Section) and any
resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any interim
Executive Committee acting under this section that it shall be to the
advantage of the Company to resume the conduct and management of its
affairs and business under all of the other provisions of these By-Laws.
<PAGE>
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall
hold office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision over
the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members
who shall be selected by the Board of Directors from its own members, none
of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention
by the officer in charge of the Audit Division, review all reports of
examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such
recommendations to the Board of Directors with respect thereto or with
respect to any other matters pertaining to auditing the Company as it shall
deem desirable.
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction
of its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors
from its own members who are not officers of the Company and who shall hold
office during the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company,
major organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected
<PAGE>
by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in
the place of any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers
and shall perform such duties as the Board of Directors may from time to
time confer and direct. He shall also exercise such powers and perform
such duties as may from time to time be agreed upon between himself and the
President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of
the Board of Directors shall preside at all meetings of the Board of
Directors at which the Chairman of the Board shall not be present and shall
have such further authority and powers and shall perform such duties as the
Board of Directors or the Chairman of the Board may from time to time
confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and
shall at all times exercise general supervision over the interest, affairs
and operations of the Company and perform all duties incident to his
office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and
such other powers and duties as may from time to time be assigned to them
by the Board of Directors, the Executive Committee, the Chairman of the
Board or the President and by the officer in charge of the department or
division to which they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings
and to recording the same in the minute books of the Company. In addition
to the other notice requirements of these By-Laws and as may be practicable
under the circumstances, all such notices shall be in writing and mailed
well in advance of the scheduled date of any other meeting. He shall have
custody of the corporate seal and shall affix the same to any documents
<PAGE>
requiring such corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and
of all the transactions of the Company. He shall have general supervision
of the expenditures of the Company and shall report to the Board of
Directors at each regular meeting of the condition of the Company, and
perform such other duties as may be assigned to him from time to time by
the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including
accounting, and shall render to the Board of Directors at appropriate times
a report relating to the general condition and internal operations of the
Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller
and such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board
of Directors shall prescribe, shall report to and be directly responsible
only to the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the
Auditor and such duties as may be prescribed by the officer in charge of
the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined
from time to time by the Board of Directors, who shall ex officio hold the
office Assistant Secretary of this Company and who may perform such duties
as may be prescribed by the officer in charge of the department or division
to whom they are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices,
subject to the direction of the Board of Directors, the Executive
Committee, Chairman of the Board of Directors or the President and the
officer in charge of the department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of
stock shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of
Directors and countersigned by the Secretary or Treasurer or an Assistant
Secretary, and the seal of the corporation shall be engraved thereon. Each
certificate shall recite that the stock represented thereby is
transferrable only upon the books of the Company by the holder thereof or
his attorney, upon surrender of the certificate properly endorsed. Any
certificate of stock surrendered to the Company shall be cancelled at the
time of transfer, and before a new certificate or certificates shall be
issued in lieu thereof. Duplicate certificates of stock shall be issued
only upon giving such security as may be satisfactory to the Board of
Directors or the Executive Committee.
<PAGE>
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders
entitled to notice of, and to vote at, any meeting of stockholders and any
adjournment thereof, or entitled to receive payment of any dividend, or to
any allotment or rights, or to exercise any rights in respect of any
change, conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which record date
shall not be more than 60 nor less than 10 days proceeding the date of any
meeting of stockholders or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion
or exchange of capital stock shall go into effect, or a date in connection
with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full
power and authority to enter into, make, sign, execute, acknowledge and/or
deliver and the Secretary or any Assistant Secretary shall have full power
and authority to attest and affix the corporate seal of the Company to any
and all deeds, conveyances, assignments, releases, contracts, agreements,
bonds, notes, mortgages and all other instruments incident to the business
of this Company or in acting as executor, administrator, guardian, trustee,
agent or in any other fiduciary or representative capacity by any and every
method of appointment or by whatever person, corporation, court officer or
authority in the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of Directors
or the Executive Committee, and any and all such instruments shall have the
same force and validity as though expressly authorized by the Board of
Directors and/or the Executive Committee.
<PAGE>
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable
honoraria or fees for attending meetings of the Board of Directors as the
Board of Directors may from time to time determine. Directors and
associate directors who serve as members of committees, other than salaried
employees of the Company, shall be paid such reasonable honoraria or fees
for services as members of committees as the Board of Directors shall from
time to time determine and directors and associate directors may be
employed by the Company for such special services as the Board of Directors
may from time to time determine and shall be paid for such special services
so performed reasonable compensation as may be determined by the Board of
Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or
may hereafter be amended, any person who was or is made or is threatened to
be made a party or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "proceeding")
by reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or
of a partnership, joint venture, trust, enterprise or non-profit entity,
including service with respect to employee benefit plans, against all
liability and loss suffered and expenses reasonably incurred by such
person. The Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
Director or officer to repay all amounts advanced if it should be
ultimately determined that the Director or officer is not entitled to be
indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file
suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification of
payment of expenses under applicable law.
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing provisions
of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior
to the time of such repeal or modification.
<PAGE>
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all
the members of the Board of Directors then in office.
<PAGE>
EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission
upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: April 18, 1997 By: /s/ Norma P. Closs
Name: Norma P. Closs
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks
with state publication requirements. It has not been approved by any state
banking authorities. Refer to your appropriate state banking authorities
for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of
WILMINGTON
Name of Bank City
in the State of DELAWARE , at the close of business on December 31,
1996.
<PAGE>
<TABLE>
<S> <C>
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . . . . . . . . 213,895
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465,818
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 752,297
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,000
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . . . . . . . . . 39,190
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,634,003
LESS: Allowance for loan and lease losses. . . . . . 51,847
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . . . . . . . 3,582,156
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . . . . . . . . . 89,129
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,520
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . . . . . . . . . 52
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,593
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,300
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,359,950
</TABLE>
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,749,697
Noninterest-bearing . . . . . . . . 852,790
Interest-bearing. . . . . . . . . . 2,896,907
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,825
Securities sold under agreements to repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . 192,295
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,526
Trading liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . . . . . . . . . . . . . . . . 714,000
With original maturity of more than one year . . . . . . . . . . . . . . . . . . . . . 43,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,756
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,929,099
Limited-life preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367,371
Net unrealized holding gains (losses) on available-for-sale securities . . . . . . . . . . . . . . 862
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,851
Total liabilities, limited-life preferred stock, and equity capital . . . . . . . . . . . . . . . . 5,359,950
</TABLE>
LETTER OF TRANSMITTAL
THE FIRST AMERICAN FINANCIAL CORPORATION
OFFER TO EXCHANGE THE
8.50% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF FIRST AMERICAN CAPITAL TRUST I
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR THE OUTSTANDING
8.50% CAPITAL SECURITIES OF
FIRST AMERICAN CAPITAL TRUST I
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
PURSUANT TO THE PROSPECTUS
DATED , 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS THE OFFER IS EXTENDED.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WILMINGTON TRUST COMPANY
BY MAIL/OVERNIGHT DELIVERY: BY HAND:
<PAGE>
Wilmington Trust Company Wilmington
Trust Company
c/o
New York, New York New York, New York
Attn: Attn: Corporate Trust Operations
FACSIMILE TRANSMISSIONS:
(212) -
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) -
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER
THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF
TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF
TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of
Old Capital Securities (as defined below) if either (i) Old
Capital Securities are to be forwarded herewith or (ii) tenders
of Old Capital Securities are to be made by book-entry transfer
to an account maintained by Wilmington Trust Company (the
"Exchange Agent") at The Depository Trust Company ("DTC")
pursuant to the procedures set forth under "The Exchange Offer--
Procedures for Tendering Old Capital Securities" in the
Prospectus and an Agent's Message (as defined below) is not
delivered.
Holders of Old Capital Securities whose certificates (the
"Certificates") for such Old Capital Securities are not
immediately available or who cannot deliver their Certificates
and all other required documents to the Exchange Agent on or
prior to the Expiration Date (as defined in the Prospectus) or
who cannot complete the procedures for book-entry transfer on or
prior to the Expiration Date, must tender their Old Capital
Securities according to the guaranteed delivery procedures set
forth in "The Exchange Offer--Procedures for Tendering Old
Capital Securities-Guaranteed Delivery" in the Prospectus.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE
DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF OLD CAPITAL SECURITIES TENDERED
LIQUIDATION
LIQUIDATION AMOUNT OF OLD NUMBER OF
AMOUNT OF OLD CAPITAL SECURITIES BENEFICIAL HOLDERS
NAME AND ADDRESS OF REGISTERED CAPITAL SECURITIES TENDERED FOR WHICH OLD
HOLDER CERTIFICATE TENDERED (IF ALL (IF LESS THAN ALL ARE CAPITAL SECURITIES
(PLEASE FILL IN IF BLANK) NUMBERS<F1> ARE TENDERED) TENDERED)<F2> ARE HELD
<S> <C> <C> <C> <C>
$ $
$ $
$ $
TOTAL AMOUNT TENDERED: $ $
<FN>
<F1> Need not be completed by book-entry holders.
<F2> Old Capital Securities may be tendered in whole or in part in denominations of $100,000 and integral
multiples of $1,000 in excess thereof, provided that if any Old Capital Securities are tendered for
exchange in part, the untendered Liquidation Amount thereof must be $100,000 or any integral multiple
of $1,000 in excess thereof. All Old Capital Securities held shall be deemed tendered unless a
lesser number is specified in this column.
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS (defined
in Instruction 1) ONLY)
( ) CHECK HERE IF TENDERED OLD CAPITAL SECURITIES ARE BEING
DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT
MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
( ) CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF
GUARANTEED DELIVERY IF TENDERED OLD CAPITAL SECURITIES ARE
BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY
PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder:
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
( ) CHECK HERE IF OLD CAPITAL SECURITIES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER AND UNEXCHANGED OR UNTENDERED OLD
CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC
ACCOUNT NUMBER SET FORTH ABOVE.
( ) CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD
CAPITAL SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING
BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
Address:
Contact Person:
Area Code and Telephone Number:
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to First American Capital
Trust I, a statutory business trust created under Delaware law
(the "Trust") and The First American Financial Corporation, a
California corporation (the "Company"), the above-described
aggregate Liquidation Amount of the 8.50% Capital Securities (the
"Old Capital Securities") of the Trust in exchange for a like
aggregate Liquidation Amount of the 8.50% Capital Securities (the
"New Capital Securities") of the Trust, which have been
registered under the Securities Act of 1933 (the "Securities
Act"), upon the terms and subject to the conditions set forth in
the Prospectus dated ____________, 1997 (as the same may be
amended or supplemented from time to time, the "Prospectus"),
receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitutes the
"Exchange Offer").
Subject to and effective upon the acceptance for exchange of
all or any portion of the Old Capital Securities tendered
herewith in accordance with the terms and conditions of the
Exchange Offer (including, if the Exchange Offer is extended or
amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers
to or upon the order of the Trust all right, title and interest
in and to such Old Capital Securities as are being tendered
herewith. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as
agent of the Company, and the Trust in connection with the
Exchange Offer) with respect to the tendered Old Capital
Securities, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an
interest), subject only to the right of withdrawal described in
the Prospectus, to (i) deliver Certificates for Old Capital
Securities to the Trust together with all accompanying evidences
of transfer and authenticity to, or upon the order of, the Trust,
upon receipt by the Exchange Agent, as the undersigned's agent,
of the New Capital Securities to be issued in exchange for such
Old Capital Securities, (ii) present Certificates for such Old
Capital Securities for transfer, and to transfer the Old Capital
Securities on the books of the Trust, and (iii) receive for the
account of the Trust all benefits and otherwise exercise all
rights of beneficial ownership of such Old Capital Securities,
all in accordance with the terms and conditions of the Exchange
Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE
UNDERSIGNED HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE,
SELL, ASSIGN AND TRANSFER THE OLD CAPITAL SECURITIES TENDERED
HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
TRUST WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND
ENCUMBRANCES, AND THAT THE OLD CAPITAL SECURITIES TENDERED HEREBY
ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY THE CORPORATION, THE ISSUER TRUST,
THE OLD ISSUER TRUST OR THE EXCHANGE AGENT TO BE NECESSARY OR
DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF
THE OLD CAPITAL SECURITIES TENDERED HEREBY, AND THE UNDERSIGNED
WILL COMPLY WITH ANY OBLIGATIONS IT MAY HAVE UNDER THE
REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND
AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The name and address of the registered holder of the Old
Capital Securities tendered hereby should be printed above, if
<PAGE>
they are not already set forth above, as they appear on the
Certificates representing such Old Capital Securities. The
Certificate numbers and the Old Capital Securities that the
undersigned wishes to tender should be indicated in the
appropriate boxes above.
If any tendered Old Capital Securities are not exchanged
pursuant to the Exchange Offer for any reason, or if Certificates
are submitted for more Old Capital Securities than are tendered
or accepted for exchange, Certificates for such unexchanged or
untendered Old Capital Securities will be returned (or, in the
case of Old Capital Securities tendered by book-entry transfer,
such Old Capital Securities will be credited to an account
maintained at DTC), without expense to the tendering holder,
promptly following the expiration or termination of the Exchange
Offer.
The undersigned understands that tenders of Old Capital
Securities pursuant to any one of the procedures described under
"The Exchange Offer--Procedures for Tendering Old Capital
Securities" in the Prospectus and in the instructions herein
will, upon the Trust's acceptance for exchange of such tendered
Old Capital Securities, constitute a binding agreement between
the undersigned, the Company and the Trust upon the terms and
subject to the conditions of the Exchange Offer. The undersigned
recognizes that, under certain circumstances set forth in the
Prospectus, the Company and the Trust may not be required to
accept for exchange any of the Old Capital Securities tendered
hereby.
Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" below, the undersigned hereby
directs that the New Capital Securities be issued in the name of
the undersigned or, in the case of a book-entry transfer of Old
Capital Securities, that such New Capital Securities be credited
to the account indicated above maintained at DTC. If applicable,
substitute Certificates representing Old Capital Securities not
exchanged or not accepted for exchange will be issued to the
undersigned or, in the case of a book-entry transfer of Old
Capital Securities, will be credited to the account indicated
above maintained at DTC. Similarly, unless otherwise indicated
under "Special Delivery Instructions" below, please deliver New
Capital Securities to the undersigned at the address shown below
the undersigned's signature.
BY TENDERING OLD CAPITAL SECURITIES AND EXECUTING THIS
LETTER OF TRANSMITTAL, THE UNDERSIGNED HEREBY REPRESENTS AND
AGREES THAT (I) NEITHER THE UNDERSIGNED NOR ANY BENEFICIAL OWNER
IS AN "AFFILIATE" OF THE COMPANY OR THE TRUST WITHIN THE MEANING
OF RULE 405 UNDER THE SECURITIES ACT, (II) ANY NEW CAPITAL
SECURITIES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED
IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS
NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN
A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF NEW
CAPITAL SECURITIES TO BE RECEIVED IN THE EXCHANGE OFFER, AND (IV)
IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT
ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION
(WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH NEW CAPITAL
SECURITIES. BY TENDERING OLD CAPITAL SECURITIES PURSUANT TO THE
EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER
OF OLD CAPITAL SECURITIES THAT IS A BROKER-DEALER REPRESENTS AND
AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY
THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE
SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A)
SUCH OLD CAPITAL SECURITIES HELD BY THE BROKER-DEALER ARE HELD
ONLY AS A NOMINEE, OR (B) SUCH OLD CAPITAL SECURITIES WERE
<PAGE>
ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL
DELIVER A PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO
TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN
CONNECTION WITH ANY RESALE OF SUCH NEW CAPITAL SECURITIES
(PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A
PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT
IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT).
THE COMPANY AND THE TRUST HAVE AGREED THAT, SUBJECT TO THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS,
AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE
USED BY A PARTICIPATING BROKER-DEALER IN CONNECTION WITH RESALES
OF NEW CAPITAL SECURITIES RECEIVED IN EXCHANGE FOR OLD CAPITAL
SECURITIES, WHERE SUCH OLD CAPITAL SECURITIES WERE ACQUIRED BY
SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT
OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES, FOR A
PERIOD ENDING 90 DAYS AFTER THE EXPIRATION DATE (SUBJECT TO
EXTENSION UNDER CERTAIN LIMITED CIRCUMSTANCES DESCRIBED IN THE
PROSPECTUS) OR, IF EARLIER, WHEN ALL SUCH NEW CAPITAL SECURITIES
HAVE BEEN DISPOSED OF BY SUCH PARTICIPATING BROKER-DEALER. IN
THAT REGARD, EACH PARTICIPATING BROKER-DEALER WHO ACQUIRED OLD
CAPITAL SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF
MARKET-MAKING OR OTHER TRADING ACTIVITIES, BY TENDERING SUCH OLD
CAPITAL SECURITIES AND EXECUTING THIS LETTER OF TRANSMITTAL,
AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OR THE TRUST
OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT THAT
MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE
PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR THAT CAUSES THE
PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO
MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE
THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE
MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS
SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH
PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF NEW CAPITAL
SECURITIES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY OR THE
ISSUER TRUST HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO
CORRECT SUCH MISSTATEMENT OR OMISSION AND HAVE FURNISHED COPIES
OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING
BROKER-DEALER OR THE COMPANY OR THE ISSUER TRUST HAS GIVEN NOTICE
THAT THE SALE OF THE NEW CAPITAL SECURITIES MAY BE RESUMED, AS
THE CASE MAY BE. IF THE COMPANY OR THE TRUST GIVES SUCH NOTICE
TO SUSPEND THE SALE OF THE NEW CAPITAL SECURITIES, IT SHALL
EXTEND THE 90-DAY PERIOD REFERRED TO ABOVE DURING WHICH
PARTICIPATING BROKER-DEALERS ARE ENTITLED TO USE THE PROSPECTUS
IN CONNECTION WITH THE RESALE OF NEW CAPITAL SECURITIES BY THE
NUMBER OF DAYS DURING THE PERIOD FROM AND INCLUDING THE DATE OF
THE GIVING OF SUCH NOTICE TO AND INCLUDING THE DATE WHEN
PARTICIPATING BROKER-DEALERS SHALL HAVE RECEIVED COPIES OF THE
SUPPLEMENTED OR AMENDED PROSPECTUS NECESSARY TO PERMIT RESALES OF
THE NEW CAPITAL SECURITIES OR TO AND INCLUDING THE DATE ON WHICH
THE COMPANY OR THE TRUST HAS GIVEN NOTICE THAT THE SALE OF NEW
CAPITAL SECURITIES MAY BE RESUMED, AS THE CASE MAY BE.
Holders of Old Capital Securities whose Old Capital
Securities are accepted for exchange will not receive accumulated
Distributions on such Old Capital Securities for any period from
and after the last Distribution date to which Distributions have
been paid or duly provided for on such Old Capital Securities
prior to the original issue date of the New Capital Securities
or, if no such Distributions have been paid or duly provided for,
will not receive any accumulated Distributions on such Old
Capital Securities, and the undersigned waives the right to
receive any distributions on such Old Capital Securities
accumulated from and after such Distribution date or, if no such
Distributions have been paid or duly provided for, to receive any
<PAGE>
distributions on such Old Capital Securities.
All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity
of the undersigned and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors,
administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned.
Except as stated in the Prospectus, this tender is irrevocable.
<PAGE>
HOLDERS SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 14)
(NOTE: SIGNATURES MUST BE GUARANTEED
IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder exactly as name appears
on Certificates for the Old Capital Securities hereby tendered or
on a security position listing, or by any person authorized to
become the registered holder by endorsements and documents
transmitted herewith (including such opinions of counsel,
certifications and other information as may be required by the
Company, the Trust or the Exchange Agent to comply with the
restrictions on transfer applicable to the Old Capital
Securities). If signature is by an attorney-in-fact, executor,
administrator, trustee, guardian, officer of a corporation or
another acting in a fiduciary capacity or representative
capacity, please set forth the signer's full title. See
Instruction 5.
-
-
(SIGNATURE OF HOLDER)
Date: , 1997
Name:
(PLEASE PRINT)
Capacity (full title):
Address:
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
Tax Identification or Social Security Number:
GUARANTEE OF SIGNATURE
(SEE INSTRUCTIONS 2 AND 5)
-
(AUTHORIZED SIGNATURE)
Date: , 1997
Name of Firm:
Capacity (full title):
(PLEASE PRINT)
Address:
<PAGE>
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities and/or any Old
Capital Securities that are not tendered are to be issued in the
name of someone other than the registered holder of the Old
Capital Securities whose name appears above.
Issue
( ) New Capital Securities
( ) Old Capital Securities not tendered
to:
Name:
Address:
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
Tax Identification or Social Security Number:
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the New Capital Securities and/or any Old
Capital Securities that are not tendered are to be sent to
someone other than the registered holder of the Old Capital
Securities whose name appears above, or to such registered holder
at an address other than that shown above.
Mail
- New Capital Securities
- Old Capital Securities not tendered
to:
Name:
Address:
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
Tax Identification or Social Security Number:
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES;
GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to
be completed if either (a) Certificates are to be forwarded
herewith or (b) tenders are to be made pursuant to the procedures
for tender by book-entry transfer set forth under "The Exchange
Offer--Procedures for Tendering Old Capital Securities" in the
Prospectus and an Agent's Message is not delivered.
Certificates, or book-entry confirmation of a book-entry transfer
of such Old Capital Securities into the Exchange Agent's account
at DTC, as well as this Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent at
its address set forth herein on or prior to the Expiration Date.
Tenders by book-entry transfer may also be made by delivering an
Agent's Message in lieu of this Letter of Transmittal. The term
"book-entry confirmation" means a timely confirmation of
book-entry transfer of Old Capital Securities into the Exchange
Agent's account at DTC. The term "Agent's Message" means a
message, transmitted by DTC to and received by the Exchange Agent
and forming a part of a book-entry confirmation, which states
that DTC has received an express acknowledgment from the
tendering participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of
Transmittal (including the representations contained herein) and
that the Trust and the Company may enforce the Letter of
Transmittal against such participant. Old Capital Securities may
be tendered in whole or in part in any Liquidation Amount of
$100,000 (100 Old Capital Securities) or any integral multiple of
$1,000 in excess thereof, provided that if any Old Capital
Securities are tendered for exchange in part, the untendered
Liquidation Amount thereof must also be $100,000 (100 Old Capital
Securities) or any integral multiple of $1,000 in excess thereof.
Holders who wish to tender their Old Capital Securities and
(i) whose Old Capital Securities are not immediately available,
(ii) who cannot deliver their Old Capital Securities, this Letter
of Transmittal and all other required documents to the Exchange
Agent on or prior to the Expiration Date or (iii) who cannot
complete the procedures for delivery by book-entry transfer on or
prior to the Expiration Date, may tender their Old Capital
Securities by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth under "The Exchange Offer--Procedures for
Tendering Old Capital Securities" in the Prospectus. Pursuant to
such procedures: (i) such tender must be made by or through an
Eligible Institution (as defined below); (ii) a properly
completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Company, must be
received by the Exchange Agent on or prior to the Expiration
Date; and (iii) the Certificates (or a book-entry confirmation)
representing all tendered Old Capital Securities, in proper form
for transfer, together with the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other documents
required by this Letter of Transmittal, must be received by the
Exchange Agent within five New York Stock Exchange Inc. trading
days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in "The Exchange Offer-Procedures for
Tendering Old Capital Securities" in the Prospectus.
<PAGE>
The Notice of Guaranteed Delivery may be delivered by hand
or transmitted by facsimile or mail to the Exchange Agent, and
must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery. For Old Capital
Securities to be properly tendered pursuant to the guaranteed
delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery on or prior to the Expiration Date. As used
herein, "Eligible Institution" means a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act as "an eligible
guarantor institution," including (as such terms are defined
therein) (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii)
a credit union; (iv) a national securities exchange, registered
securities association or clearing agency; or (v) a savings
association that is a participant in a securities transfer
association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND
SOLE RISK OF THE TENDERING HOLDER AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY ON OR PRIOR TO THE EXPIRATION DATE.
Neither the Company nor the Trust will accept any
alternative, conditional or contingent tenders. Each tendering
holder, by execution of a Letter of Transmittal (or a facsimile
thereof), waives any fight to receive any notice of the
acceptance of such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on
this Letter of Transmittal is required if:
(i) this Letter of Transmittal is signed by the
registered holder (which term, for purposes of this
document, shall include any participant in DTC whose name
appears on a security position listing as the owner of the
Old Capital Securities) of Old Capital Securities tendered
herewith, unless such holder has completed either the box
entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" above, or
(ii) such Old Capital Securities are tendered for the
account of a firm that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee
the signature on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box
captioned "Description of Old Capital Securities Tendered" is
inadequate, the Certificate numbers and/or the Liquidation Amount
of Old Capital Securities and any other required information
should be listed on a separate signed schedule which is attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old
Capital Securities will be accepted only in the Liquidation
Amount of $100,000 (100 Old Capital Securities) and integral
multiples of $1,000 in excess thereof, provided that if any Old
Capital Securities are tendered for exchange in part, the
untendered Liquidation Amount thereof must also be $100,000 (100
Old Capital Securities) or any integral multiple of $1,000 in
excess thereof. If less than all the Old Capital Securities
evidenced by any Certificate submitted are to be tendered, fill
<PAGE>
in the Liquidation Amount of Old Capital Securities that are to
be tendered in the box entitled "Liquidation Amount of Old
Capital Securities Tendered (If Less than All are Tendered)." In
such case, a new Certificate for the remainder of the Old Capital
Securities that were evidenced by the old Certificate will be
sent to the holder of the Old Capital Securities promptly after
the Expiration Date unless the appropriate boxes on this Letter
of Transmittal are completed. All Old Capital Securities
represented by Certificates delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated as
provided herein.
Except as otherwise provided herein, tenders of Old Capital
Securities may be withdrawn at any time on or prior to the
Expiration Date. In order for a withdrawal to be effective, a
written, telegraphic, telex or facsimile transmission of such
notice of withdrawal must be received by the Exchange Agent at
one of its addresses set forth above or in the Prospectus on or
prior to the Expiration Date. Any such notice of withdrawal must
specify the name of the person who tendered the Old Capital
Securities to be withdrawn, the aggregate Liquidation Amount of
Old Capital Securities to be withdrawn, and (if Certificates for
Old Capital Securities have been tendered) the name of the
registered holder of the Old Capital Securities as set forth on
the Certificates for the Old Capital Securities, if different
from that of the person who tendered such Old Capital Securities.
If Certificates for the Old Capital Securities have been
delivered or otherwise identified to the Exchange Agent, then
prior to the physical release of such Certificates for the Old
Capital Securities, the tendering holder must submit the serial
numbers shown on the particular Certificates for the Old Capital
Securities to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except
in the case of Old Capital Securities tendered for the account of
an Eligible Institution. If Old Capital Securities have been
tendered pursuant to the procedures for book-entry transfer set
forth under "The Exchange Offer-Procedures for Tendering Old
Capital Securities," the notice of withdrawal must specify the
name and number of the account at DTC to be credited with the
withdrawal of Old Capital Securities, in which case a notice of
withdrawal will be effective if delivered to the Exchange Agent
by written, telegraphic, telex or facsimile transmission on or
prior to the Expiration Date. Withdrawals of tenders of Old
Capital Securities may not be rescinded and Old Capital
Securities properly withdrawn will not be deemed validly tendered
for purposes of the Exchange Offer, but may be retendered at any
subsequent time on or prior to the Expiration Date by following
any of the procedures described in the Prospectus under "The
Exchange Offer Procedures for Tendering Old Capital Securities."
All questions as to the validity, form and eligibility
(including time of receipt) of such withdrawal notices will be
determined by the Company and the Trust, in their sole
discretion, whose determination shall be final and binding on all
parties. The Company and the Trust, any affiliates or assigns of
the Company and the Trust, the Exchange Agent or any other person
shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification. Any Old Capital
Securities that have been tendered but which are withdrawn on or
prior to the Expiration Date will be returned to the holder
thereof without cost to such holder promptly after withdrawal.
5 . SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the
registered holder of the Old Capital Securities tendered hereby,
<PAGE>
the signature must correspond exactly with the name as written on
the face of the Certificates without alteration, enlargement or
any change whatsoever.
If any of the Old Capital Securities tendered hereby are
owned of record by two or more joint owners, all such owners must
sign this Letter of Transmittal.
If any tendered Old Capital Securities are registered in
different names on several Certificates, it will be necessary to
complete, sign and submit as many separate Letters of Transmittal
(or facsimiles thereof) as there are different registrations of
Certificates.
If this Letter of Transmittal or any Certificates or bond
powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons
should so indicate when signing and must submit proper evidence
satisfactory to the Company and the Trust, in their sole
discretion, of such persons' authority to so act.
When this Letter of Transmittal is signed by the registered
holder of the Old Capital Securities listed and transmitted
hereby, no endorsement of Certificates or separate bond powers
are required unless New Capital Securities are to be issued in
the name of a person other than the registered holder.
Signatures on such Certificates or bond powers must be guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other
than the registered holder of the Old Capital Securities listed,
the Certificates must be endorsed or accompanied by appropriate
bond powers, signed exactly as the name of the registered holder
appears on the Certificates, and also must be accompanied by such
opinions of counsel, certifications and other information as the
Company, the Trust or the Exchange Agent may require in
accordance with the restrictions on transfer applicable to the
Old Capital Securities. Signatures on such Certificates or bond
powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If New
Capital Securities are to be issued in the name of a person other
than the registered holder, or if New Capital Securities are to
be sent to someone other than the registered holder or to an
address other than that shown above, the appropriate boxes on
this Letter of Transmittal should be completed. Certificates for
Old Capital Securities not exchanged will be returned by mail or,
if tendered by book-entry transfer, by crediting the account
indicated above maintained at DTC unless the appropriate boxes on
this Letter of Transmittal are completed. See Instruction 4.
7. IRREGULARITIES. The Company and the Trust will
determine, in their sole discretion, all questions as to the form
of documents, validity, eligibility (including time of receipt)
and acceptance for exchange of any tender of Old Capital
Securities, which determination shall be final and binding on all
parties. The Company and the Trust reserve the absolute right to
reject any and all tenders determined by them not to be in proper
form or the acceptance of which, or exchange for, may, in the
view of counsel to the Company and the Trust, be unlawful. The
Company and the Trust also reserve the absolute right, subject to
applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer--
Certain Conditions to the Exchange Offer" or any conditions or
irregularity in any tender of Old Capital Securities of any
<PAGE>
particular holder whether or not similar conditions or
irregularities are waived in the case of other holders. The
Company's and the Trust's interpretation of the terms and
conditions of the Exchange Offer (including this Letter of
Transmittal and the instructions hereto) will be final and
binding. No tender of Old Capital Securities will be deemed to
have been validly made until all irregularities with respect to
such tender have been cured or waived. None of the Company, the
Trust or the Exchange Agent, any affiliates or assigns of the
Company, the Trust or the Exchange Agent, nor any other person
shall be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to
give such notification.
8 . QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL
COPIES. Questions and requests for assistance may be directed to
the Exchange Agent at its address and telephone number set forth
on the front of this Letter of Transmittal. Additional copies of
the Prospectus, the Notice of Guaranteed Delivery and the Letter
of Transmittal may be obtained from the Exchange Agent or from
your broker, dealer, commercial bank, trust company or other
nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under
U.S. Federal income tax law, a holder whose tendered Old Capital
Securities are accepted for exchange is required to provide the
Exchange Agent with such holder's correct taxpayer identification
number ("TIN") on the Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the holder or other payee to a
$50 penalty. In addition, payments to such holders or other
payees with respect to Old Capital Securities exchanged pursuant
to the Exchange Offer may be subject to 31 % backup withholding.
The box in Part 3 of the Substitute Form W-9 may be checked
if the tendering holder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If
the box in Part 3 is checked, the holder or other payee must also
complete the Certificate of Awaiting Taxpayer Identification
Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the
Certificate of Awaiting Taxpayer Identification Number is
completed, the Exchange Agent will withhold 31% of all payments
made prior to the time a properly certified TIN is provided to
the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60 day period following the date of the
Substitute Form W-9. If the holder furnishes the Exchange Agent
with its TIN within 60 days after the date of the Substitute Form
W-9, the amounts retained during the 60-day period will be
remitted to the holder and no further amounts shall be retained
or withheld from payments made to the holder thereafter. If,
however, the holder has not provided the Exchange Agent with its
TIN within such 60-day period, amounts withheld will be remitted
to the IRS as backup withholding. In addition, 31% of all
payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The holder is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number)
of the registered owner of the Old Capital Securities or of the
last transferee appearing on the transfers attached to, or
endorsed on, the Old Capital Securities. If the Old Capital
Securities are registered in more than one name or are not in the
name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
<PAGE>
Certain holders (including, among others, corporations,
financial institutions and certain foreign persons) may not be
subject to these backup withholding and reporting requirements.
Such holders should nevertheless complete the attached Substitute
Form W-9 below, and write "exempt" on the face thereof, to avoid
possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed
IRS Form W-8, signed under penalties of perjury, attesting to
that holder's exempt status. Please consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 " for additional guidance on which holders
are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income
tax. Rather, the U.S. Federal income tax liability of a person
subject to backup withholding will be reduced by the amount of
tax withheld. If withholding results in an overpayment of taxes,
a refund may be obtained.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any
Certificates representing Old Capital Securities have been lost,
destroyed or stolen, the holder should promptly notify the
Exchange Agent. The holder will then be instructed as to the
steps that must be taken in order to replace the Certificates.
This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost, destroyed or
stolen Certificates have been followed.
11. SECURITY TRANSFER TAXES. Holders who tender their Old
Capital Securities for exchange will not be obligated to pay any
transfer taxes in connection therewith. If, however, New Capital
Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Old
Capital Securities tendered, or if a transfer tax is imposed for
any reason other than the exchange of Old Capital Securities in
connection with the Exchange Offer, then the amount of any such
transfer tax (whether imposed on the registered holder or any
other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such
tendering holder.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE
THEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
<TABLE>
<CAPTION>
PAYER'S NAME: WILMINGTON TRUST COMPANY
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY SOCIAL SECURITY
FORM W-9 BY SIGNING AND DATING BELOW. NUMBER OR EMPLOYER
DEPARTMENT OF THE TREASURY IDENTIFICATION NUMBER
INTERNAL REVENUE SERVICE
PART 2--CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY
THAT:
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER
NUMBER (TIN)
IDENTIFICATION NUMBER (OR I AM WAITING FOR A NUMBER TO BE
ISSUED TO ME) AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE:
(A) I AM EXEMPT FROM BACKUP WITHHOLDING, OR (B) I HAVE
NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE (THE
"IRS") THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A
RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS,
OR (C) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER
SUBJECT TO BACKUP WITHHOLDING.
CERTIFICATION INSTRUCTIONS--YOU MUST CROSS OUT ITEM (2) ABOVE IF PART 3--
YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT
TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR AWAITING TIN ( )
DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING NOTIFIED
BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING, YOU
RECEIVED ANOTHER NOTIFICATION FROM THE IRS THAT YOU ARE NO LONGER
SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT SUCH ITEM (2).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY
PROVISION OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED
TO AVOID BACKUP WITHHOLDING.
SIGNATURE DATE
NAME (PLEASE PRINT)
ADDRESS (PLEASE PRINT)
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED "GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer
Identification Number has not been issued to me, and either (1) I
have mailed or delivered an application to receive a Taxpayer
Identification Number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (2) I intend
to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification
Number by the time of payment, 31% of all reportable payments
made to me will be withheld, but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number
within sixty (60) days.
Signature Date
Name (Please Print)
<PAGE>
Address (Please Print)
EXHIBIT 99.2
FORM OF
NOTICE OF GUARANTEED DELIVERY
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
8.50% CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER CAPITAL SECURITY)
OF
FIRST AMERICAN CAPITAL TRUST I
FULLY AND UNCONDITIONALLY GUARANTEED BY
THE FIRST AMERICAN FINANCIAL CORPORATION
This Notice of Guaranteed Delivery, or one substantially
equivalent to this form, must be used to accept the Exchange
Offer (as defined below) if (i) certificates for the 8.50%
Capital Securities (liquidation amount $1,000 per Capital
Security) (the "Old Capital Securities") of First American
Capital Trust I, a Delaware statutory business trust, are not
immediately available, (ii) Old Capital Securities, the Letter of
Transmittal and all other required documents cannot be delivered
to Wilmington Trust Company (the "Exchange Agent") on or prior to
the Expiration Date (as defined in the Prospectus referred to
below) or (iii) the procedures for delivery by book-entry
transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand, overnight courier
or mail, or transmitted by facsimile transmission, to the
Exchange Agent. See "The Exchange Offer--Procedures for Tendering
Old Capital Securities" in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
WILMINGTON TRUST COMPANY
BY MAIL/OVERNIGHT DELIVERY/HAND DELIVERY:
Wilmington Trust Company
c/o ___________________________________
_______________________________
New York, New York _____
Attn: Corporate Trust Administration
TO CONFIRM BY TELEPHONE OR FOR INFORMATION:
(212) ___-____
FACSIMILE TRANSMISSION:
(212) ___-____
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS
OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF
GUARANTEED DELIVERY VIA FACSIMILE TO A NUMBER OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL
IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER
THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN
THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER
OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to First American Capital
Trust I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), upon the terms and subject to
the conditions set forth in the Prospectus dated
_________________, 1997 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the
related Letter of Transmittal (which together constitute the
"Exchange Offer"), receipt of which is hereby acknowledged, the
aggregate principal amount of Old Capital Securities set forth
below pursuant to the guaranteed delivery procedures set forth in
the Prospectus under the caption "The Exchange Offer-- Procedures
for Tendering Old Capital Securities."
Aggregate Liquidation Name(s) of Registered
Holder(s):
Amount Tendered:
Certificate No(s). Address(es):
(if available) Area Code and Telephone
Number(s):
If Old Capital Securities will be tendered by book-entry
transfer, provide the following information:
Signature(s):
DTC Account Number:
Date:
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule
17Ad-15 under the Securities Exchange Act of 1934, as amended, as
an "eligible guarantor institution", including (as such terms are
defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker, municipal securities dealer, government
securities broker, government securities dealer, (iii) a credit
union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that
is a participant in a securities transfer association recognized
program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees to deliver to the Exchange
Agent, at its address set forth above, either the Old Capital
Securities tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Old Capital
Securities to the Exchange Agent's account at The Depository
Trust Company ("DTC"), pursuant to the procedures for book-entry
transfer set forth in the Prospectus, in either case together
with one or more properly completed and duly executed Letters of
Transmittal (or a facsimile thereof), or Agent's Message (as
defined in the Prospectus) in lieu thereof, and any other
required documents within five business days after the date of
execution of this Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the
Letters of Transmittal and the Old Capital Securities tendered
hereby to the Exchange Agent within the time period set forth
above and that failure to do so could result in a financial loss
to the undersigned.
Name of Firm:
(Authorized Signature):
(Title):
Address:
(Include Zip Code)
Area Code and Telephone Number (___) ___-_____
Date:
NOTE: DO NOT SEND OLD CAPITAL SECURITIES WITH THIS NOTICE OF
GUARANTEED DELIVERY. ACTUAL SURRENDER OF OLD CAPITAL
SECURITIES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED
BY, A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
