<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
-------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ --------------
Commission file number 0-3658
--------------------------------------
THE FIRST AMERICAN FINANCIAL CORPORATION
-------------------------------------------
(Exact name of registrant as specified in its charter)
Incorporated in California 95-1068610
-------------------------- ------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
114 East Fifth Street, Santa Ana, California 92701-4699
-------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714)558-3211
----------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- ----------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes No
-------- ---------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
$1 par value - 11,565,413 as of August 6, 1997
<PAGE>
INFORMATION INCLUDED IN REPORT
------------------------------
Part I: Financial Information
Item 1. Financial Statements
A. Condensed Consolidated Statements of Income
B. Condensed Consolidated Balance Sheets
C. Condensed Consolidated Statements of Cash Flows
D. Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Part II: Other Information
Item 6. Exhibits and Reports on Form 8-K
Items 1-5 have been omitted because they are not applicable with
respect to the current reporting period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE FIRST AMERICAN FINANCIAL CORPORATION
----------------------------------------
(Registrant)
/s/ THOMAS A. KLEMENS
----------------------------------------
Thomas A. Klemens
Executive Vice President, Chief Financial Officer
(Principal Financial Officer and Duly
Authorized to Sign on Behalf of
Registrant)
Date: August 13, 1997
1
<PAGE>
Part I: Financial Information
---------------------
Item 1. Financial Statements
--------------------
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Statements of Income
-------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30 June 30
----------------------------------- ----------------------------------
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues
Operating revenues $ 443,447,000 $ 404,878,000 $ 819,872,000 $ 745,757,000
Investment and other income 6,927,000 8,496,000 13,379,000 14,993,000
--------------- --------------- --------------- ---------------
450,374,000 413,374,000 833,251,000 760,750,000
--------------- --------------- --------------- ---------------
Expenses
Salaries and other personnel costs 157,812,000 132,742,000 298,599,000 252,982,000
Premiums retained by agents 128,962,000 128,218,000 251,155,000 238,090,000
Other operating expenses 96,198,000 84,011,000 180,668,000 157,475,000
Provision for title losses and other claims 22,457,000 23,488,000 41,049,000 42,463,000
Depreciation and amortization 6,647,000 5,558,000 13,122,000 10,007,000
Interest 2,538,000 1,281,000 3,660,000 2,510,000
Minority interests 983,000 864,000 1,294,000 1,484,000
--------------- --------------- --------------- ---------------
415,597,000 376,162,000 789,547,000 705,011,000
--------------- --------------- --------------- ---------------
Income before premium and income taxes 34,777,000 37,212,000 43,704,000 55,739,000
Premium taxes 4,561,000 4,385,000 8,722,000 7,930,000
--------------- --------------- --------------- ---------------
Income before income taxes 30,216,000 32,827,000 34,982,000 47,809,000
Income taxes 11,700,000 13,400,000 13,600,000 19,800,000
--------------- --------------- --------------- ---------------
Net income $ 18,516,000 $ 19,427,000 $ 21,382,000 $ 28,009,000
=============== =============== =============== ===============
Net income per share $ 1.60 $ 1.70 $ 1.85 $ 2.45
=============== =============== =============== ===============
Cash dividends per share $ .18 $ .18 $ .36 $ .33
=============== =============== =============== ===============
Weighted average number of shares 11,595,000 11,447,000 11,581,000 11,439,000
=============== =============== =============== ===============
</TABLE>
2
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Balance Sheets
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 165,429,000 $173,439,000
-------------- ------------
Accounts and accrued income receivable, net 115,514,000 89,355,000
-------------- ------------
Investments:
Deposits with savings and loan associations and banks 29,875,000 21,674,000
Debt securities 138,647,000 130,576,000
Equity securities 10,366,000 8,517,000
Other long-term investments 32,028,000 30,414,000
-------------- ------------
210,916,000 191,181,000
-------------- ------------
Loans receivable 59,781,000 54,256,000
-------------- ------------
Property and equipment, at cost 242,952,000 222,917,000
Less- accumulated depreciation (98,521,000) (92,451,000)
-------------- ------------
144,431,000 130,466,000
-------------- ------------
Title plants and other indexes 96,982,000 94,226,000
-------------- ------------
Assets acquired in connection with claim settlements
(net of valuation reserves of $10,199,000 and $10,278,000) 21,664,000 24,270,000
-------------- ------------
Deferred income taxes 36,843,000 38,401,000
-------------- ------------
Goodwill and other intangibles, net 127,270,000 87,189,000
-------------- ------------
Deferred policy acquisition costs 24,472,000 24,753,000
-------------- ------------
Other assets 92,143,000 72,258,000
-------------- ------------
$1,095,445,000 $979,794,000
============== ============
Liabilities and Stockholders' Equity
Demand deposits $ 56,168,000 $ 51,321,000
-------------- ------------
Accounts payable and accrued liabilities 152,269,000 130,325,000
-------------- ------------
Deferred revenue 102,674,000 104,133,000
-------------- ------------
Reserve for known and incurred but not reported claims 246,925,000 245,245,000
-------------- ------------
Income taxes payable 3,906,000 2,554,000
-------------- ------------
Notes and contracts payable 39,846,000 71,257,000
-------------- ------------
Minority interests in consolidated subsidiaries 23,063,000 22,494,000
Commitments and contingencies
Guaranteed preferred beneficial interests in Company's
junior subordinated deferrable interest debentures 100,000,000
--------------
Stockholders' equity:
Preferred stock, $1 par value
Authorized - 500,000 shares; outstanding - none
Common stock, $1 par value
Authorized - 24,000,000 shares
Outstanding - 11,562,000 and 11,554,000 shares 11,562,000 11,554,000
Additional paid-in capital 49,634,000 49,420,000
Retained earnings 305,960,000 288,754,000
Net unrealized gain on securities 3,438,000 2,737,000
-------------- ------------
370,594,000 352,465,000
-------------- ------------
$1,095,445,000 $979,794,000
============== ============
</TABLE>
3
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 21,382,000 $ 28,009,000
Adjustments to reconcile net income to cash provided by
operating activities-
Provision for title losses and other claims 41,049,000 42,463,000
Depreciation and amortization 13,122,000 10,007,000
Minority interests in net income 1,294,000 1,484,000
Other, net (434,000) (640,000)
Changes in assets and liabilities excluding effects of
company acquisitions and noncash transactions-
Claims paid, including assets acquired, net of recoveries (36,775,000) (39,077,000)
Net change in income tax accounts 7,677,000 11,223,000
Increase in accounts and accrued income receivable (13,877,000) (19,878,000)
(Decrease) increase in accounts payable and accrued liabilities (12,503,000) 15,466,000
Decrease in deferred revenue (1,459,000) (1,054,000)
Other, net (17,693,000) (7,554,000)
------------ ------------
Cash provided by operating activities 1,783,000 40,449,000
------------ ------------
Cash flows from investing activities:
Net cash effect of company acquisitions (28,505,000) (3,306,000)
Net increase in deposits with banks (8,201,000) (5,458,000)
Net increase in loans receivable (5,525,000) (5,356,000)
Purchases of debt and equity securities (40,963,000) (40,365,000)
Proceeds from sales of debt and equity securities 21,691,000 33,451,000
Proceeds from maturities of debt securities 10,427,000 8,031,000
Net decrease in other investments 366,000 147,000
Capital expenditures (21,023,000) (12,474,000)
Proceeds from sale of property and equipment 569,000 1,092,000
------------ ------------
Cash used for investing activities (71,164,000) (24,238,000)
------------ ------------
Cash flows from financing activities:
Net change in demand deposits 4,847,000 3,833,000
Proceeds from the issuance of junior subordinated
deferrable interest debentures 100,000,000
Repayment of debt (37,337,000) (9,330,000)
Purchase of Company shares (2,245,000) (348,000)
Cash dividends (4,176,000) (3,784,000)
Proceeds from exercise of employee stock options 282,000
------------ ------------
Cash provided by (used for) financing activities 61,371,000 (9,629,000)
------------ ------------
Net (decrease) increase in cash and cash equivalents (8,010,000) 6,582,000
Cash and cash equivalents - Beginning of year 173,439,000 145,902,000
------------ ------------
- End of first half $165,429,000 $152,484,000
============ ============
Supplemental information:
Cash paid during the first half for:
Interest $ 2,088,000 $ 2,729,000
Premium taxes $ 10,243,000 $ 7,149,000
Income taxes $ 7,197,000 $ 8,760,000
Noncash investing and financing activities:
Shares issued for stock bonus plan $ 2,185,000 $ 1,287,000
Liabilities incurred in connection with company acquisitions $ 40,184,000 $ 11,311,000
Net unrealized gain (loss) on securities $ 701,000 $ (2,662,000)
</TABLE>
4
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
AND SUBSIDIARY COMPANIES
------------------------
Notes to Condensed Consolidated Financial Statements
----------------------------------------------------
(Unaudited)
Note 1 - Basis of Condensed Consolidated Financial Statements
- -------------------------------------------------------------
The condensed consolidated financial information included in this report has
been prepared in conformity with the accounting principles and practices
reflected in the consolidated financial statements included in the annual report
filed with the Commission for the preceding calendar year. All adjustments are
of a normal recurring nature and are, in the opinion of management, necessary to
a fair statement of the consolidated results for the interim periods. Any
statements in this report looking forward in time involve risks and
uncertainties, including but not limited to the following risks: the effect of
interest rate fluctuations; changes in the performance of the real estate
markets; the effect of changing economic conditions; and the demand for and
acceptance of the Company's products. This report should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
Note 2 - Junior Subordinated Deferrable Interest Debentures
- -----------------------------------------------------------
On April 22, 1997, the Company issued and sold $100 million of 8.5% trust
preferred securities, due in 2012, through its wholly owned subsidiary, First
American Capital Trust I. For financial reporting purposes, the securities are
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." Distributions payable on the securities are included as
interest expense in the Company's consolidated income statement. The Company
has used a portion of the proceeds from the sale of these 15-year securities to
repay in full the variable rate indebtedness portion of its amended credit
agreement, to finance certain acquisitions and for general corporate purposes.
Note 3 - Company Acquisition
- ----------------------------
On May 13, 1997, the Company acquired all of the operations of Strategic
Mortgage Services, Inc. (SMS) other than SMS' flood zone certification business.
This acquisition has been accounted for by the purchase method of accounting
and, accordingly, the assets acquired and liabilities assumed have been recorded
at their estimated fair values at the date of acquisition.
Note 4 - Subsequent Event
- -------------------------
On July 29, 1997, the Company amended its credit facility to provide for a more
favorable pricing option, an increased line of credit and the elimination or
relaxation of certain covenants. The line of credit has been increased from
$30.0 million to $75.0 million and is currently unused.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
- -------------
RESULTS OF OPERATIONS
Three and six months ended June 30:
OVERVIEW
Mortgage interest rates, which began to increase in the second quarter 1994,
peaked in January of 1995 and decreased throughout the remainder of that year
and into 1996, helped by an easing of monetary policy by the Federal Reserve
Board. This, together with an improved real estate economy (including the
beginnings of a modest recovery in California and an increase in refinance
activity), contributed to a relatively strong first quarter 1996. These
favorable conditions continued throughout 1996 and into 1997, resulting in
strong revenues and profits for the Company for 1996, relatively strong revenues
for the first quarter 1997 and record revenues for the second quarter 1997.
However, profits for the first and second quarters of 1997 were adversely
affected by the need for title operations to maintain staffing levels in order
to service the record number of title orders opened during the current six month
period. Furthermore, the Company's information services operations experienced
higher overhead as it integrated acquisitions and added new customers to its
systems and continued to build and refine its framework to respond to the
present and future needs of its customers. Net income for the second quarter
1997 was $18.5 million, or $1.60 per share, as compared with $19.4 million, or
$1.70 per share, for the same period of the prior year.
OPERATING REVENUES
Set forth below is a summary of operating revenues for each of the Company's
segments.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------- ----------------------------------
($000) ($000)
1997 % 1996 % 1997 % 1996 %
-------- --- -------- ---- --------- ----- --------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Title Insurance:
Direct Operations $186,876 42 $166,748 41 $334,550 41 $304,238 41
Agency Operations 160,660 36 158,104 39 312,766 38 294,468 39
-------- --- -------- --- -------- --- -------- ---
347,536 78 324,852 80 647,316 79 598,706 80
Real Estate Information 79,656 18 66,265 16 141,703 17 120,659 16
Home Warranty 11,214 3 9,761 3 21,282 3 18,500 3
Trust and Banking 5,041 1 4,000 1 9,571 1 7,892 1
-------- --- -------- --- -------- --- -------- ---
Total $443,447 100 $404,878 100 $819,872 100 $745,757 100
======== === ======== === ======== === ======== ===
</TABLE>
Title Insurance. Operating revenues from direct title operations increased
12.1% and 10.0% for the three and six months ended June 30, 1997, respectively,
when compared with the same periods of the prior year. These increases were
primarily attributable to an increase in the number of title orders closed by
the Company's direct operations, as well as an increase in the average revenues
per order closed. The Company's direct operations closed 229,300 and 410,800
title orders during the three and six months ended June 30,1997, respectively,
representing increases of 9.6% and 6.2% when compared with the same periods of
the prior year. These increases were due in large part to the factors mentioned
above, primarily the resurgence of real estate activity in California, a state
heavily concentrated with direct operations, as well as increases in the
Company's national market share. The average revenues per order closed were $815
and $814 for the three and six months ended June 30, 1997, respectively,
increases of 2.3% and 3.4% when compared with $797 and $787 for the same periods
of the prior year. These increases were primarily due to an increased mix of
residential resale and commercial activity. Operating revenues from agency
operations increased 1.6% and 6.2% for the three and six months ended June 30,
1997, respectively, when compared with the same periods of the prior year. These
increases were primarily due to the same factors affecting direct operations
mentioned above, compounded by the inherent delay in reporting by agents.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations (continued)
- -------------------------
Real Estate Information. Real estate information operating revenues increased
20.2% and 17.4% for the three and six months ended June 30, 1997, respectively,
when compared with the same periods of the prior year. These increases were
primarily attributable to $13.1 million and $18.9 million of operating revenues
contributed by new acquisitions for the respective periods.
Home Warranty. Home warranty operating revenues increased 14.9% and 15.0% for
the three and six months ended June 30, 1997, respectively, when compared with
the same periods of the prior year. These increases were primarily attributable
to improvements in the residential resale markets in which this business segment
operates.
INVESTMENT AND OTHER INCOME
Investment and other income decreased 18.5% and 10.8% for the three and six
months ended June 30, 1997, respectively, when compared with the same periods of
the prior year. These decreases were primarily attributable to $0.5 million of
investment losses realized in the current three month period, as compared with
investment gains of $2.2 million realized in the same period of the prior year,
offset in part by an increase in equity in earnings of unconsolidated
subsidiaries and increased investment portfolio yields.
TOTAL OPERATING EXPENSES
Title Insurance. Salaries and other personnel costs were $120.3 million and
$229.1 million for the three and six months ended June 30, 1997, respectively,
increases of 16.7% and 15.6% when compared with the same periods of the prior
year. These increases were primarily due to costs incurred servicing the high
number of more labor intensive residential resale transactions processed during
the current three and six month periods (as opposed to a predominate refinance
mix in the same periods of the prior year). Also contributing to the increases
were $4.0 million and $5.7 million of costs incurred for the three and six
months ended June 30, 1997, respectively, related to acquisition activity and
modest salary increases.
Agents retained $129.0 million and $251.2 million of title premiums generated
by agency operations for the three and six months ended June 30, 1997,
respectively, which compares with $128.2 million and $238.1 million for the same
periods of the prior year. The percentage of title premiums retained by agents
ranged from 80.3% to 81.1% due to regional variances (i.e., the agency share
varies from region to region and thus the geographical mix of agency revenues
causes this variation).
Other operating expenses were $58.6 million and $112.3 million for the three and
six months ended June 30, 1997, respectively, increases of 5.8% and 6.7% when
compared with the same periods of the prior year. These increases were
primarily attributable to the impact of certain incremental costs associated
with processing the increase in title order volume experienced during the
respective periods.
The provision for title losses as a percentage of title insurance operating
revenues was 3.9% for the six months ended June 30, 1997, and 5.1% for the same
period of the prior year. The decrease for the current period was primarily due
to an ongoing improvement in the Company's loss experience.
Real Estate Information. Real estate information personnel and other operating
expenses were $62.7 million and $114.3 million for the three and six months
ended June 30, 1997, respectively, increases of 31.5% and 32.9% when compared
with the same periods of the prior year. These increases were primarily due to
$11.0 million and $23.9 million of costs associated with new acquisitions, as
well as slightly higher overhead costs attributable to the integration of the
new acquisitions and transitioning new accounts to their systems.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations (continued)
- -------------------------
Home Warranty. Home warranty personnel and other operating expenses were $3.2
million and $6.4 million for the three and six months ended June 30, 1997,
respectively, increases of 14.2% and 17.1% when compared with the same periods
of the prior year. These increases were primarily attributable to costs
incurred servicing the increased business volume and expansion into new
territories. The provision for home warranty losses expressed as a percentage of
home warranty operating revenues was 56.9% and 53.2% for the six months ended
June 30, 1997 and 1996, respectively. The increase in loss ratio was primarily
due to an increase in the average number of claims per contract.
PRETAX PROFITS
Set forth below is a summary of pretax profits for each of the Company's
segments.
<TABLE>
<CAPTION>
Three Month Ended Six Months Ended
June 30 June 30
---------------------------- ------------------------------
($000) ($000)
1997 % 1996 % 1997 % 1996 %
-------- --- ------- --- -------- --- ------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Title Insurance $25,766 61 $23,581 54 29,701 52 $ 31,740 46
Real Estate Information 13,144 31 16,628 38 20,967 37 30,410 45
Home Warranty 2,677 6 2,399 6 4,482 8 4,687 7
Trust and Banking 937 2 838 2 1,852 3 1,617 2
------- --- ------- --- ------- --- -------- ---
Total before corporate 42,524 100 43,446 100 57,002 100 68,454 100
=== === === ===
Corporate (7,747) (6,234) (13,298) (12,715)
------- ------- -------- --------
Total $34,777 $37,212 $ 43,704 $ 55,739
======== ======= ======== ========
</TABLE>
In general, the title insurance business is a lower profit margin business when
compared to the Company's other segments. The lower profit margins reflect the
high cost of producing title evidence whereas the corresponding revenues are
subject to regulatory and competitive pricing restraints. Due to this
relatively high proportion of fixed costs, title insurance profit margins
generally improve as closed order volumes increase. In addition, title
insurance profit margins are affected by the composition (residential or
commercial) and type (resale, refinancing or new construction) of real estate
activity. Profit margins from resale and new construction transactions are
generally higher than from refinancing transactions because in many states there
are premium discounts on, and cancellation rates are higher for, refinance
transactions. Title insurance profit margins are also affected by the
percentage of operating revenues generated by agency operations. Profit margins
from direct operations are generally higher than from agency operations due
primarily to the large portion of the premium that is retained by the agent.
Real estate information pretax profits are generally unaffected by the type of
real estate activity but increase as the volume of residential real estate loan
transactions increase.
PREMIUM TAXES
Premium taxes were $8.7 million and $7.9 million for the six months ended June
30, 1997 and 1996, respectively. Premium taxes as a percentage of title
insurance operating revenues remained relatively constant at 1.3%.
INCOME TAXES
The effective income tax rate was 38.9% for the six months ended June 30, 1997,
and 41.4% for the same period of the prior year. The decrease in effective rate
was primarily attributable to changes in the ratio of permanent differences to
income before income taxes, as well as a decrease in state income taxes
resulting from the Company's non-insurance subsidiaries decrease in pretax
profits.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations (continued)
- -------------------------
NET INCOME
Net income for the three and six months ended June 30, 1997, was $18.5 million,
or $1.60 per share, and $21.4 million, or $1.85 per share, respectively. Net
income for the three and six months ended June 30, 1996, was $19.4 million, or
$1.70 per share, and $28.0 million, or $2.45 per share, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Total cash and cash equivalents decreased $8.0 million and increased $46.6
million for the six months ended June 30, 1997 and 1996, respectively.
The decrease for the current year period was primarily attributable to the cash
effect of company acquisitions, the net purchases of debt and equity securities,
capital expenditures and the repayment of debt, offset in part by the proceeds
from the issuance of junior subordinated debentures. The increase for the prior
year period was primarily due to cash provided by operating activities, offset
in part by capital expenditures and the repayment of debt.
Effective July 29, 1997, the Company amended its bank credit agreement (see Note
4). The amendment relaxes or eliminates certain covenants and provides for a
$75.0 million line of credit which is currently unused.
Notes and contracts payable as a percentage of total capitalization decreased to
7.5% at June 30, 1997, from 16.0% at December 30, 1996. This decrease was
primarily due to a $100.0 million increase in total capitalization as a result
of the Company's junior subordinated deferrable interest debentures (see Note
2), as well as $31.4 million net reduction of debt.
Management believes that all of its anticipated cash requirements for the
immediate future will be met from internally generated funds and from the
remaining proceeds of the junior subordinated debentures.
9
<PAGE>
Part II: Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits
(4.1) Amendment No. 6 dated as of April 1, 1997 to the
Amendment and Restatement dated as of April 28, 1993 of
Credit Agreement dated as of April 21, 1992.
(4.2) Junior Subordinated Indenture dated as of April 22, 1997.
(4.3) Amended and Restated Declaration of Trust dated as of
April 22, 1997.
(4.4) Amended and Restated Credit Agreement dated as of July
29, 1997 of Credit Agreement dated as of April 21, 1992.
(10.1) First American Capital Trust I Registration Rights
Agreement dated as of April 22, 1997.
(10.2) Guarantee Agreement dated as of April 22, 1997.
(10.3) Purchase Agreement dated as of April 17, 1997.
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarterly period
covered by this report.
10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- ------------
<C> <S>
(4.1) Amendment No. 6 dated as of April 1, 1997 to the Amendment
and Restatement dated as of April 28, 1993 of Credit
Agreement dated as of April 21, 1992.
(4.2) Junior Subordinated Indenture dated as of April 22, 1997.
(4.3) Amended and Restated Declaration of Trust dated as of
April 22, 1997.
(4.4) Amended and Restated Credit Agreement dated as of July 29,
1997 of Credit Agreement dated as of April 21, 1992.
(10.1) First American Capital Trust I Registration Rights
Agreement dated as of April 22, 1997.
(10.2) Guarantee Agreement dated as of April 22, 1997.
(10.3) Purchase Agreement dated as of April 17, 1997.
(27) Financial Data Schedule
</TABLE>
11
<PAGE>
EXHIBIT 4.1
Composite Conformed Copy
AMENDMENT NO. 6
AMENDMENT NO. 6 dated as of April 1, 1997 to the AMENDMENT AND
RESTATEMENT dated as of April 28, 1993 of CREDIT AGREEMENT dated as of April 21,
1992 between THE FIRST AMERICAN FINANCIAL CORPORATION (the "Company"), the
-------
lenders party thereto (the "Lenders") and THE CHASE MANHATTAN BANK, as agent
-------
(the "Agent") for the Lenders (such Amendment and Restatement, as amended by
-----
Amendment No. 1 thereto dated as of June 1, 1994, Amendment No. 2 thereto
dated as of November 22, 1994, Amendment No. 3 thereto dated as of March 31,
1995, Amendment No. 4 thereto dated as of June 1, 1995 and Amendment No. 5
thereto dated as of February 16, 1996, being herein called the "Credit
------
Agreement").
- ---------
The Company has requested that the Lenders agree to certain amendments of the
Credit Agreement. The Lenders are willing to do so on the terms and conditions
contained herein,
Accordingly, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement shall have the
-----------
same meanings when used herein.
SECTION 2. AMENDMENTS OF CREDIT AGREEMENT. Effective
-------------------------------
as of the date, and subject to the conditions, set forth in Section 3 hereof,
the Credit Agreement is hereby amended as follows:
A. Section 1.01 of the Credit Agreement is amended by inserting the
following new defined term in the appropriate alphabetical order:
"Capital Securities" shall mean preferred securities issued by a
------------------
Subsidiary of the Company organized as a Delaware business trust that are
redeemable, at the option of such issuer, ten years or more after the
issuance thereof, which securities are guaranteed by the Company and the
proceeds of which are invested in junior subordinated securities of the
Company.
B. The definition of "Indebtedness" in Section 1.01 of the Credit
Agreement is amended by inserting in clause (a) thereof, in the eighth line at
the end of the parenthetical clause contained therein, the following words:
", but excluding any Capital Securities permitted under Section 8.07(p)
hereof".
C. The definition of "Stockholders' Equity" in Section 1.01 of the
Credit Agreement is amended by inserting, at the end of such definition
immediately prior to the period, the following words : ", provided that
--------
stockholders' equity shall not include any Capital Securities".
<PAGE>
-2-
D. Section 8.07 of the Credit Agreement is amended by (i) deleting the
word "and" at the end of clause (n) thereof, (ii) replacing the period at the
end of clause (o) thereof with a semi-colon followed by the word "and", and
(iii) inserting a new clause (p) to read as follows:
" (p) Capital Securities up to but not exceeding $100,000,000 at any
one time outstanding."
E. Each reference in the Credit Agreement to the Credit Agreement
(including references such as "herein", "hereunder" and the like) is amended to
refer to the Credit Agreement as amended hereby and (unless the context
otherwise requires) to this Amendment.
F. Except as hereby expressly amended, the Credit Agreement shall remain
in full force and effect.
SECTION 3. EFFECTIVENESS OF AMENDMENTS. The amendments provided for by
---------------------------
Section 2 hereof shall become effective as of the date hereof upon the
satisfaction of the following conditions precedent: (a) the execution and
delivery by the Agent of a counterpart of this Amendment and the receipt by the
Agent of counterparts of this Amendment executed and delivered by the Company
and the Majority Lenders; and (b) the receipt by the Agent of a certificate of a
senior officer of the Company to the effect that no Default under the Credit
Agreement (as amended hereby) has occurred and is counting. The Agent will
advise the Company and the Lenders when such conditions have been so satisfied.
Section 4. EXPENSES. The Company hereby confirms its obligations under
--------
Section 11.03(a)(ii) of the Credit Agreement with respect to the reasonable
out-of-pocket costs and expenses of the Agent (including, without limitation,
the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy) in
connection with the negotiation, preparation, execution and delivery of this
Amendment).
Section 5. COUNTERPARTS. This Amendment may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Amendment by
executing any such counterpart.
SECTION 6. NEW YORK LAW. This Amendment shall be governed by and
------------
construed in accordance with the laws of the state of New York.
<PAGE>
-3-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
THE FIRST AMERICAN FINANCIAL CORPORATION
By /s/ THOMAS A. KLEMENS
-----------------------------
Title: E.V.P./C.F.O.
By /s/ MARK R ARNESEN
----------------------------
Title: V.P./Secretary
<PAGE>
-4-
THE CHASE MANHATTAN BANK
By /s/ DEBORAH VAN ZIJL
-------------------------------------
Title: Vice President
WELLS FARGO BANK, N.A.
By /s/ MICHAEL SULLIVAN
-------------------------------------
Title: Michael Sullivan
Vice President
IMPERIAL BANK
By /s/ MICHAEL SNOW
-------------------------------------
Title: Vice President
SANWA BANK CALIFORNIA
By /s/ ART DUNBAR
-------------------------------------
Title: Vice President
UNION BANK
By /s/ D S LAMBELL
-------------------------------------
Title: Vice President
NBD BANK
By /s/ ANN H. CHUDACOFF
-------------------------------------
Title: Vice President
THE CANADA LIFE
ASSURANCE COMPANY
CUMMINGS & CO., as Nominee for
The Canada Life Assurance Company
By /s/ WILFREDO CUEVAS
-------------------------------------
Title: Wilfredo Cuevas, A.V.P.
<PAGE>
-5-
THE CHASE MANHATTAN BANK
as Agent
By /s/ DEBORAH VAN ZIJL
---------------------------
Title: Vice President
<PAGE>
EXHIBIT 4.2
Composite Conformed Copy
- --------------------------------------------------------------------------------
THE FIRST AMERICAN FINANCIAL CORPORATION
to
WILMINGTON TRUST COMPANY
Trustee
_____________________________
JUNIOR SUBORDINATED INDENTURE
Dated as of April 22, 1997
_____________________________
- --------------------------------------------------------------------------------
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317) and the
Junior Subordinated Indenture, dated as of April 22, 1997.
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<S> <C>
(S) 310 (a) (1), (2) and (5).......................... 6.9
(a) (3)........................................... Not Applicable
(a) (4)........................................... Not Applicable
(b)............................................... 6.8
.................................................. 6.10
(c)............................................... Not Applicable
(S) 311 (a)........................................... 6.13(a)
(b)........................................... 6.13(b)
(b) (2)....................................... 7.3(a) (2)
.............................................. 7.3(a) (2)
(S) 312 (a)........................................... 7.1
.............................................. 7.2(a)
(b)........................................... 7.2(b)
(c)........................................... 7.2(c)
(S) 313 (a)........................................... 7.3(a)
(b)........................................... 7.3(b)
(c)........................................... 7.3(a), 7.3(b)
(d)........................................... 7.3(c)
(S) 314 (a) (1), (2) and (3).......................... 7.4
(a) (4)....................................... 10.5
(b)........................................... Not Applicable
(c) (1)....................................... 1.2
(c) (2)....................................... 1.2
(c) (3)....................................... Not Applicable
(d)........................................... Not Applicable
(e)........................................... 1.2
(f)........................................... Not Applicable
(S) 315 (a)........................................... 6.1(a)
(b)........................................... 6.2
.............................................. 7.3(a) (6)
(c)........................................... 6.1(b)
(d)........................................... 6.1(c)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- ---------------- ----------
<S> <C>
(d) (1)........................................ 6.1(a) (1)
(d) (2)........................................ 6.1(c) (2)
(d) (3)........................................ 6.1(c) (3)
(e)............................................ 5.14
(S) 316 (a)............................................ 1.1
(a) (1) (A).................................... 5.12
(a) (1) (B).................................... 5.13
(a) (2)........................................ Not Applicable
(b)............................................ 5.8
(c)............................................ 1.4(f)
(S) 317 (a) (1)........................................ 5.3
(a) (2)........................................ 5.4
(b)............................................ 10.3
(S) 318 (a)............................................ 1.7
</TABLE>
- --------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Junior Subordinated Indenture.
<PAGE>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...... 1
Section 1.1. Definitions............................................. 1
Section 1.2. Compliance Certificate and Opinions..................... 9
Section 1.3. Forms of Documents Delivered to Trustee................. 9
Section 1.4. Acts of Holders......................................... 10
Section 1.5. Notices, Etc. to Trustee and Company.................... 12
Section 1.6. Notice to Holders; Waiver............................... 12
Section 1.7. Conflict with Trust Indenture Act....................... 12
Section 1.8. Effect of Headings and Table of Contents................ 13
Section 1.9. Successors and Assigns.................................. 13
Section 1.10. Separability Clause..................................... 13
Section 1.11 Benefits of Indenture................................... 13
Section 1.12. Governing Law........................................... 13
Section 1.13. Non-Business Days....................................... 13
ARTICLE II
SECURITY FORMS........................... 14
Section 2.1. Forms Generally......................................... 14
Section 2.2. Legends................................................. 15
Section 2.3. Form of Face of Security................................ 17
Section 2.4. Form of Reverse of Security............................. 20
Section 2.4. Form of Trustee's Certificate of Authentication......... 24
ARTICLE III
THE SECURITIES.......................... 24
Section 3.1. Title and Terms......................................... 24
Section 3.2. Denominations........................................... 27
Section 3.3. Execution, Authentication, Delivery and Dating.......... 27
Section 3.4. Temporary Securities.................................... 28
Section 3.5. Registration, Transfer and Exchange..................... 29
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities........ 33
Section 3.7. Payment of Interest; Interest Rights Preserved.......... 34
Section 3.8. Persons Deemed Owners................................... 35
Section 3.9. Cancellation............................................ 36
Section 3.10. Computation of Interest................................. 36
Section 3.11. Deferrals of Interest Payment Dates..................... 36
Section 3.12. Right of Set-Off........................................ 37
Section 3.13. Agreed Tax Treatment.................................... 37
</TABLE>
<PAGE>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<TABLE>
<CAPTION>
<S> <C>
Section 3.14. Shortening of Stated Maturity............................................. 38
Section 3.15. CUSIP Numbers............................................................. 38
ARTICLE IV
SATISFACTION AND DISCHARGE....................................... 38
Section 4.1. Satisfaction and Discharge of Indenture................................... 38
Section 4.2. Application of Trust Money................................................ 39
ARTICLE V
REMEDIES.............................................. 40
Section 5.1. Events of Default......................................................... 40
Section 5.2. Acceleration of Maturity; Rescission and Annulment........................ 41
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee........... 42
Section 5.4. Trustee May File Proofs of Claim.......................................... 43
Section 5.5. Trustee May Enforce Claims Without Possession of Securities............... 44
Section 5.6. Application of Money Collected............................................ 44
Section 5.7. Limitation on Suits....................................................... 44
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest;
Direct Action by Holders of Preferred Securities.......................... 45
Section 5.9. Restoration of Rights and Remedies........................................ 45
Section 5.10. Rights and Remedies Cumulative............................................ 46
Section 5.11. Delay or Omission Not Waiver.............................................. 46
Section 5.12. Control by Holders........................................................ 46
Section 5.13. Waiver of Past Defaults................................................... 46
Section 5.14. Undertaking for Costs..................................................... 47
Section 5.15. Waiver of Usury, Stay or Extension Laws................................... 47
ARTICLE VI
THE TRUSTEE............................................ 48
Section 6.1. Certain Duties and Responsibilities....................................... 48
Section 6.2. Notice of Defaults........................................................ 49
Section 6.3. Certain Rights of Trustee................................................. 49
Section 6.4. Not Responsible for Recitals or Issuance of Securities.................... 50
Section 6.5. May Hold Securities....................................................... 50
Section 6.6. Money Held in Trust....................................................... 51
Section 6.7. Compensation and Reimbursement............................................ 51
Section 6.8. Disqualification; Conflicting Interests................................... 51
Section 6.9. Corporate Trustee Required; Eligibility................................... 52
Section 6.10. Resignation and Removal; Appointment of Successor......................... 52
Section 6.11. Acceptance of Appointment by Successor.................................... 54
Section 6.12. Merger, Conversion, Consolidation or Succession to Business............... 55
</TABLE>
<PAGE>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<TABLE>
<CAPTION>
<S> <C>
Section 6.13. Preferential Collection of Claims Against Company........... 55
Section 6.14. Appointment of Authenticating Agent......................... 55
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY............. 57
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders... 57
Section 7.2. Preservation of Information, Communications to Holders...... 57
Section 7.3. Reports by Trustee.......................................... 57
Section 7.4. Reports by Company.......................................... 58
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........... 58
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms........ 58
Section 8.2. Successor Corporation Substituted........................... 59
ARTICLE IX
SUPPLEMENTAL INDENTURES........................ 60
Section 9.1. Supplemental Indentures without Consent of Holders.......... 60
Section 9.2. Supplemental Indentures with Consent of Holders............. 61
Section 9.3. Execution of Supplemental Indentures........................ 62
Section 9.4. Effect of Supplemental Indentures........................... 62
Section 9.5. Conformity with Trust Indenture Act......................... 62
Section 9.6. Reference in Securities to Supplemental Indentures.......... 63
ARTICLE X
COVENANTS................................ 63
Section 10.1. Payment of Principal, Premium and Interest.................. 63
Section 10.2. Maintenance of Office or Agency............................. 63
Section 10.3. Money for Security Payments to be Held in Trust............. 64
Section 10.4. Statement as to Compliance.................................. 65
Section 10.5. Waiver of Certain Covenants................................. 65
Section 10.6. Payment of Trust Costs and Expenses......................... 65
Section 10.7. Additional Covenants........................................ 66
Section 10.8. Calculation of Original Issue Discount...................... 67
ARTICLE XI
REDEMPTION OF SECURITIES......................... 67
Section 11.1. Applicability of This Article............................... 67
Section 11.2. Election to Redeem; Notice to Trustee....................... 67
</TABLE>
<PAGE>
Trust Indenture Indenture
Act Section Section
- --------------- ---------
<TABLE>
<CAPTION>
<S> <C>
Section 11.4. Notice of Redemption.................................................. 68
Section 11.5. Deposit of Redemption Price........................................... 69
Section 11.6. Payment of Securities Called for Redemption........................... 69
ARTICLE XII
SINKING FUNDS........................................ 70
Section 12.1. Applicability of Article.............................................. 70
Section 12.2. Satisfaction of Sinking Fund Payments with Securities................. 70
Section 12.3. Redemption of Securities for Sinking Fund............................. 70
ARTICLE XIII
SUBORDINATION OF SECURITIES.................................. 72
Section 13.1. Securities Subordinate to Senior Indebtedness......................... 72
Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc........................ 72
Section 13.3. Prior Payment to Senior Indebtedness Upon Acceleration of Securities.. 73
Section 13.4. No Payment When Senior Indebtedness in Default........................ 74
Section 13.5. Payment Permitted If No Default....................................... 74
Section 13.6. Subrogation to Rights of Holders of Senior Indebtedness............... 75
Section 13.7. Provisions Solely to Define Relative Rights........................... 75
Section 13.8. Trustee to Effectuate Subordination................................... 75
Section 13.9. No Waiver of Subordination Provisions................................. 76
Section 13.10. Notice to Trustee..................................................... 76
Section 13.11. Reliance on Judicial Order or Certificate of Liquidating Agent........ 77
Section 13.12. Trustee Not Fiduciary for Holders of Senior Indebtedness.............. 77
Section 13.13. Rights of Trustee as Holder of Senior Indebtedness; Preservation of
Trustee's Rights...................................................... 77
Section 13.14. Article Applicable to Paying Agents................................... 78
Section 13.15. Certain Conversions or Exchanges Deemed Payment....................... 78
Section 13.16. Trust Moneys Not Subordinated......................................... 78
EXHIBITS
Exhibit A Transferrees Letter of Representation
ANNEXES
Annex A Declaration of Trust
Annex B Amended and Restated Declaration of Trust
Annex C Guarantee Agreement
</TABLE>
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of April 22, 1997, between THE
FIRST AMERICAN FINANCIAL CORPORATION, a California corporation (hereinafter
called the "Company") having its principal office at 114 East Fifth Street,
Santa Ana, CA 92701, and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as Trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured junior
subordinated debt securities in one or more series (hereinafter called the
"Securities") of substantially the tenor hereinafter provided, including,
without limitation, Securities issued to evidence loans made to the Company of
the proceeds from the issuance from time to time by one or more business trusts
(each a "Trust," and, collectively, the "Trusts") of preferred interests in such
Trusts (the "Preferred Securities") and common interests in such Trusts (the
"Common Securities" and, collectively with the Preferred Securities, the "Trust
Securities"), and to provide the terms and conditions upon which the Securities
are to be authenticated, issued and delivered.
All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the
premises and the purchase of the Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;
(2) All other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
<PAGE>
2
(3) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and the term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles which are generally accepted at the date or time of such computation;
provided, that when two or more principles are so generally accepted, it shall
mean that set of principles consistent with those in use by the Company;
(4) The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision;
(5) The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";
(6) Whenever the context may require, any gender shall be deemed to
include the others; and
(7) Unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Indenture.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security from the applicable
Interest Payment Date.
"Additional Taxes" means the sum of any additional taxes, duties and other
governmental charges to which a Trust has become subject from time to time as a
result of a Tax Event.
"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, no Trust to which
Securities have been issued shall be deemed to be an Affiliate of the Company.
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.
"Agent Members" has the meaning set forth in Section 2.1.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities of
one or more series.
"Board of Directors" means either the board of directors of the Company or
any committee of that board duly authorized to act hereunder.
<PAGE>
3
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, or such committee of the Board of Directors or officers of the
Company to which authority to act on behalf of the Board of Directors has been
delegated, and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means 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, with respect to the Securities of a
series initially issued to a Trust, the corporate trust office of the Property
Trustee under the related Declaration, is closed for business.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means the common stock, par value $1.00 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by the Chairman of the Board
of Directors, the Vice Chairman of the Board of Directors, its President or a
Vice President, and by its principal financial officer, its Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered, which
at the date hereof is Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration.
"corporation" includes a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 4.3.
"Declaration", with respect to a Trust, means a Declaration of Trust
substantially in the form attached hereto as Annex A, as amended by an Amended
and Restated Declaration of Trust substantially in the form attached hereto as
Annex B, or substantially in such form as may be
<PAGE>
4
specified as contemplated by Section 3.1 with respect to the Securities of any
series, in each case as amended from time to time.
"Defaulted Interest" has the meaning specified in Section 3.7.
"Definitive Securities" has the meaning set forth in Section 2.1.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depositary by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
"Discount Security" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Distributions" means, with respect to the Trust Securities issued by a
Trust, amounts payable in respect of such Trust Securities as provided in the
related Declaration and referred to therein as "Distributions."
"Dollar" means the currency of the United States of America that, as at the
time of payment, is legal tender for the payment of public and private debts.
"Event of Default" unless otherwise specified in the supplemental indenture
creating a series of Securities has the meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4(f).
"Extension Period" has the meaning specified in Section 3.11.
"Global 144A Security" has the meaning set forth in Section 2.1.
"Global Registered Security" has the meaning set forth in Section 2.1.
"Global Securities Legend" has the meaning set forth in Section 2.2.
"Global Security" has the meaning set forth in Section 2.1.
"Guarantee", with respect to the Trust Securities issued by a Trust, means
the guarantee by the Company of Distributions on such Trust Securities to the
extent provided in the Guarantee Agreement.
<PAGE>
5
"Guarantee Agreement", with respect to the Trust Securities issued by a
Trust, means the Guarantee Agreement substantially in the form attached hereto
as Annex C, or substantially in such form as may be specified as contemplated by
Section 3.1 with respect to the Securities of any series, in each case as
amended from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of each particular series of Securities established as
contemplated by Section 3.1.
"Interest Payment Date" means as to each series of Securities the Stated
Maturity of an installment of interest on such Securities.
"Investment Company Event" means, with respect to a Trust, the receipt by
such 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"), such 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 the date of original
issuance of the Preferred Securities of such Trust.
"Junior Subordinated Payment" has the meaning specified in Section 13.2.
"Legal Defeasance" has the meaning specified in Section 4.2.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"Non-Global Purchasers" has the meaning set forth in Section 2.1.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board of Directors , a Vice Chairman of the Board of Directors, the President or
a Vice President, and by the principal financial officer, the Secretary or an
Assistant Secretary (or any person expressly authorized by any of the foregoing
persons) of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, and who shall be acceptable to the Trustee.
<PAGE>
6
"Original Issue Date" means the date of issuance specified as such in each
Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment or redemption price money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent in trust for the Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or which have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any such
Securities are held by Holders in whose hands such Securities are valid, binding
and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee actually knows to be so
owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor. Upon the
written request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Securities, if
any, known by the Company to be owned or held by or for the account of the
Company or any other obligor on the Securities or any Affiliate of the Company
or such obligor, and, subject to the provisions of Section 6.1(b), the Trustee
shall be entitled to accept such Officers' Certificate as conclusive evidence of
the facts therein set forth and of the fact that all Securities not listed
therein are Outstanding for the purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the Company to
pay the principal of (or premium, if any) or interest on any Securities on
behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
"Place of Payment" means, with respect to the Securities of any series, the
place or places where the principal of (and premium, if any) and interest on the
Securities of such series are payable pursuant to Sections 3.1 and 3.11.
<PAGE>
7
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, in respect of any Trust, the banking corporation,
commercial bank or trust company identified as the "Property Trustee" in the
related Declaration, solely in its capacity as Property Trustee of such Trust
under such Declaration and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as
therein provided.
"QIB" means any "qualified institutional buyer" (as defined under the
Securities Act).
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" means, when used with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 3.1 with respect to Securities of a series, (i) if the
Securities of a series are represented by one or more Global Securities, the
Business Day next preceding such Interest Payment Date and (ii) if any of the
Securities of a series are 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).
"Regular Trustee" means, in respect of any Trust, each Person identified as
a "Regular Trustee" in the related Declaration of Trust, solely in such Person's
capacity as Regular Trustee of such Trust under such Declaration of Trust and
not in such Person's individual capacity, or any successor trustee appointed as
therein provided.
"Responsible Officer" when used with respect to the Trustee means any
officer of the Trustee within the Corporate Trust Office of the Trustee with
direct responsibility for the administration of this Indenture and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer's knowledge of and familiarity
with the particular subject.
"Restricted Securities Legend" has the meaning set forth in Section 2.2.
<PAGE>
8
"Rights Plan" means a plan of the Company providing for the issuance by the
Company to all holders of its Common Stock of rights entitling the holders
thereof to subscribe for or purchase shares of Common Stock or any class or
series of preferred stock of the Company, which rights (i) are deemed to be
transferred with such shares of Common Stock, (ii) are not exercisable and (iii)
are also issued in respect of future issuances of Common Stock, in each case
until the occurrence of a specified event or events.
"Rule 144A" has the meaning set forth in Section 2.1.
"Securities" or "Security" has the meaning set forth in the first recital
of this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.5.
"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, including interest rate, foreign exchange rate and commodity forward
contracts, options and 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 Securities, (b) any obligations of the Company which, when
incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Code of 1978, as amended, was without recourse to the Company, (c)
any indebtedness of the Company to any of its Subsidiaries, (d) indebtedness to
any 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 Securities.
"Special Event" shall mean a Tax Event or an Investment Company Event.
<PAGE>
9
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity" when used with respect to any Security or any installment
of principal thereof or interest thereon means the date specified pursuant to
the terms of such Security as the date on which the principal of such Security
or such installment of interest is due and payable, as such date, in the case of
such principal, may be shortened or extended as provided pursuant to the terms
of such Security and this Indenture.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Tax Event" means, with respect to a series of Securities or a Trust, the
receipt by such the Company of an Opinion of Counsel (as defined in the relevant
Declaration) 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 the
Original Issue Date of the Securities of such series, there is more than an
insubstantial risk that (i) such Trust is, or will be within 90 days of the date
of such Opinion of Counsel, subject to United States federal income tax with
respect to income received or accrued on the corresponding series of Securities
issued by the Company to such Trust, (ii) interest payable by the Company on
such series of Securities is not, or within 90 days of the date of such Opinion
of Counsel, will not be, deductible by the Company, in whole or in part, for
United States federal income tax purposes or (iii) such Trust is, or will be
within 90 days of the date of such Opinion of Counsel, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Transfer Restricted Securities" Securities that bear or are required to
bear the Restricted Securities Legend set forth in Section 2.2 hereof.
"Trust" has the meaning specified in the first recital of this Indenture.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
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10
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. (S)
77aaa-77bbb), as amended and as in effect on the date as of this Indenture,
except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"U.S. Government Obligations" has the meaning specified in Section 4.4.
"Vice President", when used with respect to the Company means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
Section 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants, compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action or
request have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent (including covenants
compliance with which constitute a condition precedent), if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such Officers' Certificate and Opinion of Counsel is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than the certificates provided
pursuant to Section 10.4) shall include:
(1) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made
or caused to be made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
<PAGE>
11
Section 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer or counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel rendering such Opinion of Counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent or proxy duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments is or are
delivered to the Trustee, and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent or proxy shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
the certificate of any notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where
<PAGE>
12
such execution is by a Person acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The fact and date of the execution by any Person of any such instrument
or writing, or the authority of the Person executing the same, may also be
proved in any other manner which the Trustee deems sufficient and in accordance
with such reasonable rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the Securities Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities of such series, provided that the Company may not set a
record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of the relevant Outstanding Securities on such
record date, and no other Holders, shall be entitled to take the relevant
action, whether or not such Holders remain Holders after such record date,
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of the relevant Outstanding Securities on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no effect),
and nothing in this paragraph shall be construed to render ineffective any
action taken by Holders of the requisite principal amount of the relevant
Outstanding Securities on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Trustee in writing and to each
Holder of the relevant Securities in the manner set forth in Section 1.6.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities entitled to join in the giving or making
of (i) any Notice of Default, (ii) any declaration of acceleration referred to
in Section 5.2, (iii) any request to institute proceedings referred to in
Section 5.7(2) or (iv) any direction referred to in Section 5.12, in each case
with respect to the relevant Securities. If any record date is set pursuant to
this paragraph, the Holders of the relevant Outstanding Securities on such
record date, and no other Holders, shall be entitled to join in such notice,
declaration, request or direction, whether or not such Holders
<PAGE>
13
remain Holders after such record date, provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of the relevant Outstanding
Securities on such record date. Nothing in this paragraph shall be construed to
prevent the Trustee from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and of no effect), and nothing in this paragraph shall be construed
to render ineffective any action taken by Holders of the requisite principal
amount of the relevant Outstanding Securities on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Trustee,
at the Company's expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be given to the Company
in writing and to each Holder of the relevant Securities in the manner set forth
in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of the relevant Outstanding Securities in the manner set forth in
Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Preferred Securities or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, or
(2) the Company by the Trustee, any Holder or any holder of Preferred
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of
<PAGE>
14
its principal office specified in the first paragraph of this instrument or at
any other address subsequently furnished in writing to the Trustee by the
Company.
Section 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
Section 1.7. Conflict with Trust Indenture Act.
At such time, if any, as this Indenture is qualified under the Trust
Indenture Act, if any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust
Indenture Act through operation of Section 318(c) thereof, such imposed duties
shall control.
Section 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
Section 1.10. Separability Clause.
In case any provision of this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 1.11 Benefits of Indenture.
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15
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1, 9.2
and 10.5 the holders of Preferred Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES THEREOF.
Section 1.13. Non-Business Days.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or the Securities) payment of interest or
principal (and premium, if any) need not be made on such date, but may be made
on the next succeeding Business Day (and no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Stated Maturity,
as the case may be, until such next succeeding Business Day) 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 Interest Payment Date or Redemption Date or at the
Stated Maturity).
ARTICLE II
SECURITY FORMS
Section 2.1. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article, or
in such other form or forms as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with applicable tax laws or the rules of any
securities exchange or automated quotation system on which the Securities may be
listed or traded or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities. If
the form of Securities of any series is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary
<PAGE>
16
of the Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 3.3 with respect to the authentication and
delivery of such Securities.
Securities registered under the Securities Act, shall be issued
initially in the form of one or more permanent global Securities in definitive,
fully registered form without interest coupons with the Global Securities Legend
set forth in Section 2.2 hereof (each, a "Global Registered Security"), which
--------------------------
shall be duly executed by the Company and authenticated by the Trustee as
hereinafter provided.
Securities that are not registered under the Securities Act and are
offered and sold to QIBs in reliance on Rule 144A under the Securities Act
("Rule 144A"), shall be issued initially in the form of one or more permanent
---------
global Securities in definitive, fully registered form without interest coupons
with the Global Securities Legend and Restricted Securities Legend set forth in
Section 2.2 hereof (each, a "Global 144A Security"; and when referred to herein
--------------------
with a Global Registered Security, a "Global Security"), which shall be duly
---------------
executed by the Company and authenticated by the Trustee as hereinafter
provided.
This paragraph shall apply only to Global Securities. Members of, or
participants in, the Depositary ("Agent Members") shall have no rights under
-------------
this Indenture with respect to any Global Security held on their behalf by the
Depositary or by the Trustee as the custodian of the Depositary or under such
Global Security, and the Depositary may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of the Depositary
governing the exercise of the rights of a holder of a beneficial interest in any
Global Security.
Except as provided in Section 3.5, owners of beneficial interests in
Global Securities will not be entitled to receive Definitive Securities (as
hereinafter defined). Securities that are not registered under the Securities
Act and are offered and sold to Persons who are not QIBs (referred to herein as
the "Non-Global Purchasers") shall be issued initially to such Persons in the
---------------------
form of certificated Securities bearing the Restricted Securities Legend set
forth in Section 2.2 below ("Definitive Securities"); provided, however, that
--------------------- -------- -------
upon transfer of such Definitive Securities to a QIB, such Definitive Securities
will, unless the Global Security has previously been exchanged, be exchanged for
an interest in a Global Security pursuant to the provisions of Section 3.5
hereof. Definitive Securities will bear the Restricted Securities Legend set
forth in Section 2.2 unless removed in accordance with Section 2.2 hereof.
The Securities shall be typewritten, printed, lithographed or engraved
or produced by any combination of these methods, if required by any securities
exchange or automated quotation system on which the Securities may be listed or
traded, on a steel engraved border or steel engraved borders or may be produced
in any other manner permitted by the rules of any securities
<PAGE>
17
exchange or automated quotation system on which the Securities may be listed or
traded, all as determined by the officers executing such Securities, as
evidenced by their execution of such securities.
Section 2.2. Legends.
Each Security certificate evidencing Global Securities (and all
Securities issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the following form ("Global Securities Legend"):
"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."
Each Security certificate evidencing Global 144A Securities and Definitive
Securities (and all Securities issued in exchange therefor or substitution
thereof) shall bear a legend substantially the following form ("Restricted
Securities Legend"):
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS,
<PAGE>
18
ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE ISSUER OF THIS SECURITY
THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS
TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON
WHICH THE ISSUER OF THIS SECURITY OR ANY AFFILIATE OF THE ISSUER OF THIS
SECURITY WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR)
EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE,
IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER,
SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSES (II)(D) AND (E)
IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE PROPERTY
TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND
SUBSTANCE."
Upon any sale or transfer of a Transfer Restricted Security (including any
Transfer Restricted Security represented by a Global 144A Security) pursuant to
Rule 144 under the Securities Act or pursuant to an effective registration
statement under the Securities Act:
(a) in the case of any Transfer Restricted Security that is a Definitive
Security, the Registrar shall permit the Holder thereof to exchange such
Transfer Restricted Security for a Definitive Security that does not bear
the Restricted Securities Legend set forth above and rescind any
restriction on the transfer of such Security; and
(b) in the case of any such Transfer Restricted Security represented by a
Global 144A Security, such Transfer Restricted Security shall not be
required to bear the Restricted Securities Legend, although it shall
continue to be subject to the provisions of Section 3.5 hereof; provided,
--------
however, that with respect to any request for an exchange of a Transfer
-------
Restricted Security that is represented by a Global 144A Security for a
Definitive Security that does not bear the Restricted Securities Legend,
which request is made in reliance upon Rule 144, the Holder thereof shall
certify in writing to the Trustee that such request is
<PAGE>
19
being made pursuant to Rule 144 (such certification to be in the form set
forth on the reverse of the Security).
Section 2.3. Form of Face of Security.
THE FIRST AMERICAN FINANCIAL CORPORATION CUSIP ____
__% Junior Subordinated Deferrable Interest Debentures
No. $
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 , or registered assigns, the principal sum of Dollars on
__________ __, ____[; provided that the Company may, subject to certain
conditions set forth herein, shorten the Stated Maturity of the principal of
this Security to a date not earlier than __________]. The Company further
promises to pay interest on said principal sum from ,
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, [monthly]
[quarterly] [semi-annually] [if applicable, insert - (subject to deferral as set
forth herein)] in arrears on [insert applicable Interest Payment Dates] of each
year, commencing , , at the rate of % per annum,
until the principal hereof shall have become due and payable, [if applicable,
insert plus Additional Interest, if any,] until the principal hereof is paid or
duly provided for or made available for payment [if applicable, insert -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 % per annum, compounded [monthly] [quarterly] [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 [if applicable, insert, or the corporate trust office of
the Property Trustee under the applicable Declaration,] is closed 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 the [insert definition of Regular Record Dates]. Any
such interest installment not so punctually paid or duly provided for shall
forthwith cease to be payable
<PAGE>
20
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.
[If applicable, insert - 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 consecutive [monthly] [quarterly] [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 consecutive [months] [quarters]
<PAGE>
21
[semi-annual] periods or extend beyond the Stated Maturity of the 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 [if applicable, insert -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 [if applicable, insert -; 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.
<PAGE>
22
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:
- ---------------------------------------
[Secretary or Assistant Secretary]
Section 2.4. 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 $
].
All terms used in this Security that are defined in the Indenture [if
applicable, insert -or in the Amended and Restated Declaration of Trust, dated
as of _______ __, 19__, as amended (the "Declaration"), for First American
Capital Trust __ among The First American Financial Corporation, as Sponsor, and
the Trustees named therein, shall have the meanings assigned to them in the
Indenture [if applicable, insert -or the Declaration, as the case may be].
[If applicable, insert--The Company may at any time, at its option, on or
after _________, ____, and subject to the terms and conditions of Article XI of
the Indenture, redeem this Security in whole at any time or in part from time to
time at a redemption price equal to the following prices, expressed in
percentages of the principal amount, plus accrued and unpaid interest [if
applicable, insert -including Additional Interest, if any] to but excluding the
Redemption Date. If redeemed during the 12-month period beginning _____ __:
<PAGE>
23
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----------
<S> <C>
20__ %
20__
20__
20__
20__
20__
20__
20__
20__
20__
</TABLE>
and at 100% on or after _________ __, 20__.]
[If applicable, insert -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
(a) to shorten the Stated Maturity of the Securities of this series to the
minimum extent required, but in any event to a date not earlier than ________,
20__ (the action referred to in this clause (a) being herein referred to as a
"Maturity Advancement"), such that, in the opinion of counsel to the Company
experienced in such matters, after such Maturity Advancement interest paid on
the Securities of this Series will be deductible for United States federal
income tax purposes or (b) if, in the opinion of counsel to the Company
experienced in such matters, there would in all cases after effecting a Maturity
Advancement, be more than an insubstantial risk that a Tax Event would continue
to exist, 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.]
[If applicable, insert -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.
<PAGE>
24
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 or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Security.
[If the Security is not a Discount 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.]
[If the Security is a Discount 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 such portion
of the principal amount as may be specified in the terms of this series may
declare an amount of principal of 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. Such
amount shall be equal to - insert formula for determining the amount. Upon any
such declaration, such amount of the principal of and the accrued interest
(including any Additional Interest) on all the Securities of this series shall
become immediately due and payable,
<PAGE>
25
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 $ 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 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.
<PAGE>
26
Section 2.5. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:
--------------------------
as Trustee
By:
-----------------------
Authorized Signatory
ARTICLE III
THE SECURITIES
Section 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more series. The
following matters shall be established in or pursuant to a Board Resolution, and
set forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of a series:
(a) the title of the Securities of such series, which shall distinguish the
Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any
Securities which, pursuant to the last paragraph of Section 3.3, are deemed
never to have been authenticated and delivered hereunder); provided, however,
that the authorized aggregate principal amount of such series may be increased
above such amount by a Board Resolution to such effect;
(c) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof and
the right of the Company to shorten or extend the Stated Maturity or Maturities;
(d) the rate or rates, if any, at which the Securities of such series shall
bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable in respect
<PAGE>
27
of any Securities of such series, the Interest Payment Dates on which such
interest shall be payable, the right, pursuant to Section 3.11 or as otherwise
set forth therein, of the Company to defer or extend an Interest Payment Date,
and the Regular Record Date for the interest payable on any Interest Payment
Date or the method by which any of the foregoing shall be determined;
(e) the place or places where the principal of (and premium, if any) and
interest on the Securities of such series shall be payable, the place or places
where the Securities of such series may be presented for registration of
transfer or exchange, and the place or places where notices and demands to or
upon the Company in respect of the Securities of such series may be made;
(f) the period or periods within which, or the date or dates on which, if
any, the price or prices at which and the terms and conditions upon which the
Securities of such series may be redeemed, in whole or in part, at the option of
the Company;
(g) the obligation or the right, if any, of the Company to redeem, repay or
purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions or upon the happening of a specified event,
or at the option of a Holder thereof, and the period or periods within which,
the price or prices at which, the currency or currencies (including currency
unit or units) in which and the other terms and conditions upon which Securities
of the series shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation;
(h) the denominations in which any Securities of such series shall be
issuable, if other than denominations of $1,000 and any integral multiple
thereof;
(i) if other than Dollars, the currency or currencies (including currency
unit or units) in which the principal of (and premium, if any) and interest, if
any, on the Securities of the series shall be payable, or in which the
Securities of the series shall be denominated;
(j) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(k) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(l) the additions or changes, if any, to this Indenture with respect to the
Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
(m) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the Securities of such series or the manner
in which such amounts will be determined;
<PAGE>
28
(n) whether the Securities of the series, or any portion thereof, shall
initially be issuable in the form of a temporary Global Security representing
all or such portion of the Securities of such series and provisions for the
exchange of such temporary Global Security for definitive Securities of such
series;
(o) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such case,
the respective Depositaries for such Global Securities, the form of any legend
or legends which shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 2.2 and any circumstances in addition to or in
lieu of those set forth in Section 3.5 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in the name or names
of Persons other than the Depositary for such Global Security or a nominee
thereof;
(p) the appointment of any Paying Agent or Agents for the Securities of
such series;
(q) the terms of any right to convert or exchange Securities of such series
into any other securities or property of the Company, and the additions or
changes, if any, to this Indenture with respect to the Securities of such series
to permit or facilitate such conversion or exchange;
(r) the form or forms of the Declaration of Trust, Amended and Restated
Declaration of Trust and Guarantee Agreement, if different from the forms
attached hereto as Annexes A, B and C, respectively;
(s) the terms of any right to convert or exchange Securities of such series
into any other securities or property of the Company, and the additions or
changes, if any, to this Indenture with respect to the Securities of such series
to permit or facilitate such conversion or exchange;
(t) the additions, modifications or deletions, if any, in the Events of
Default that apply to any Securities of the series and any change in the right
of the Trustee or the requisite Holder of such Securities to declare the
principal amount thereof due and payable pursuant to Section 5.2;
(u) the relative degree, if any, to which the Securities of the series
shall be senior to or be subordinated to other series of Securities in right of
payment, whether such other series of Securities are Outstanding or not; and
(v) any other terms of the Securities of such series (which terms shall not
be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided herein or in or pursuant
to such Board Resolution and set forth in such Officers' Certificate or in any
such indenture supplemental hereto.
If any of the terms of the Securities of any series are established by
action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the
<PAGE>
29
Secretary or an Assistant Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Officers' Certificate setting forth the terms
of the series.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
Section 3.2. Denominations.
The Securities of each series shall be in registered form without coupons
and shall be issuable in denominations of $1,000 and any integral multiple
thereof, unless otherwise specified as contemplated by Section 3.1.
Section 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its President
or one of its Vice Presidents under its corporate seal reproduced or impressed
thereon and attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may deliver
Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and make such Securities available for delivery. If the
form or terms of the Securities of the series have been established by or
pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1,
in authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and (subject to Section 6.1) shall be fully protected in
relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 2.1, that such form has been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such terms
have been established in conformity with the provisions of this Indenture;
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company
<PAGE>
30
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and
(4) that all requirements of New York, California and Federal law in
respect of the execution and delivery by the Company of such Securities,
and all covenants and conditions set forth in this Indenture which are
conditions precedent hereto, have been complied with.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder. Notwithstanding the foregoing, if any Security shall
have been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.9, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall not be entitled to the benefits of this Indenture.
Section 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities of such series in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities.
<PAGE>
31
If temporary Securities of any series are issued, the Company will cause
Definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of Definitive Securities, the temporary Securities shall
be exchangeable for Definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge (except for tax or other governmental charges, if applicable) to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall authenticate and
make available for delivery in exchange therefor one or more definitive
Securities of the same series, of any authorized denominations having the same
Original Issue Date and Stated Maturity and having the same terms as such
temporary Securities. Until so exchanged, the temporary Securities of any series
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
Section 3.5. Registration, Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of Securities and of
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers and exchanges of
Securities as herein provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and make available for delivery, in the name
of the designated transferee or transferees, one or more new Securities of the
same series of any authorized denominations, of a like aggregate principal
amount, of the same Original Issue Date and Stated Maturity and having the same
terms.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of a like
aggregate principal amount, of the same Original Issue Date and Stated Maturity
and having the same terms, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and make
available for delivery, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
<PAGE>
32
No service charge shall be made to a Holder for any transfer or exchange of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a nominee
thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered,
in the name of any Person other than the Depositary for such Global
Security or a nominee thereof unless (A) such Depositary (i) has notified
the Company that it is unwilling or unable to continue as Depositary for
such Global Security or (ii) has ceased to be a clearing agency registered
under the Exchange Act at a time when the Depositary is required to be so
registered to act as depositary, in either case unless the Company has
approved a successor Depositary within 90 days, (B) there shall have
occurred and be continuing an Event of Default with respect to such Global
Security, (C) the Company in its sole discretion determines that such
Global Security will be so exchangeable or transferable or (D) there shall
exist such circumstances, if any, in addition to or in lieu of the
foregoing as have been specified for this purpose as contemplated by
Section 3.1.
(3) Subject to Clause (2) above, any exchange of a Global Security for
other Securities may be made in whole or in part, and all Securities issued
in exchange for a Global Security or any portion thereof shall be
registered in such names as the Depositary for such Global Security shall
direct.
(4) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any
portion thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or
11.6 or otherwise, shall be authenticated and delivered in the form of, and
shall be, a Global Security, unless such Security is registered in the name
of a Person other than the Depositary for such Global Security or a nominee
thereof.
The provisions of Clause (1) below shall only apply to transfers and
exchanges of Definitive Securities:
(1) When Definitive Securities are presented by a Holder to the
Securities Registrar with a request:
(a) to register the transfer of such Definitive Securities; or
<PAGE>
33
(b) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
the Securities Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that:
-------- -------
(i) such Definitive Securities shall be duly endorsed or
accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Securities Registrar, duly
executed by such Holder or his attorney duly authorized in writing;
and
(ii) if such Definitive Securities are Transfer Restricted
Securities, such Definitive Securities shall also be accompanied by
the following additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Securities Registrar by a Holder for
registration in the name of such Holder, without transfer, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Security); or
(B) if such Transfer Restricted Securities are being
transferred (x) to the Company or to a QIB in accordance with
Rule 144A under the Securities Act or (y) pursuant to an
effective registration statement under the Securities Act, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act; or (x) to an institutional "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act that is acquiring the security for its own account, or for
the account of such an institutional accredited investor, in each
case in a minimum principal amount of the Securities of $100,000
for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the
Securities Act; or (y) in reliance on another exemption from the
registration requirements of the Securities Act: (i) a
certification to that effect from such Holder (in the form set
forth on the reverse of the Security), (ii) if the Company or the
Trustee so requests, an Opinion of Counsel reasonably acceptable
to the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act and (iii) in
the case of clause (x), a signed letter from the transferee
substantially in the form of Exhibit A hereto.
<PAGE>
34
The provisions of Clause (1) below shall only apply to transfers and
exchanges of a Definitive Security for a beneficial interest in a Global
Security.
(1) A Definitive Security may not be exchanged for a beneficial
interest in a Global Security except upon satisfaction of the requirements
set forth below. Upon receipt by the Trustee of a Definitive Security,
duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Trustee, together with:
(a) certification, in the form set forth on the reverse of the
Security, to the effect that such Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(b) written instructions from the Holder thereof directing the
Trustee to make, or to direct the Securities Registrar to make, an
endorsement on the Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the Global
Security,
then the Trustee shall cancel such Definitive Security and cause, or direct
the Securities Registrar to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the
Securities Registrar, the aggregate principal amount of Securities
represented by the Global Security to be increased accordingly. If no
Global Securities are then outstanding, the Company shall issue and the
Trustee shall authenticate, upon written order of the Company in the form
of an Officers' Certificate, a new Global Security in the appropriate
principal amount. The Trustee shall deliver copies of each certification
and instruction received by it pursuant to clauses (a) and (b) above to the
Depositary and, upon receipt thereof, the Depositary shall make appropriate
adjustments to its books and records to reflect exchange of such Definitive
Security for an interest in the Global Security in accordance with this
Section 3.5.
The provisions in Clauses (1) and (2) below shall only apply to the
transfer and exchange of a beneficial interest in a Global Security for a
Definitive Security.
(1) Any person having a beneficial interest in a Global Security may
upon request exchange such beneficial interest for a Definitive Security of
the same aggregate principal amount; provided that such request is
--------
accompanied by the information specified below. Upon receipt by the
Trustee of written instructions (or such other form of instructions as is
customary for the Depositary) from the Depositary or its nominee on
behalf of any Person having a beneficial interest in a Global Security and,
in the case of a Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by facsimile):
(a) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the owner of a beneficial
interest in a Global
<PAGE>
35
Security, a certification from such Person to that effect (in the form
set forth on the reverse of the Security); or
(b) if such beneficial interest is being transferred (x) to a QIB
in accordance with Rule 144A under the Securities Act or (y) pursuant
to an effective registration statement under the Securities Act, a
certification from such person to that effect (in the form set forth
on the reverse of the Security); or
(c) if such beneficial interest is being transferred (w) pursuant
to an exemption from registration in accordance with Rule 144 or
Regulation S under the Securities Act; or (x) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3)
or (7) under the Securities Act that is acquiring the security for its
own account, or for the account of such an institutional accredited
investor, in each case in a minimum principal amount of the Securities
of $100,000 for investment purposes and not with a view to, or for
offer or sale in connection with, any distribution in violation of the
Securities Act; or (y) in reliance on another exemption from the
registration requirements of the Securities Act: (i) a certification
to that effect from the transferee (in the form set forth on the
reverse of the Security), (ii) if the Company or the Trustee so
requests, an Opinion of Counsel reasonably acceptable to the Company
and to the Trustee to the effect that such transfer is in compliance
with the Securities Act, and (iii) in the case of clause (x), a signed
letter from the transferee in the form of Exhibit A hereto;
then the Securities Registrar, at the direction of the Trustee, will cause,
in accordance with the standing instructions and procedures existing
between the Depositary and the Securities Registrar, the aggregate
principal amount of the Global Security to be reduced accordingly and,
following such reduction, the Company will execute and the Trustee will
authenticate and deliver to the transferee one or more Definitive
Securities in accordance with clause (2) below.
(2) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 3.5 shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee in writing. The
Trustee shall deliver such Definitive Securities to the Persons in whose
names such Securities are so registered in accordance with the instructions
of the Depositary.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Security of
any series during a period beginning at the opening of business 15 days before
the day of selection for redemption of Securities pursuant to Article XI and
ending at the close of business on the day of mailing of notice of redemption or
(b) to transfer or exchange any Security so selected for redemption in whole or
in part, except, in the case of any Security to be redeemed in part, any portion
thereof not to be redeemed.
<PAGE>
36
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and make available for delivery in exchange therefor a new
Security of the same issue and series of like tenor and principal amount, having
the same Original Issue Date and Stated Maturity and bearing the same interest
rate as such mutilated Security, and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and make available for
delivery, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same issue and series of like tenor and principal amount, having the same
Original Issue Date and Stated Maturity and bearing the same interest rate as
such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
<PAGE>
37
Section 3.7. Payment of Interest; Interest Rights Preserved.
Interest on any Security of any series which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date, shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
in respect of Securities of such series, except that, unless otherwise provided
in the Securities of such series, interest payable on the Stated Maturity of the
principal of a Security shall be paid to the Person to whom principal is paid.
The initial payment of interest on any Security of any series which is issued
between a Regular Record Date and the related Interest Payment Date shall be
payable as provided in such Security or in the Board Resolution pursuant to
Section 3.1 with respect to the related series of Securities. At the option of
the Company, interest on any series of Securities may be paid (i) by check
mailed to the address of the Person entitled thereto as it shall appear on the
Securities Register of such series or (ii) by wire transfer in immediately
available funds at such place and to such account as designated by the Person
entitled thereto as specified in the Securities Register of such series.
Any interest on any Security which is payable, but is not timely paid or
duly provided for, on any Interest Payment Date for Securities of such series
(herein called "Defaulted Interest"), shall forthwith cease to be payable to the
registered Holder on the relevant Regular Record Date by virtue of having been
such Holder, and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series in respect of which
interest is in default (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
in this Clause provided. Upon such deposit, the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first class, postage prepaid, to each Holder of a
Security of such series at the address of such Holder as it appears in the
Securities Register not less than 10 days prior to such Special Record Date. The
Trustee may (but shall have no duty to), in its discretion, in the name and at
the expense of the Company, cause a similar notice to be published at least once
in a newspaper, customarily published in the English language on each Business
Day and of general circulation in the Borough of Manhattan, The City
<PAGE>
38
of New York, but such publication shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names the Securities of such series (or their respective Predecessor Securities)
are registered on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Securities of the series in respect
of which interest is in default may be listed or traded and, upon such notice as
may be required by such exchange (or by the Trustee if the Securities are not
listed), if, after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such payment shall be deemed practicable by the
Trustee.
Any interest on any Security which is deferred or extended pursuant to
Section 3.11 shall not be Defaulted Interest for the purposes of this Section
3.7.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 3.8. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.7) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
Section 3.9. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities shall be returned by the
Trustee to the Company and destroyed by the Company.
<PAGE>
39
Section 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series for any period shall be
computed on the basis of a 360-day year of twelve 30-day months and interest on
the Securities of each series 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.
Section 3.11. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, 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 such series, from time to time to defer the payment of interest on
such Securities for such period or periods as may be specified as contemplated
by Section 3.1 (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. No Extension Period shall end on a date other than
an Interest Payment Date. At the end of any such Extension Period, the Company
shall pay all interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the Securities of
such series to the extent permitted by applicable law) to the Persons in whose
names such Securities are registered at the close of business on the Regular
Record Date with respect to the Interest Payment Date at the end of such
Extension Period; provided, however, that no Extension Period shall extend
beyond the Stated Maturity of the principal of the Securities of such series;
provided, further, that during any such Extension Period, the Company shall not,
and shall not permit any Subsidiary 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 such
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 such Securities 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
exercise thereof, (b) payments under the Guarantee with respect to such
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
<PAGE>
40
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 the period
or periods specified in such Securities or extend beyond the Stated Maturity of
the principal of such Securities. Upon termination of any Extension Period and
upon the payment of all accrued and unpaid interest and any Additional Interest
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
shall give the Holders of the Securities of such series and the Trustee written
notice of its election to begin any such Extension Period at least one Business
Day prior to the record date for the next succeeding Interest Payment Date on
which interest on Securities of such series would be payable but for such
deferral.
The Trustee, upon receipt of notice thereof from the Company, shall
promptly give notice, in the name and at the expense of the Company, of the
Company's election to begin any such Extension Period to the Holders of the
Outstanding Securities of such series.
Section 3.12. Right of Set-Off.
With respect to the Securities of a series issued to a Trust,
notwithstanding anything to the contrary in the Indenture, the Company shall
have the right to set-off any payment it is otherwise required to make
thereunder in respect of any such Security to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee relating to such Security or under Section 5.8 of
the Indenture.
Section 3.13. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security intend that
such Security constitutes indebtedness and agree to treat such Security as
indebtedness for United States federal, local and state tax purposes.
Section 3.14. Shortening of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, the Company shall have the right, subject
to certain conditions, if any are specified as contemplated by Section 2.1 or
Section 3.1 with respect to the Securities of such series, to shorten the Stated
Maturity of the principal of the Securities of such series at any time to any
date not earlier than the fifteenth anniversary of the Original Issue Date of
the Securities of such series. In the event the Company elects to shorten the
Stated Maturity of the Securities of such series, it shall give written notice
to the Trustee, and the Trustee shall give notice of such
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shortening to the Holders, no less than 30 and no more than 60 days prior to the
effectiveness thereof.
Section 3.15. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the CUSIP numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on written demand of and at the
expense of the Company, shall execute instruments supplied by the Company
acknowledging satisfaction and discharge of this Indenture, when (1) either (A)
all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3) have been delivered to the Trustee for
cancellation; or (B) all such Securities not theretofore delivered to the
Trustee for cancellation (i) have become due and payable, or (ii) will become
due and payable at their Maturity within one year, or (iii) if redeemable at the
option of the Company, are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company and the Company,
in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited
with the Trustee as funds in trust for such purpose in an amount sufficient to
pay and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and interest to the
date of such deposit (in the case of Securities which have become due and
payable) or to the Maturity or Redemption Date, as the case may be; (2) the
Company has paid or caused to be paid all other sums payable hereunder by the
Company; and (3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company
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42
to the Trustee under Section 6.7 and, if money shall have been deposited with
the Trustee pursuant to subclause (B) of clause (1) of this Section, the
obligations of the Trustee under Section 4.5 and the last paragraph of Section
10.3 shall survive.
Section 4.2. Legal Defeasance.
In addition to discharge of this Indenture pursuant to Section 4.1, in the
case of any Securities with respect to which the exact amount described in
subparagraph A of Section 4.4 can be determined at the time of making the
deposit referred to in such subparagraph A, the Company shall be deemed to have
paid and discharged the entire indebtedness on all the Securities as provided in
this Section on and after the date the conditions set forth in Section 4.4 are
satisfied, and the provisions of this Indenture with respect to the Securities
shall no longer be in effect (except as to (i) rights of registration of
transfer and exchange of Securities, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (iii) rights of Holders of Securities to
receive, solely from the trust fund described in subparagraph A of Section 4.4,
payments of principal thereof and interest, if any, thereon upon the original
stated due dates therefor (but not upon acceleration), (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, (v) this Section
4.2 and (vi) the rights of the Holders of Securities as beneficiaries hereof
with respect to the property so deposited with the Trustee payable to all or any
of them) (hereinafter called "Legal Defeasance"), and the Trustee, at the cost
and expense of the Company, shall execute proper instruments supplied by the
Company acknowledging the same.
Section 4.3. Covenant Defeasance.
In the case of any Securities with respect to which the exact amount
described in subparagraph A of Section 4.4 can be determined at the time of
making the deposit referred to in such subparagraph A, (i) the Company shall be
released from its obligations under any covenants specified in or pursuant to
this Indenture (except as to (i) rights of registration of transfer and exchange
of Securities, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Securities, (iii) rights of Holders of Securities to receive, solely from
the trust fund described in subparagraph A of Section 4.4, payments of principal
thereof and interest, if any, thereon upon the original stated due dates
therefor (but not upon acceleration), (iv) the rights, obligations, duties and
immunities of the Trustee hereunder, (v) this Section 4.3 and (vi) the rights of
the Holders of Securities as beneficiaries hereof with respect to the property
so deposited with the Trustee payable to all or any of them), and (b) the
occurrence of any event specified in Section 5.1(3) (with respect to any of the
covenants specified in or pursuant to this Indenture) shall be deemed not to be
or result in an Event of Default, in each case with respect to the Outstanding
Securities as provided in this Section on and after the date the conditions set
forth in Section 4.4 are satisfied (hereinafter called "Covenant Defeasance"),
and the Trustee, at the cost and expense of the Company, shall execute proper
instruments supplied by the Company acknowledging the same. For this purpose,
such Covenant Defeasance means that the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant (to the extent so specified in the case of Section
5.1(3)), whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such
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43
covenant to any other provision herein or in any other document, but the
remainder of this Indenture and the Securities shall be unaffected thereby.
Section 4.4. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 4.2
or 4.3 to the Outstanding Securities:
A. with reference to Section 4.2 or 4.3, the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as funds in
trust, specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of Securities (i) cash in an amount, (ii) direct
obligations of the United States of America, backed by its full faith and credit
or obligations of a Person controlled or supervised by and acting as an agency
or instrumentality of the United States of America the timely payment of which
is unconditionally guaranteed as a full faith and credit obligation by the
United States of America (collectively, "U.S. Government Obligations"), maturing
as to principal and interest, if any, at such times and in such amounts as will
ensure the availability of cash, or (iii) a combination thereof, in each case
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge the principal of and interest, if any, on all
Securities on each date that such principal or interest, if any, is due and
payable;
B. in the case of Legal Defeasance under Section 4.2, the Company has
delivered to the Trustee an Opinion of Counsel based on the fact that (x) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling or (y), since the date hereof, there has been a change in the
applicable United States federal income tax law, in either case to the effect
that, and such opinion shall confirm that, the Holders of the Securities of such
series will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit and Legal Defeasance and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit and Legal Defeasance had not occurred;
C. in the case of Covenant Defeasance under Section 4.3, the Company
has delivered to the Trustee an Opinion of Counsel to the effect that, and such
opinion shall confirm that, the Holders of the Securities will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and Covenant Defeasance and will be subject to federal income tax on the same
amount in the same manner and at the same times as would have been the case if
such deposit and Covenant Defeasance had not occurred;
D. such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under, any agreement or
instrument to which the Company is a party or by which it is bound; and
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44
E. the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent contemplated by this provision have been complied with.
Section 4.5. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
and U.S. Government Obligations deposited with the Trustee pursuant to Section
4.1 and Section 4.4 shall be held in trust and such money and all money from
such U.S. Government Obligations shall be applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either directly
or through any Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money and U.S. Government
Obligations has been deposited with the Trustee.
Section 4.6. Indemnity for U.S. Government Obligations.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 4.4 or the principal or interest received in
respect of such obligations other than any such tax, fee or other charge that by
law is for the account of the Holders of Outstanding Securities.
ARTICLE V
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it becomes
due and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any interest payment date in the case of an
Extension Period); or
(2) default in the payment of the principal of (or premium, if any, on) any
Security of that series at its Maturity; or
(3) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Company in this Indenture with respect to that
series (other than a covenant or
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45
warranty a default in the performance of which or the breach of which is
elsewhere in this Section specifically dealt with), and continuance of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of that series a written notice specifying such default
or breach and requiring it to be remedied; or
(4) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property or ordering
the winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days; or
(5) the institution by the Company of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
state bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit for creditors, or the admission by
it in writing of its inability to pay its debts generally as they become due and
its willingness to be adjudicated a bankrupt, or the taking of corporate action
by the Company in furtherance of any such action; or
(6) any other Event of Default provided with respect to Securities of that
series.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
5.1(4) or 5.1(5)) with respect to Securities of any 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 that series may declare the principal amount (or, if the
Securities of that series are Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of all the Securities of
that 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 a 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 that series fail to declare the principal amount (or,
if the Securities of that series are Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Securities of that series to be immediately due and payable, the holders of at
least 25% in aggregate liquidation amount of the corresponding series of
Preferred Securities then outstanding shall have
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46
such right by a notice in writing to the Company and the Trustee; and upon any
such declaration such principal amount (or specified portion thereof) of and the
accrued interest (including any Additional Interest) on all the Securities of
such series shall become immediately due and payable. Payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII notwithstanding that such
amount shall become immediately due and payable as herein provided. If an Event
of Default specified in Section 5.1(4) or 5.1(5) with respect to Securities of
any series at the time Outstanding occurs, the principal amount of all the
Securities of that series (or, if the Securities of that series are Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms of that series) shall automatically, and without any
declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount (or, if the
Securities of that series are Discount Securities, such portion of the principal
amount as may be specified in the terms of that series) of the Outstanding
Securities of that series, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay:
(A) all overdue installments of interest (including any Additional
Interest) on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of acceleration,
and
(C) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel; and
(2) all Events of Default with respect to Securities of that series, other
than the non-payment of the principal of Securities of that series which has
become due solely by such acceleration, have been cured or waived as provided in
Section 5.13;
provided that, in the case of Securities of a series held by a Trust, if the
Holders of at least a majority in principal amount of the Outstanding Securities
of that series fails to rescind and annul such declaration and its consequences,
the holders of a majority in aggregate liquidation amount of the related series
of Preferred Securities then outstanding shall have such right by written notice
to the Company and the Trustee, subject to the satisfaction of the conditions
set forth in Clauses (1) and (2) above of this Section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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Section 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security when such interest becomes
due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (and premium, if
any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal, including any sinking fund payment or
analogous obligations (and premium, if any) and interest (including any
Additional Interest); and, in addition thereto, all amounts owing the Trustee
under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities of
any series shall then be due and payable as therein expressed or by declaration
of acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal (and
premium, if any) or interest (including any Additional Interest)) shall
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48
be entitled and empowered (but shall have no duty), to the fullest extent
permitted by law, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (or, if the
Securities of that series are Discount Securities, such portion of the principal
amount as may be due and payable pursuant to a declaration in accordance with
Section 5.2) (and premium, if any) and interest (including any Additional
Interest) owing and unpaid in respect to the Securities and to file such other
papers or documents as may be necessary or advisable and, at such time, if any,
as this Indenture is qualified under the Trust Indenture Act, to take any and
all actions as are authorized under the Trust Indenture Act in order to have the
claims of the Holders and any predecessor to the Trustee under Section 6.7
allowed in any such judicial proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and receive
any moneys or other property payable or deliverable on any such claims and to
distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator
(or other similar official) in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee for distribution in
accordance with Section 5.6, and in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due to it and any predecessor Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
Section 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of all the amounts owing the Trustee and any predecessor Trustee
under Section 6.7, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been recovered.
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Section 5.6. Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due and
unpaid upon such series of Securities for principal (and premium, if any),
interest (including any Additional Interest), in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such series of
Securities for principal (and premium, if any) and interest (including any
Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
Section 5.7. Limitation on Suits.
No Holder of any Securities of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture or for the
appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other
similar official) or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable security
or indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of security or indemnity has failed to institute any such proceeding; and
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(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing itself of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Holders of Securities, or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all such Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right which is absolute and unconditional to receive
payment of the principal of (and premium, if any) and (subject to Section 3.7
and Section 3.11) interest (including any Additional Interest) on such Security
on the respective Stated Maturities expressed in such Security (or, in the case
of redemption, on the Redemption Date) and to institute suit for the enforcement
of any such payment, and such right shall not be impaired without the consent of
such Holder. In the case of Securities of a series held by a Trust, any holder
of the corresponding series of Preferred Securities held by such Trust shall
have the right, upon the occurrence of an Event of Default described in Section
5.1(1) or 5.1(2), to institute a suit directly against the Company for
enforcement of payment to such holder of principal of (premium, if any) and
(subject to Section 3.7 and Section 3.11) interest (including any Additional
Interest) on the Securities having a principal amount equal to the aggregate
liquidation amount of such Preferred Securities of the corresponding series held
by such holder.
Section 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee, such Holder or such holder of
Preferred Securities, then and in every such case the Company, the Trustee, the
Holders and such holder of Preferred Securities shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee, the Holders and the holders of Preferred Securities shall continue as
though no such proceeding had been instituted.
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51
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.6, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security or any
holder of any Preferred Security to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Preferred
Securities, as the case may be.
Section 5.12. Control by Holders.
The Holders of not less than of a majority in principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such series, provided that:
(1) such direction shall not be in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
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(3) subject to the provisions of Section 6.1, the Trustee shall have the
right to decline to follow such direction if a Responsible Officer or Officers
of the Trustee shall, in good faith, determine that the proceeding so directed
would be unjustly prejudicial to the Holders not joining in any such direction
or would involve the Trustee in personal liability.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series and, in the case of any Securities of a
series issued to a Trust, the holders of a majority in liquidation amount of
Preferred Securities issued by such Trust may waive any past default hereunder
and its consequences with respect to such series except a default:
(1) in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series (unless all
Events of Default with respect to Securities of that series, other than the non-
payment of the principal of Securities of that series which has become due
solely by such acceleration, have been cured or annulled as provided in Section
5.3 and the Company has paid or deposited with the Trustee a sum sufficient to
pay all overdue installments of interest (including any Additional Interest) on
all Securities of that series, the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than by such
declaration of acceleration, and all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel), or
(2) in respect of a covenant or provision hereof which under Article IX
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series or, in the case of a waiver by holders of Preferred
Securities issued by such Trust, by all holders of Preferred Securities issued
by such Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
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Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
Section 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the
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54
case of any such certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not on their face they
conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the 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
Holders pursuant to Section 5.12 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture with respect
to the Securities of such series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
Section 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Securities
Register, notice of such default, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest (including any Additional
Interest) on any Security of such series,
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55
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of Securities of
such series; and provided, further, that, in the case of any default of the
character specified in Section 5.1(3), no such notice to Holders of Securities
of such series shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.
Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(f) the 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, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
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56
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Indenture.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of the Securities or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
6.8 and 6.13, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
Section 6.7. Compensation and Reimbursement.
The Company, as borrower, agrees
(1) to pay to the Trustee from time to time such compensation as shall be
agreed in writing between the Company and the Trustee for all services rendered
by it hereunder (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(2) to reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and
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counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify each of the Trustee and any predecessor Trustee for, and
to hold it harmless against, any and all loss, liability, damage, claim or
expense (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) incurred without negligence or bad
faith, arising out of or in connection with the acceptance or administration of
this trust or the performance of its duties hereunder, 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. This
indemnification shall survive the termination of this Agreement and the
resignation or removal of the Trustee hereunder.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Trustee shall have a lien prior to the Securities
on all money or property held or collected by the Trustee. Such lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under the Bankruptcy Code of 1978, as amended, or any successor
statute.
Section 6.8. Disqualification; Conflicting Interests.
(a) The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the Trustee from filing with the Commission the application
referred to in the second to last paragraph of said Section 310(b).
(b) The Declaration and the Guarantee Agreement with respect to each Trust
shall be deemed to be specifically described in this Indenture for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the United
States of America or of any state or territory or the District of Columbia,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal, state, territorial or District of
Columbia authority, or
(b) a corporation or other Person organized and doing business under the
laws of a foreign government that is permitted to act as Trustee pursuant to a
rule, regulation or order of the
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Commission, authorized under such laws to exercise corporate trust powers, and
subject to supervision or examination by authority of such foreign government or
a political subdivision thereof substantially equivalent to supervision or
examination applicable to United States institutional trustees,
in either case, having securities rated in one of the three highest rating
categories by a nationally recognized statistical rating organization and having
a combined capital and surplus of at least $50,000,000, subject to supervision
or examination by federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then, for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article. Neither the Company nor any Person directly or indirectly controlling,
controlled by or under common control with the Company shall serve as Trustee
for the Securities of any series issued hereunder.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
the Trustee within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Company. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after such removal, the Trustee
being removed may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and shall fail
to resign after written request therefor by the Company or by any such Holder,
or
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(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to all Securities, or (ii)
subject to Section 5.14, any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause with respect
to the Securities of one or more series, the Company, by a Board Resolution,
shall promptly appoint a successor Trustee with respect to the Securities of
that or those series. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Securities of such series and supersede
the successor Trustee appointed by the Company. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Security for at least
six months may, subject to Section 5.14, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities of such series as their names and addresses appear in the
Securities Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
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Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of all amounts due to it under Section 6.7, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts, and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee, upon payment of all amounts due to it under Section 6.7, shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder with respect to the Securities of
that or those series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in paragraph
(a) or (b) of this Section, as the case may be.
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(d) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated, and in case any
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor Trustee or in
the name of such successor Trustee, and in all cases the certificate of
authentication shall have the full force which it is provided anywhere in the
Securities or in this Indenture that the certificate of the Trustee shall have.
Section 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original issue
and upon exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, and Securities so authenticated shall be entitled to
the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, or of any state or territory or
the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by federal, or state, territorial or
District of Columbia authority. If such Authenticating Agent publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
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condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent 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 Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provision of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: /s/
--------------------------------
As Trustee
By:
-----------------------------
As Authenticating Agent
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By:
-----------------------------------
Authorized Officer
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after January 15 and July 15 in
each year, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such January 1 and July 1, and
(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company 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 Trustee in its
capacity as Securities Registrar.
Section 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided in the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
Section 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture 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
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Act, the Trustee shall, within sixty days after each May 15 following the date
of this Indenture deliver to Holders a brief report, dated as of such May 15,
which complies with the provisions of such Section 313(a).
(b) If this Indenture shall have been qualified under the Trustee
Indenture Act, a copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed and also with the Commission. The Company will
promptly notify the Trustee when any Securities are listed on any stock
exchange.
Section 7.4. Reports by Company.
The Company shall file with the Trustee and with the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided in the Trust Indenture Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with
the Trustee within 15 days after the same is required to be filed with the
Commission. At any time when the Company is not subject to Section 13 or 15(d)
of the Exchange Act, upon the request of a Holder or a beneficial owner of a
Security, the Company shall promptly furnish the information specified in Rule
144A (d) (4) of the Securities Act (or any successor provision), or cause such
information to be furnished, to such Holder or beneficial owner in order to
permit compliance by such Holder or beneficial owner with Rule 144A under the
Securities Act; provided, however, that the Company shall not be required to
furnish such information at any time to a prospective purchaser located outside
the United States who is not a "U.S. person" within the meaning of Regulation S
under the Securities Act. If this Indenture shall have been qualified under the
Trustee Indenture Act, the Company also shall comply with the other provisions
of Trust Indenture Act Section 314(a). Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein, including the Company's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
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:
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(1) the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer, or which leases,
the properties and assets of the Company substantially as an entirety shall be a
corporation, partnership or trust organized and existing under the laws of the
United States of America or any State or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest (including any Additional
Interest) on all the Securities and the performance of every covenant of this
Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default, shall have happened and be continuing;
(3) in the case of the Securities of a series held by a Trust, such
consolidation, merger, conveyance, transfer or lease is permitted under the
related Declaration and Guarantee and does not give rise to any breach or
violation of the related Declaration or Guarantee; and
(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and any such supplemental indenture complies with this Article
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and the Trustee, subject to Section 6.1,
may rely upon such Officers' Certificate and Opinion of Counsel as conclusive
evidence that such transaction complies with this Section 8.1.
Section 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with Section
8.1, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein; and in the event of any such conveyance,
transfer or lease the Company shall be discharged from all obligations and
covenants under the Indenture and the Securities and may be dissolved and
liquidated.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee; and, upon the written order of such successor Person
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall make
available for delivery any Securities which previously shall have been signed
and delivered by the officers of the Company to the Trustee for authentication
pursuant to such provisions and any Securities
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which such successor Person thereafter shall cause to be signed and delivered to
the Trustee on its behalf for the purpose pursuant to such provisions. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Securities had
been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form reasonably satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and in
the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to or with
the Trustee or to surrender any right or power herein conferred upon the
Company; or
(3) to establish the form or terms of Securities of any series as permitted
by Sections 2.1 or 3.1; or
(4) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are
expressly being included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(5) to add any additional Events of Default for the benefit of the Holders
of all or any series of Securities (and if such additional Events of Default are
to be for the benefit of less than all series of Securities, stating that such
additional Events of Default are expressly being included solely for the benefit
of such series); or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall (a) become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit of
such provision or (b) not apply to any Outstanding Securities; or
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(7) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this clause (7) shall not
adversely affect the interest of the Holders of Securities of any series in any
material respect or, in the case of the Securities of a series issued to a Trust
and for so long as any of the corresponding series of Preferred Securities
issued by such Trust shall remain outstanding, the holders of such Preferred
Securities; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities of one or more series and to
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.11(b); or
(9) at such time, if any, as this Indenture is qualified under the Trust
Indenture Act, to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) except to the extent permitted by Section 3.11 or Section 3.14 or as
otherwise specified as contemplated by Section 2.1 or Section 3.1 with respect
to the deferral of the payment of interest on the Securities of any series,
change the Stated Maturity of the principal of, or any installment of interest
(including any Additional Interest) on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or reduce any premium payable
upon the redemption thereof, or reduce the amount of principal of a Discount
Security that would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 5.2, or change the place of payment where,
or the coin or currency in which, any Security or interest thereon is payable,
or impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Securities
of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
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(3) modify any of the provisions of this Section, Section 5.13 or Section
10.5, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Security affected thereby; or
(4) modify the provisions in Article XIII of this Indenture with respect to
the subordination of Outstanding Securities of any series in a manner adverse to
the Holders thereof;
provided, further, that, in the case of the Securities of a series issued to a
Trust, so long as any of the corresponding series of Preferred Securities issued
by such Trust remains outstanding, (i) no such amendment shall be made that
adversely affects the holders of such Preferred Securities in any material
respect, and no termination of this Indenture shall occur, and no waiver of any
Event of Default or compliance with any covenant under this Indenture shall be
effective, without the prior consent of the holders of at least a majority of
the aggregate liquidation amount of such Preferred Securities then outstanding
unless and until the principal (and premium, if any) of the Securities of such
series and all accrued and, subject to Section 3.7 and Section 3.11, unpaid
interest (including any Additional Interest) thereon have been paid in full and
(ii) no amendment shall be made to Section 5.8 of this Indenture that would
impair the rights of the holders of Preferred Securities provided therein
without the prior consent of the holders of each Preferred Security then
outstanding unless and until the principal (and premium, if any) of the
Securities of such series and all accrued and (subject to Section 3.7 and
Section 3.11) unpaid interest (including any Additional Interest) thereon have
been paid in full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or Preferred Securities,
or which modifies the rights of the Holders of Securities or holders of
Preferred Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities or holders of Preferred Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any supplemental
indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive, and
(subject to Section 6.1) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture, and that
all conditions precedent have been complied with. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
At such time, if any, as this Indenture is qualified under the Trust
Indenture Act, every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and made available for delivery by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest (including Additional Interest) on the Securities of that
series in accordance with the terms of such Securities and this Indenture.
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Section 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities, an office or agency where Securities of that series may be presented
or surrendered for payment and an office or agency where Securities of that
series may be surrendered for transfer or exchange and where notices and demands
to or upon the Company in respect of the Securities of that series and this
Indenture may be served. The Company initially appoints the Trustee, acting
through its Corporate Trust Office, as its agent for said purposes. The Company
will give prompt written notice to the Trustee of any change in the location of
any such office or agency. If at any time the Company shall fail to maintain
such office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in each Place of
Payment for Securities of any series for such purposes. The Company will give
prompt written notice to the Trustee of any such designation and any change in
the location of any such office or agency.
Section 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest (including Additional Interest)
on any of the Securities of such series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
(and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided, and will promptly
notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m. New York City time on each due date of the principal of or
interest (including Additional Interest) on any Securities, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest (including Additional Interest) so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal and premium (if
any) or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
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(1) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest (including Additional Interest) on Securities in
trust for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal (and
premium, if any) or interest (including Additional Interest);
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(4) at such time, if any, as this Indenture is qualified under the Trust
Indenture Act, comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by the Company or any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any)
or interest (including Additional Interest) on any Security and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be paid
on Company Request to the Company, or (if then held by the Company) shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the direction and expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of
New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each calendar year of the Company ending after the date hereof, an Officers'
Certificate, one of the signatories
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of which shall be the principal executive, principal financial or principal
accounting officer of the Company, covering the preceding calendar year, stating
whether or not to the best knowledge of the signers thereof the Company is in
default in the performance, observance or fulfillment of or compliance with any
of the terms, provisions, covenants and conditions of this Indenture, and if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge. For the purpose of this Section
10.4, compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.
Section 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, the Company may omit in any particular instance to comply with any
covenant or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with
respect to the Securities of any series, if before or after the time for such
compliance the Holders of at least a majority in principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such covenant or condition shall remain in full force and effect.
Section 10.6. Payment of Trust Costs and Expenses.
Since each Trust is being formed solely to facilitate an investment in the
Securities, the Company, in its capacity as the issuer of the Securities, hereby
covenants to pay all debts and obligations (other than with respect to the
Preferred Securities and Common Securities) and all costs and expenses of each
Trust (including, but not limited to, all costs and expenses relating to the
organization of the Trust, the fees and expenses of the Trustees and all costs
and expenses relating to the operation of the Trust) and to pay any and all
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Trust by the United States, or any other
taxing authority, so that the net amounts received and retained by the Trust and
the Property Trustee after paying such expenses will be equal to the amounts the
Trust and the Property Trustee would have received had no such costs or expenses
been incurred by or imposed on the Trust. The obligations of the Company to pay
all debts, obligations, costs and expenses of each Trust (other than with
respect to the Preferred Securities and Common Securities) shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture.
Section 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities of each
series that it shall not, and it 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
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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 or warrants, options or other rights where 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, (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) if at such time (x) there shall have
occurred any event of which the Company has actual knowledge that (A) with the
giving of notice or the lapse of time or both, would constitute an Event of
Default with respect to the Securities of such series and (B) in respect of
which the Company shall not have taken reasonable steps to cure, (y) if the
Securities of such series are held by a Trust, the Company shall be in default
with respect to its payment of any obligations under the Guarantee relating to
the Preferred Securities issued by such Trust or (z) the Company shall have
given notice of its election to begin an Extension Period with respect to the
Securities of such series as provided herein and shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be continuing.
The Company also covenants with each Holder of Securities of a series
issued to a Trust (i) to maintain directly or indirectly 100% ownership of the
Common Securities of such Trust; provided, however, that any permitted successor
of the Company hereunder may succeed to the Company's ownership of such Common
Securities, (ii) not to voluntarily terminate, wind-up or liquidate such Trust,
except (a) in connection with a distribution of the Securities of such series to
the holders of the Trust Securities of such Trust in liquidation of such Trust
or (b) in connection with certain mergers, consolidations or amalgamations
permitted by the related Declaration and (iii) to use its reasonable efforts,
consistent with the terms and provisions of such Declaration, to cause such
Trust to remain classified as a grantor trust and not an association taxable as
a corporation for United States federal income tax purposes.
Section 10.8. Calculation of Original Issue Discount.
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The Company shall file with the Trustee promptly at the end of each
calendar year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on Outstanding Securities as
of the end of such year, if any.
ARTICLE XI
REDEMPTION OF SECURITIES
Section 11.1. Applicability of This Article.
Redemption of Securities of any series (whether by operation of a sinking
fund or otherwise) as permitted or required by any form of Security issued
pursuant to this Indenture shall be made in accordance with such form of
Security and this Article; provided, however, that if any provision of any such
form of Security shall conflict with any provision of this Article, the
provision of such form of Security shall govern. Except as otherwise set forth
in the form of Security for such series, each Security of such series shall be
subject to partial redemption only in the amount of $1,000 or, in the case of
the Securities of a series issued to a Trust, $1,000, or integral multiples
thereof.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election of
the Company of the Securities, the Company shall, not less than 45 nor more than
60 days prior to the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such date and of the
principal amount of Securities of that series to be redeemed. In the case of any
redemption of Securities prior to the expiration of any restriction on such
redemption provided in the terms of such Securities, the Company shall furnish
the Trustee with an Officers' Certificate and an Opinion of Counsel evidencing
compliance with such restriction.
Section 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by lot or such other method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination) for such Security. If less than all the Securities of
such series
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and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed. If the
Company shall so direct, Securities registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Securities
selected for redemption.
Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of each series to be redeemed, each notice of
redemption shall identify the Securities to be redeemed (including CUSIP number,
if a CUSIP number has been assigned to such Securities of such Series) and shall
state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be calculated
prior to the time the notice is required to be sent, an estimate of the
Redemption Price together with a statement that it is an estimate and the actual
Redemption Price will be calculated on the third Business Day prior to the
Redemption Date (and, if such an estimate of the Redemption Price is given, a
subsequent notice shall be given as set forth above on the date that such
Redemption Price is calculated setting forth the actual Redemption Price);
(c) if less than all Outstanding Securities of such particular series and
having the same terms are to be redeemed, the identification (and, in the case
of partial redemption, the respective principal amounts) of the particular
Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price will become due and
payable upon each such Security or portion thereof, and that interest thereon,
if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
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(f) that the redemption is for a sinking fund, if such is the case; and
(g) such other provisions as may be required in respect of the terms of a
particular series of Securities.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be revocable.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, a failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.
Section 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m. New York City time on the Redemption Date specified in
the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company is
acting as its own Paying Agent, the Company will segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the Redemption
Price of, and any accrued interest (including Additional Interest) on, all the
Securities which are to be redeemed on that date.
Section 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4, the
Securities or portion of Securities shall become due and payable on the date and
at the place or places stated in such notice at the applicable Redemption Price.
On presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said Securities or the specified portions thereof shall be
paid and redeemed by the Company at the applicable Redemption Price, together
with accrued interest (including any Additional Interest) to the Redemption
Date; provided, however, that, unless otherwise specified as contemplated by
Section 3.1, installments of interest whose Stated Maturity is on or prior to
the Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
3.7.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and make available for delivery to
the Holder thereof, at the expense of the Company, a new Security or Securities
of the same series, of authorized denominations, in aggregate principal amount
equal to the unredeemed portion of the Security so presented and having the same
Original Issue Date, Stated Maturity and terms. If a Global Security is so
surrendered, such new Security will also be a new Global Security.
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If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 11.7. Right of Redemption of Securities Initially Issued to Trust.
In the case of Securities of a series initially issued to a Trust, except
as otherwise specified as contemplated by Section 3.1, the Company, at its
option, may redeem such Securities upon the occurrence and during the
continuation of a Special Event at any time within 90 days following the
occurrence and during the continuation of such Special Event, in whole (but not
in part), in each case at the Redemption Price specified in such Security,
together with accrued interest (including any Additional Interest) to the
Redemption Date.
If less than all the Securities of any such series are to be redeemed, the
aggregate principal amount of such Securities remaining Outstanding after giving
effect to such redemption shall be sufficient to satisfy any provisions of the
Declaration relating to the Trust to which such Securities were issued,
including any requirement in such Declaration as to the minimum liquidation
amount of Preferred Securities that may be held by a holder of Preferred
Securities thereunder.
ARTICLE XII
SINKING FUNDS
Section 12.1. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 3.1 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any sinking fund payment in excess of such minimum amount which is
permitted to be made by the terms of such Securities of any series is herein
referred to as an "optional sinking fund payment". If provided for by the terms
of any Securities of any series, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 12.2. Each sinking fund payment
shall be applied to the redemption of Securities of any series as provided for
by the terms of such Securities.
Section 12.2. Satisfaction of Sinking Fund Payments with Securities.
In lieu of making all or any part of a mandatory sinking fund payment with
respect to any Securities of a series in cash, the Company may at its option, at
any time no more than 16 months and no less than 30 days prior to the date on
which such sinking fund payment is due, deliver to
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the Trustee Securities of such series (together with the unmatured coupons, if
any, appertaining thereto) theretofore purchased or otherwise acquired by the
Company, except Securities of such series that have been redeemed through the
application of mandatory or optional sinking fund payments pursuant to the terms
of the Securities of such series, accompanied by a Company Order instructing the
Trustee to credit such obligations and stating that the Securities of such
series were originally issued by the Company by way of bona fide sale or other
negotiation for value; provided that the Securities to be so credited have not
been previously so credited. The Securities to be so credited shall be received
and credited for such purpose by the Trustee at the Redemption Price for such
Securities, as specified in the Securities so to be redeemed, for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
Section 12.3. Redemption of Securities for Sinking Fund.
Not less than 30 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
such Securities pursuant to the terms of such Securities, the portion thereof,
if any, which is to be satisfied by payment of cash in the currency in which the
Securities of such series are payable (except as provided pursuant to Section
3.1) and the portion thereof, if any, which is to be satisfied by delivering and
crediting Securities pursuant to Section 12.2 and will also deliver to the
Trustee any Securities to be so delivered. Such Officers' Certificate shall be
irrevocable and upon its delivery the Company shall be obligated to make the
cash payment or payments therein referred to, if any, on or before the
succeeding sinking fund payment date. In the case of the failure of the Company
to deliver such Officers' Certificate (or, as required by this Indenture, the
Securities and coupons, if any, specified in such Officers' Certificate), the
sinking fund payment due on the succeeding sinking fund payment date for such
series shall be paid entirely in cash and shall be sufficient to redeem the
principal amount of the Securities of such series subject to a mandatory sinking
fund payment without the right to deliver or credit Securities as provided in
Section 12.2 and without the right to make the optional sinking fund payment
with respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional) made in cash
plus any unused balance of any preceding sinking fund payments made with respect
to the Securities of any particular series shall be applied by the Trustee (or
by the Company if the Company is acting as its own Paying Agent) on the sinking
fund payment date on which such payment is made (or, if such payment is made
before a sinking fund payment date, on the sinking fund payment date immediately
following the date of such payment) to the redemption of Securities of such
series at the Redemption Price specified in such Securities with respect to the
sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee
(or, if the Company is acting as its own Paying Agent, segregated and held in
trust by the Company as provided in Section 10.3) for such series and together
with such payment (or such amount so segregated) shall be applied in accordance
with the provisions of this Section 12.3. Any and all sinking fund moneys with
respect to the Securities of any particular series held by the Trustee (or if
the Company is acting as its own Paying Agent, segregated and held in trust as
provided in Section 10.3) on the last sinking fund
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payment date with respect to Securities of such series and not held for the
payment or redemption of particular Securities of such series shall be applied
by the Trustee (or by the Company if the Company is acting as its own Paying
Agent), together with other moneys, if necessary, to be deposited (or
segregated) sufficient for the purpose, to the payment of the principal of the
Securities of such series at Maturity. The Trustee shall select the Securities
to be redeemed upon such sinking fund payment date in the manner specified in
Section 11.3 and cause notice of the redemption thereof to be given in the name
of and at the expense of the Company in the manner provided in Section 11.4.
Such notice having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Section 11.6. On or before each
sinking fund payment date, the Company shall pay to the Trustee (or, if the
Company is acting as its own Paying Agent, the Company shall segregate and hold
in trust as provided in Section 10.3) in cash a sum in the currency in which
Securities of such series are payable (except as provided pursuant to Section
3.1) equal to the principal and any interest accrued to the Redemption Date for
Securities or portions thereof to be redeemed on such sinking fund payment date
pursuant to this Section 12.3.
Neither the Trustee nor the Company shall redeem any Securities of a series
with sinking fund moneys or mail any notice of redemption of Securities of such
series by operation of the sinking fund for such series during the continuance
of a default in payment of interest, if any, on any Securities of such series or
of any Event of Default (other than an Event of Default occurring as a
consequence of this paragraph) with respect to the Securities of such series,
except that if the notice of redemption shall have been provided in accordance
with the provisions hereof, the Trustee (or the Company, if the Company is then
acting as its own Paying Agent) shall redeem such Securities if cash sufficient
for that purpose shall be deposited with the Trustee (or segregated by the
Company) for that purpose in accordance with the terms of this Article XII.
Except as aforesaid, any moneys in the sinking fund for such series at the time
when any such default or Event of Default shall occur and any moneys thereafter
paid into such sinking fund shall, during the continuance of such default or
Event of Default, be held as security for the payment of the Securities and
coupons, if any, of such series; provided, however, that in case such default or
Event of Default shall have been cured or waived herein, such moneys shall
thereafter be applied on the next sinking fund payment date for the Securities
of such series on which such moneys may be applied pursuant to the provisions of
this Section 12.3.
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ARTICLE XIII
SUBORDINATION OF SECURITIES
Section 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and premium, if any) and interest (including any Additional Interest) on
each and all of the Securities are hereby expressly made subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness.
Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Company (each such event, if any,
herein sometimes referred to as a "Proceeding"), then the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due or
to become due on such Senior Indebtedness before the Holders of the Securities
are entitled to receive or retain any payment or distribution of any kind or
character, whether in cash, property or securities (including any payment or
distribution which may be payable or deliverable by reason of the payment of any
other obligations of the Company (including any series of the Securities)
subordinated to the payment of the Securities, such payment or distribution
being hereinafter referred to as a "Junior Subordinated Payment"), on account of
principal of (or premium, if any) or interest (including any Additional
Interest) on the Securities or on account of the purchase or other acquisition
of Securities by the Company or any Subsidiary and to that end the holders of
Senior Indebtedness shall be entitled to receive, for application to the payment
thereof, any payment or distribution of any kind or character, whether in cash,
property or securities, including any Junior Subordinated Payment, which may be
payable or deliverable in respect of the Securities in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any Junior Subordinated
Payment, before all amounts due or to become due on all Senior Indebtedness are
paid in full or payment thereof is provided for in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Indebtedness, and if
such fact shall, at or prior to the time of such payment or distribution, have
been made known to the Trustee or, as the case may be, such Holder, then and in
such event such payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Company for application to the payment of all amounts due or to
become due on all Senior Indebtedness remaining unpaid, to the extent necessary
to pay all amounts due or to become due on all Senior Indebtedness in full,
after
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giving effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness.
For purposes of this Article only, the words "any payment or distribution
of any kind or character, whether in cash, property or securities" shall not be
deemed to include shares of stock of the Company as reorganized or readjusted,
or securities of the Company or any other corporation provided for by a plan of
reorganization or readjustment which securities are subordinated in right of
payment to all then outstanding Senior Indebtedness to substantially the same
extent as the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person upon the terms and conditions set forth in Article VIII shall not be
deemed a Proceeding for the purposes of this Section if the Person formed by
such consolidation or into which the Company is merged or the Person which
acquires by sale such properties and assets as an entirety, as the case may be,
shall, as a part of such consolidation, merger, or sale comply with the
conditions set forth in Article VIII.
Section 13.3. Prior Payment to Senior Indebtedness Upon Acceleration of
Securities.
In the event that any Securities are declared due and payable before their
Stated Maturity, then and in such event the holders of the Senior Indebtedness
outstanding at the time such Securities so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Indebtedness (including any amounts due upon acceleration) before the
Holders of the Securities are entitled to receive any payment or distribution of
any kind or character, whether in cash, properties or securities (including any
Junior Subordinated Payment) by the Company on account of the principal of (or
premium, if any) or interest (including any Additional Interest) on the
Securities or on account of the purchase or other acquisition of Securities by
the Company or any Subsidiary; provided, however, that nothing in this Section
shall prevent the satisfaction of any sinking fund payment in accordance with
this Indenture or as otherwise specified as contemplated by Section 3.1 for the
Securities of any series by delivering and crediting pursuant to Section 12.2 or
as otherwise specified as contemplated by Section 3.1 for the Securities of any
series Securities which have been acquired (upon redemption or otherwise) prior
to such declaration of acceleration.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 13.2 would be applicable.
Section 13.4. No Payment When Senior Indebtedness in Default.
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(a) In the event and during the continuation of any default in the payment
of principal of (or premium, if any) or interest on any Senior Indebtedness, or
in the event that any event of default with respect to any Senior Indebtedness
shall have occurred and be continuing and shall have resulted in such Senior
Indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, unless and until such
event of default shall have been cured or waived or shall have ceased to exist
and such acceleration shall have been rescinded or annulled, or (b) in the event
any judicial proceeding shall be pending with respect to any such default in
payment or such event or default, then no payment or distribution of any kind or
character, whether in cash, properties or securities (including any Junior
Subordinated Payment) shall be made by the Company on account of principal of
(or premium, if any) or interest (including any Additional Interest), if any, on
the Securities or on account of the purchase or other acquisition of Securities
by the Company or any Subsidiary, in each case unless and until all amounts due
or to become due on such Senior Indebtedness are paid in full; provided,
however, that nothing in this Section shall prevent the satisfaction of any
sinking fund payment in accordance with this Indenture or as otherwise specified
as contemplated by Section 3.1 for the Securities of any series by delivering
and crediting pursuant to Section 12.2 or as otherwise specified as contemplated
by Section 3.1 for the Securities of any series Securities which have been
acquired (upon redemption or otherwise) prior to such default in payment or
event of default.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 13.2 would be applicable.
Section 13.5. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time except during the
pendency of any Proceeding referred to in Section 13.2 or under the conditions
described in Sections 13.3 and 13.4, from making payments at any time of
principal of (and premium, if any) or interest (including Additional Interest)
on the Securities, or (b) the application by the Trustee of any money deposited
with it hereunder to the payment of or on account of the principal of (and
premium, if any) or interest (including any Additional Interest) on the
Securities or the retention of such payment by the Holders, if, at the time of
such application by the Trustee, a Responsible Officer of the Trustee did not
have actual knowledge that such payment would have been prohibited by the
provisions of this Article.
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Section 13.6. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on all
Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company which by its express terms is subordinated to
Senior Indebtedness of the Company to substantially the same extent as the
Securities are subordinated to the Senior Indebtedness and is entitled to like
rights of subrogation by reason of any payments or distributions made to holders
of such Senior Indebtedness) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of the Senior Indebtedness of any cash, property
or securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by Holders of the Securities or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the Company to or on
account of the Senior Indebtedness.
Section 13.7. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article or elsewhere in this Indenture or in the Securities is intended to
or shall (a) impair, as between the Company and the Holders of the Securities,
the obligations of the Company, which are absolute and unconditional, to pay to
the Holders of the Securities the principal of (and premium, if any) and
interest (including any Additional Interest) on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) affect
the relative rights against the Company of the Holders of the Securities and
creditors of the Company other than their rights in relation to the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture including, without limitation, filing and voting claims in
any Proceeding, subject to the rights, if any, under this Article of the holders
of Senior Indebtedness to receive cash, property and securities otherwise
payable or deliverable to the Trustee or such Holder.
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Section 13.8. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her behalf to take such action as may be necessary
or appropriate to acknowledge or effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
Section 13.9. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
Section 13.10. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least two Business Days
prior to the date upon which by the terms hereof any monies may become payable
for any purpose (including, without limitation, the payment of the principal of
(and premium, if any) or interest (including any Additional Interest) on any
Security), then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such monies
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and to apply the same to the purpose for which they were received and shall not
be affected by any notice to the contrary which may be received by it within two
Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Indebtedness (or a trustee therefor) to establish that
such notice has been given by a holder of Senior Indebtedness (or a trustee
therefor). In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Section 13.11. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee for the benefit of creditors, agent or other Person
making such payment or distribution, delivered to the Trustee or to the Holders
of Securities, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article.
Section 13.12. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holders if it shall in good faith mistakenly pay over
or distribute to Holders of Securities or to the Company or to any other Person
cash, property or securities to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article or otherwise. With respect to the holders
of Senior Indebtedness, the Trustee undertakes to perform or to observe only
such of its covenants or obligations as are specifically set forth in this
Article and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
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Section 13.13. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.7.
Section 13.14. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee.
Section 13.15. Certain Conversions or Exchanges Deemed Payment.
For the purposes of this Article only, (a) the issuance and delivery of
junior securities upon conversion or exchange of Securities shall not be deemed
to constitute a payment or distribution on account of the principal of (or
premium, if any) or interest (including any Additional Interest) on Securities
or on account of the purchase or other acquisition of Securities, and (b) the
payment, issuance or delivery of cash, property or securities (other than junior
securities) upon conversion or exchange of a Security shall be deemed to
constitute payment on account of the principal of such security. For the
purposes of this Section, the term "junior securities" means (i) shares of any
stock of any class of the Company and (ii) securities of the Company which are
subordinated in right of payment to all Senior Indebtedness which may be
outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article.
Section 13.16. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from
money held in trust under Article IV by the Trustee for the payment of principal
of, premium, if any, and interest on the Securities shall not be subordinated to
the prior payment of any Senior Indebtedness of the Company or subject to the
restrictions set forth in this Article XIII and none of the Holders or the
Trustee shall be obligated to pay over any such amount to the Company or any
holder of Senior Indebtedness of the Company or any other creditor of the
Company.
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* * * *
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.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
THE FIRST AMERICAN FINANCIAL CORPORATION
By: /s/ THOMAS A. KLEMENS
-------------------------------------
Name: Thomas A. Klemens
Title: Executive Vice President and
Chief Financial Officer
WILMINGTON TRUST COMPANY
as Trustee
By: /s/ EMMETT R. HARMON
-------------------------------------
Name: Emmett R. Harmon
Title: Vice President
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EXHIBIT A
Transferee Letter of Representation
The First American Financial Corporation
Wilmington Trust Company, as Trustee
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the ________% Junior Subordinated Debentures (the
"Restricted Securities") of The First American Financial Corporation
("Company").
Upon transfer, the Securities would be registered in the name of the
new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" within the meaning
of Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional
Accredited Investor") that is purchasing Restricted Securities with a principal
amount of at least $100,000, and if the Restricted Securities are to be
purchased for one or more accounts ("investor accounts") for which we are acting
as fiduciary or agent, each such account is an Institutional Accredited Investor
that is purchasing Restricted Securities with a principal amount of at least
$100,000. In the normal course of our business, we invest in or purchase
securities similar to the Restricted Securities and we have such knowledge and
experience in financial business matters as to be capable of evaluating the
merits and risks of purchasing the Restricted Securities. We are aware that we
(or any investor account) may be required to bear the economic risk of an
investment in the Restricted Securities for an indefinite period of time and we
are (or such account is) able to bear such risk for an indefinite period.
2. We acknowledge that none of the Company or the Initial Purchasers
(as defined in the Offering Memorandum), or any person representing the Company
or the Initial Purchasers, has made any representation to us with respect to the
Company or the offering of the
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89
Restricted Securities, other than the Offering Memorandum dated April , 1997
(the "Offering Memorandum"), a copy of which has been delivered to us and upon
which we are relying in making our investment decision with respect to the
Restricted Securities. Accordingly, we acknowledge that no representation or
warranty is made by the Initial Purchasers as to the accuracy or completeness of
such materials. We have had access to such financial and other information
concerning the Company and the Restricted Securities as we deemed necessary in
connection with our decision to purchase the Restricted Securities, including an
opportunity to ask questions and request information from the Company and the
Initial Purchasers. We acknowledge that we have read and agreed to the matters
stated under the caption "Transfer Restrictions" in such Offering Memorandum and
the restrictions on duplication and circulation of such Offering Memorandum.
3. We understand that any subsequent transfer of the Restricted
Securities is subject to certain restrictions and conditions set forth in the
Offering Memorandum under the caption "Transfer Restrictions" and we agree to be
bound by, and not to resell, pledge or otherwise transfer the Restricted
Securities except in compliance with such restrictions and conditions and the
Securities Act of 1933, as amended (the "Securities Act").
4. We understand and hereby acknowledge that prior to the
effectiveness of a registration statement filed with the Securities and Exchange
Commission relating to the Restricted Securities, the Restricted Securities have
not been registered under the Securities Act, and may not be sold except as
permitted in the following sentence. We agree to offer, sell or otherwise
transfer such Restricted Securities prior to the date which is two years after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Restricted Securities (or
any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to
the Company, (b) pursuant to a registration statement which has been declared
effective under the Securities Act, (c) for so long as the Restricted Securities
are eligible for resale pursuant to Rule 144A under the Securities Act, to a
person we reasonable believe is qualified institutional buyer under Rule 144A
("QIB") that purchases for its own account or for the account of a QIB to whom
notice is given that the transfer is being made in reliance on Rule 144A, (d)
outside the United States in a transaction meeting the requirements of Rule 904
of Regulation S under the Securities Act or (e) pursuant to any other available
exemption from the registration requirements of the Securities Act, and, in each
case, in accordance with the applicable securities laws of any state of the
United States or any other applicable jurisdiction and subject to any
requirement of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control. The
foregoing restriction on resale will not apply subsequent to the Resale
Restriction Termination Date. We acknowledge that the Company and the Trustee
reserve the right prior to any offer, sale or other transfer prior to the Resale
Restriction Termination Date of the Restricted Securities pursuant to clause (d)
or (e) above to require the delivery of an opinion of counsel, certifications or
other information acceptable to the Company and the Trustee in form and
substance. We acknowledge that the Restricted Securities purchased by us will
be in the form of definitive physical certificates and will bear a legend
reflecting the substance of this paragraph 4.
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90
5. Prior to any proposed transfer of the Restricted Securities
(other than pursuant to an effective registration statement) occurring before
the Resale Restriction Termination Date, we must check the appropriate box set
forth on the reverse of the certificate(s) evidencing such Restricted Securities
relating to the manner of such transfer and submit such certificate(s) to the
Property Trustee. We understand that the Trustee will not be required to accept
any Restricted Securities for registration of transfer, except upon presentation
of evidence satisfactory to the Company and to the Trustee that the foregoing
restrictions on transfer have been complied with.
6. We are acquiring the Restricted Securities for our own account or
for one or more accounts (each of which is an "institutional accredited
investor") as to each of which we exercise sole investment discretion.
7. We are not acquiring the Restricted Securities with a view to, or
for offer or sale in connection with, any Distribution in violation of the
Securities Act.
8. We shall provide to any person purchasing any Restricted
Securities from us a notice advising such purchaser that transfers of the
Restricted Securities are restricted as set forth herein.
We acknowledge that you and others will rely upon our confirmations,
acknowledgments and agreements set forth herein, and we agree to notify you
promptly in writing if any of our representations or warranties herein ceases to
be accurate and complete. You are irrevocably authorized to produce this letter
or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW.
TRANSFEREE:_____________________
BY______________________________
<PAGE>
EXHIBIT 4.3
Composite Conformed Copy
- --------------------------------------------------------------------------------
AMENDED AND RESTATED DECLARATION OF TRUST
First American Capital Trust I
Dated as of April 22, 1997
- --------------------------------------------------------------------------------
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TABLE OF CONTENTS
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ARTICLE 1
INTERPRETATION AND DEFINITIONS.......................... 1
Section 1.1 Interpretation and Definitions................................ 1
Affiliate.......................................................... 2
Authorized Officer................................................. 2
Bankruptcy Event................................................... 2
Business Day....................................................... 3
Business Trust Act................................................. 3
Capital Security................................................... 3
Capital Securities Beneficial Owner................................ 3
Capital Securities Certificate..................................... 3
Certificate........................................................ 3
Certificate of Trust............................................... 3
Closing Date....................................................... 3
Code............................................................... 3
Commission......................................................... 4
Common Securities Holder........................................... 4
Common Security.................................................... 4
Common Security Certificate........................................ 4
Capital Securities................................................. 4
Distribution Date.................................................. 4
Corporate Trust Office............................................. 4
Covered Person..................................................... 4
Debenture Issuer................................................... 4
Debenture Issuer Indemnified Person................................ 4
Debenture Trustee.................................................. 4
Debentures......................................................... 4
Delaware Trustee................................................... 5
Depositary......................................................... 5
Distribution....................................................... 5
DTC................................................................ 5
Exchange Act....................................................... 5
Exchange Offer..................................................... 5
Fiduciary Indemnified Person....................................... 5
Fiscal Year........................................................ 5
Global Security.................................................... 5
Guarantee.......................................................... 5
Holder............................................................. 5
Indemnified Person................................................. 5
Indenture.......................................................... 5
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Indenture Event of Default....................................... 5
Initial Purchasers............................................... 6
Institutional Accredited Investor................................ 6
Investment Company............................................... 6
Investment Company Act........................................... 6
Investment Company Event......................................... 6
Legal Action..................................................... 6
Liquidation Date................................................. 6
List of Holders.................................................. 6
Majority in Liquidation Amount................................... 6
New Capital Securities........................................... 6
Officers' Certificate............................................ 6
Paying Agent..................................................... 7
Payment Amount................................................... 7
Person........................................................... 7
Private Placement Legend......................................... 7
Property Account................................................. 7
Property Trustee................................................. 7
Pro Rata......................................................... 7
Qualified Institutional Buyer.................................... 7
Quorum........................................................... 7
Redemption Price................................................. 7
Registration Rights Agreement.................................... 7
Regular Trustee.................................................. 8
Regulation S..................................................... 8
Related Party.................................................... 8
Responsible Officer.............................................. 8
Capital Securities............................................... 8
Restricted Global Security....................................... 8
Restricted Security.............................................. 8
Rule 144A........................................................ 8
Securities....................................................... 8
Securities Act................................................... 8
Security Register................................................ 8
Security Registrar............................................... 8
Special Event.................................................... 8
Sponsor.......................................................... 8
Successor Delaware Trustee....................................... 8
Successor Entity................................................. 9
Successor Property Trustee....................................... 9
Successor Securities............................................. 9
Super Majority................................................... 9
Tax Event........................................................ 9
10% in Liquidation Amount........................................ 9
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Transfer Restricted Securities................................... 9
Treasury Regulations............................................. 9
Trust Enforcement Event.......................................... 9
Trust Indenture Act.............................................. 9
Trustee" or "Trustees............................................ 10
Trustees' Authorization Certificate.............................. 10
ARTICLE 2
TRUST INDENTURE ACT........................... 10
Section 2.1 Trust Indenture Act; Application......................... 10
Section 2.2 Lists of Holders of Securities........................... 10
Section 2.3 Reports by the Property Trustee.......................... 11
Section 2.4 Periodic Reports to the Property Trustee................. 11
Section 2.5 Evidence of Compliance with Conditions Precedent......... 11
Section 2.6 Trust Enforcement Events; Waiver......................... 11
Section 2.7 Trust Enforcement Event; Notice.......................... 13
ARTICLE 3
ORGANIZATION............................... 14
Section 3.1 Name and Organization.................................... 14
Section 3.2 Office................................................... 14
Section 3.3 Purpose.................................................. 14
Section 3.4 Authority................................................ 14
Section 3.5 Title to Property of the Trust........................... 15
Section 3.6 Powers and Duties of the Regular Trustees................ 15
Section 3.7 Prohibition of Actions by the Trust and the Trustees..... 18
Section 3.8 Powers and Duties of the Property Trustee................ 19
Section 3.9 Certain Duties and Responsibilities of the Property
Trustee.................................................. 21
Section 3.10 Certain Rights of Property Trustee....................... 23
Section 3.11 Delaware Trustee......................................... 25
Section 3.12 Execution of Documents................................... 25
Section 3.13 Not Responsible for Recitals or Issuance of Securities... 26
Section 3.14 Duration of Trust........................................ 26
Section 3.15 Mergers.................................................. 26
Section 3.16 Property Trustee May File Proofs of Claim................ 28
ARTICLE 4
SPONSOR................................. 28
Section 4.1 Responsibilities of the Sponsor.......................... 28
Section 4.2 Indemnification and Expenses of the Trustee.............. 29
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ARTICLE 5
TRUST COMMON SECURITIES HOLDER..................... 29
Section 5.1 Debenture Issuer's Purchase of Common Securities........ 29
Section 5.2 Covenants of the Common Securities Holder............... 30
ARTICLE 6
TRUSTEES................................. 30
Section 6.1 Number of Trustees...................................... 30
Section 6.2 Delaware Trustee........................................ 30
Section 6.3 Property Trustee; Eligibility........................... 31
Section 6.4 Certain Qualifications of Regular Trustees
and Delaware Trustee Generally.......................... 32
Section 6.5 Initial Trustees........................................ 32
Section 6.6 Appointment, Removal and Resignation of Trustees........ 32
Section 6.7 Vacancies among Trustees................................ 33
Section 6.8 Effect of Vacancies..................................... 34
Section 6.9 Meetings................................................ 34
Section 6.10 Delegation of Power..................................... 34
Section 6.11 Merger, Conversion, Consolidation or Succession to
Business................................................ 35
ARTICLE 7
THE SECURITIES.............................. 35
Section 7.1 General Provisions Regarding Securities.................. 35
Section 7.2 Distributions............................................ 37
Section 7.3 Redemption of Securities................................. 38
Section 7.4 Redemption Procedures.................................... 38
Section 7.5 Voting Rights of Capital Securities...................... 40
Section 7.6 Voting Rights of Common Securities....................... 42
Section 7.7 Paying Agent............................................. 43
Section 7.8 Transfer of Securities................................... 44
Section 7.9 Mutilated, Destroyed, Lost or Stolen Certificates........ 45
Section 7.10 Deemed Security Holders.................................. 45
Section 7.11 Form and Dating.......................................... 46
Section 7.12 Transfer Procedures and Restrictions..................... 47
Section 7.13 CUSIP Numbers............................................ 54
ARTICLE 8
DISSOLUTION AND TERMINATION OF TRUST................... 55
Section 8.1 Terminating Events....................................... 55
Section 8.2 Termination.............................................. 55
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Section 8.3 Liquidation............................................. 55
ARTICLE 9
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS............ 57
Section 9.1 Liability............................................... 57
Section 9.2 Exculpation............................................. 57
Section 9.3 Fiduciary Duty.......................................... 58
Section 9.4 Indemnification......................................... 59
Section 9.5 Outside Businesses...................................... 61
ARTICLE 10
ACCOUNTING.............................. 61
Section 10.1 Fiscal Year............................................ 61
Section 10.2 Certain Accounting Matters............................. 62
Section 10.3 Banking................................................ 62
Section 10.4 Withholding............................................ 62
ARTICLE 11
AMENDMENTS AND MEETINGS........................ 63
Section 11.1 Amendments............................................. 63
Section 11.2 Meetings of the Holders of Securities; Action by
Written Consent........................................ 65
ARTICLE 12
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE.......................... 66
Section 12.1 Representations and Warranties of the Property Trustee. 66
Section 12.2 Representations and Warranties of the Delaware Trustee. 67
ARTICLE 13
MISCELLANEOUS............................. 68
Section 13.1 Notices................................................ 68
Section 13.2 Governing Law.......................................... 69
Section 13.3 Intention of the Parties............................... 69
Section 13.4 Headings............................................... 69
Section 13.5 Successors and Assigns................................. 69
Section 13.6 Partial Enforceability................................. 69
Section 13.7 Counterparts........................................... 70
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EXHIBITS
Exhibit A Capital Security Certificate
Exhibit B Common Security Certificate
Exhibit C Trustee's Authorization Certificate
vi
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated as of
April 22, 1997 among The First American Financial Corporation, a California
corporation, as Sponsor, and Thomas A. Klemens and Parker S. Kennedy, the
initial Regular Trustees, Wilmington Trust Company, as the initial Property
Trustee and Wilmington Trust Company, as the initial Delaware Trustee, not in
their individual capacities but solely as Trustees, and the holders, from time
to time, of undivided beneficial ownership interests in the assets of Trust to
be issued pursuant to this Declaration.
WHEREAS, the Delaware Trustee, Thomas A. Klemens and the Sponsor
established First American Capital Trust I (the "Trust"), a business trust under
the Business Trust Act pursuant to a Declaration of Trust dated as of April 11,
1997 (the "Original Declaration") and a Certificate of Trust (the "Certificate
of Trust") filed with the Secretary of State of the State of Delaware on April
11, 1997; and
WHEREAS, the sole purpose of the Trust shall be to issue and sell certain
securities representing undivided beneficial ownership interests in the assets
of the Trust, to invest the gross proceeds from such sales in the Debentures
issued by the Debenture Issuer and to engage in only those activities necessary
or incidental thereto; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto that the Trust
constitute a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of the Trust, the Trustees
hereby declare that all assets contributed to the Trust be held in trust for the
benefit of the Holders, from time to time, of the Securities representing
undivided beneficial ownership interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I.
INTERPRETATION AND DEFINITIONS
Section A. Interpretation and Definitions.
Unless the context otherwise requires:
1. capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
<PAGE>
2
2. a term defined anywhere in this Declaration has the same meaning
throughout;
3. all references to "this Declaration" are to this Declaration as
modified, supplemented or amended from time to time;
4. all references in this Declaration to Articles, Sections and
Exhibits are to Articles, Sections and Exhibits of this Declaration unless
otherwise specified;
5. a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires;
6. a reference to the singular includes the plural and vice versa and
a reference to any gender form of a term shall include the other form of a
term, as applicable;
7. all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder shall mean such
accounting principles which are generally accepted at the date or time of
such computation; provided, that when two or more principles are so
generally accepted, it shall mean that set of principles consistent with
those in use by the applicable Person;
8. the words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation"; and
9. the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is expressly
authorized by such Person to bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication
or composition of or in respect of such Person under any applicable federal
or state bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee,
<PAGE>
3
trustee, sequestrator (or other similar official) of such Person or of any
substantial part of its property or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or similar official) of such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due and its willingness to be adjudicated a
bankrupt, or the taking of corporate action by such Person in furtherance
of any such action.
"Business Day" means 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 corporate trust office of
the Debenture Trustee, under the Indenture, is closed for business.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.
"Capital Security" has the meaning specified in Section 7.1.
"Capital Security Beneficial Owner" means each Person who is the
beneficial owner of an interest in a Global Security as reflected in the records
of the Depositary or, if a Depositary participant is not the beneficial owner,
then as reflected in the records of a Person maintaining an account with the
Depositary (directly or indirectly, in accordance with the rules of the
Depositary).
"Capital Security Certificate" means a certificate evidencing
ownership of a Capital Security, substantially in the form attached as Exhibit
A.
"Certificate" means a Common Security Certificate or a Capital
Security Certificate.
"Certificate of Trust" has the meaning specified in the recitals
hereto.
<PAGE>
4
"Closing Date" means the date on which the Capital Securities are
issued and sold.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Securities Holder" means The First American Financial
Corporation in its capacity as purchaser and holder of all of the Common
Securities issued by the Trust.
"Common Security" has the meaning specified in Section 7.1
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security, substantially in the form
attached as Exhibit B.
"Compounded Distribution" has the meaning specified in Section 7.2(a).
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at Rodney Square North, 1100 North
Market Street, Wilmington, DE 19890-0001 Attention: Corporate Trust
Administration.
"Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder.
"Debenture Issuer" means The First American Financial Corporation in
its capacity as issuer of the Debentures under the Indenture.
"Debenture Issuer Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees or agents of any Regular Trustee or
any Affiliate thereof; or (d) any officer, employee or agent of the Trust or its
Affiliates.
<PAGE>
5
"Debenture Trustee" means Wilmington Trust Company, in its capacity as
trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"Debentures" means the Securities (as defined in the Indenture) to be
issued by the Debenture Issuer and to be held by the Property Trustee.
"Definitive Capital Securities" has the meaning specified in Section
7.11(c).
"Delaware Trustee" has the meaning set forth in Section 6.2.
"Depositary" means, with respect to Securities issuable in whole or in
part in the form of one or more Global Securities, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such
Securities.
"Distribution" means a distribution payable to Holders in accordance
with Section 7.2.
"Distribution Date" means the date on which Distributions are made to
Holders in accordance with Section 7.2.
"DTC" means The Depository Trust Company, the initial Depositary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Exchange Agent" has the meaning specified in Section 7.7.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement.
"Fiduciary Indemnified Person" has the meaning set forth in Section
9.4(b).
"Fiscal Year" has the meaning set forth in Section 10.1.
"Global Security" means a Security, ownership and transfers of which
shall be made through book entries by the Depositary as described in Section
7.11.
"Guarantee" means the guarantee agreement of the Sponsor in respect of
the Capital Securities and the Common Securities.
"Holder" means a Person in whose name a Certificate is registered,
such Person being a beneficial owner within the meaning of the Business Trust
Act; provided, however, that in determining whether the Holders of the requisite
liquidation amount of Capital
<PAGE>
6
Securities have voted on any matter provided for in this Declaration, then for
the purpose of such determination only (and not for any other purpose
hereunder), if the Capital Securities remain in the form of one or more Global
Securities, the term "Holders" shall mean the holder of the Global Security
acting at the direction of the Capital Security Beneficial Owners.
"Indemnified Person" means a Debenture Issuer Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Junior Subordinated Indenture dated as of April
22, 1997, among the Debenture Issuer and the Debenture Trustee, and any
indenture supplemental thereto pursuant to which the Debentures are to be
issued.
"Indenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Initial Purchasers" means Chase Securities Inc. and UBS Securities
LLC.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as the term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Investment Company" means an investment company as defined in the
Investment Company Act and the regulations promulgated thereunder.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"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, which Change in 1940 Act Law becomes effective on or after
the date of original issuance of the Capital Securities.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Liquidation Date" has the meaning specified in Section 8.3(a).
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount" means, except as provided in the
terms of the Capital Securities or by 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
<PAGE>
7
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.
"New Capital Securities" has the meaning specified in Section 7.1.
"Officers' Certificate" means, with respect to any Person (other than
Regular Trustees who are natural persons), a certificate signed by any
Authorized Officer of such Person on behalf of such Person. Any Officers'
Certificate delivered by the Trust shall be signed by at least one Regular
Trustee. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Declaration 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 on behalf of such Person in
rendering the Officers' Certificate;
(c) a statement that each such 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 such officer and
on behalf of such Person, such condition or covenant has been complied
with.
The term "Officers' Certificate", when used with reference to Regular
Trustees who are natural persons shall mean a certificate signed by two of the
Regular Trustees which otherwise satisfies the foregoing requirements.
"Paying Agent" has the meaning specified in Section 7.7.
"Payment Amount" has the meaning specified in Section 7.2(a).
"Person" or "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.
"Private Placement Legend" has the meaning specified in Section
7.12(i).
"Property Account" has the meaning specified in Section 3.8(c).
<PAGE>
8
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3.
"Pro Rata" means pro rata to each Holder according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in
Rule 144A under the Securities Act.
"Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.
"Redemption Price" has the meaning specified in Section 7.3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the date hereof between the Sponsor, the Trust and the Initial
Purchasers for the benefit of themselves and the Holders as the same may be
amended from time to time in accordance with the terms thereof.
"Regular Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.
"Regulation S" means Regulation S under the Securities Act or any
successor regulation thereto.
"Related Party" means, with respect to the Sponsor, any direct or
wholly owned subsidiary of the Sponsor or any Person that owns, directly or
indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee with direct
responsibility for the administration of this Declaration and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Restricted Definitive Capital Securities" has the meaning specified
in Section 7.11(c).
"Restricted Global Security" means any Global Security or Global
Securities evidencing Securities that are to be traded pursuant to Rule 144A.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) of the Securities Act.
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"Rule 144A" means Rule 144A under the Securities Act or any successor
rule thereunder.
"Securities" means the Common Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"Securities Register" has the meaning specified in Section 7.7.
"Security Registrar and Securities Registrar" each has the meaning
specified in Section 7.7.
"Special Event" means an Investment Company Event or a Tax Event.
"Sponsor" means The First American Financial Corporation, a California
corporation, or any successor entity in a merger, consolidation or amalgamation,
in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning specified in Section
6.6(b).
"Successor Entity" has the meaning specified in Section 3.15(b)(i).
"Successor Property Trustee" has the meaning specified in Section
6.6(b).
"Successor Securities" has the meaning specified in Section
3.15(b)(i)b.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" means the receipt by the Sponsor 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 the Closing Date,
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 the United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Debenture Issuer on the Debentures is not, or within 90
days of the date of such opinion, will not be deductible by the Debenture
Issuer, 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 such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
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10
"10% in Liquidation Amount" means, except as provided in the terms of
the Capital Securities or by 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 10% or
more 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.
"Transfer Restricted Securities" has the meaning specified in Section
7.1.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Enforcement Event" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in respect of the
Debentures.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trustees' Authentication Order" means a written certificate, in the
form attached as Exhibit C hereto, signed by the Sponsor for the purpose of
establishing the terms and form of the Capital Securities and the Common
Securities as determined by the Regular Trustees.
ARTICLE II.
TRUST INDENTURE ACT
Section A. Trust Indenture Act; Application.
1. At such time, if any, as this Declaration is qualified under the
Trust Indenture Act, this Declaration will be subject to the provisions of the
Trust Indenture Act that are required to be part of this Declaration and shall,
to the extent applicable, be governed by such provisions.
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11
2. The Property Trustee shall be the only Trustee, which, at such
time, if any, as this Declaration is qualified under the Trust Indenture Act, is
the "Trustee" for the purposes of the Trust Indenture Act.
3. At such time, if any, as this Declaration is qualified under the
Trust Indenture Act, if and to the extent that any provision of this Declaration
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
4. The application of the Trust Indenture Act to this Declaration
shall not affect the Trust's classification as a grantor trust for United States
Federal income tax purposes and shall not affect the nature of the Securities as
equity securities representing undivided beneficial ownership interests in the
assets of the Trust.
Section B. Lists of Holders of Securities.
1. Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee with a list, in such form as the
Property Trustee may reasonably require, of the names and 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 and as of January 1 and July 1
and (ii) at any other time, within 30 days of receipt by the Trust of a written
request from the Property Trustee for a List of Holders as of a date no more
than 15 days before such List of Holders is given to the Property Trustee;
provided that neither the Sponsor nor the Regular Trustees on behalf of the
Trust shall be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Property Trustee by the Sponsor and the Regular Trustees on behalf of the Trust.
The Property Trustee shall preserve, in as current a form as is reasonably
practicable, all information contained in Lists of Holders given to it or which
it receives in the capacity as Paying Agent (if acting in such capacity),
provided that the Property Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
2. The Property Trustee shall comply with its obligations under, and
shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the
Trust Indenture Act.
Section C. Reports by the Property Trustee.
Within 60 days after May 15 of each year (commencing in the year of
the first anniversary of the issuance of the Capital Securities), the Property
Trustee shall provide to the Holders of the Capital Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
Section D. Periodic Reports to the Property Trustee.
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12
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
are required by Section 314 of the Trust Indenture Act (if any) 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.
Section E. Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration 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) of the Trust Indenture Act may be given in the form of an Officers'
Certificate.
Section F. Trust Enforcement Events; Waiver.
1. The Holders of a Majority in Liquidation Amount of the Capital
Securities may, by vote or written consent, on behalf of the Holders of all of
the Capital Securities, waive any past Trust Enforcement Event in respect of the
Capital Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
a. is not waivable under the Indenture, the Trust Enforcement
Event under this Declaration shall also not be waivable; or
b. requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures (a "Super Majority") to
be waived under the Indenture, the Trust Enforcement Event under this
Declaration may only be waived by the vote or written consent of the
Holders of at least the proportion in aggregate liquidation amount of the
Capital Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any
such default shall cease to exist, and any Trust Enforcement Event with respect
to the Capital Securities arising therefrom shall be deemed to have been cured,
for every purpose of this Declaration and the Capital Securities, but no such
waiver shall extend to any subsequent or other Trust Enforcement Event with
respect to the Capital Securities or impair any right consequent thereon. Any
waiver by the Holders of the Capital Securities of a Trust Enforcement Event
with respect to the Capital Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Trust Enforcement
Event with respect to the Common Securities for all purposes of this Declaration
without any further act, vote, or consent of the Holders of the Common
Securities.
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13
2. The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote or written consent, on behalf of the Holders of all of
the Common Securities, waive any past Trust Enforcement Event in respect of the
Common Securities and its consequences, provided that, if the underlying
Indenture Event of Default:
a. is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Trust
Enforcement Event under this Declaration as provided below in this Section
2.6(b), the Trust Enforcement Event under this Declaration shall also not
be waivable; or
b. requires the consent or vote of a Super Majority to be
waived under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Trust Enforcement Event under
this Declaration as provided below in this Section 2.6(b), the Trust
Enforcement Event under this Declaration may only be waived by the vote or
written consent of the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any Trust Enforcement Event and all Trust Enforcement Events with respect to the
Common Securities and the consequences thereof until all Trust Enforcement
Events with respect to the Capital Securities have been cured, waived or
otherwise eliminated, and until such Trust Enforcement Events with respect to
the Capital Securities have 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 in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such waiver, any such default shall cease to exist and any Trust
Enforcement Event with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other Trust Enforcement Event with
respect to the Common Securities or impair any right consequent thereon.
3. A waiver of an Indenture Event of Default by the Property Trustee
at the direction of the Holders of the Capital Securities constitutes a waiver
of the corresponding Trust Enforcement Event with respect to the Capital
Securities under this Declaration. The foregoing provisions of this Section
2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and
such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.
Section G. Trust Enforcement Event; Notice.
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1. The Property Trustee shall, within 90 days after the occurrence of
a Trust Enforcement Event actually known to the Property Trustee, transmit by
mail, first class postage prepaid, to the Holders of the Securities, notices of
all defaults with respect to the Securities actually known to a Responsible
Officer of the Property Trustee, unless such defaults have been cured before the
giving of such notice (the term "defaults" for the purposes of this Section 27
being hereby defined to be an Indenture Event of Default, not including any
periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of or interest on any of the Debentures, the Property Trustee shall be
protected in withholding such notice if and so long as a Responsible Officer of
the Property Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Securities.
2. The Property Trustee shall not be deemed to have knowledge of any
default except:
a. a default under Sections 5.1(1) (other than the payment of
Additional Interest) and 5.1(2) of the Indenture; or
b. any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer of the Property
Trustee charged with the administration of this Declaration shall have
actual knowledge.
ARTICLE III.
ORGANIZATION
Section A. Name and Organization.
The trust hereby continued is named "First American Capital Trust I"
as such name may be modified from time to time by the Regular Trustees following
written notice to the Delaware Trustee, the Property Trustee and the Holders of
Securities. The Trust's activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
Section B. Office.
The address of the principal office of the Trust is c/o The First
American Financial Corporation, 114 East Fifth Street, Santa Ana, California
90271. On 10 Business Days' written notice to the Holders of Securities, the
Regular Trustees may designate another principal office for the Trust.
Section C. Purpose.
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15
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities and use the gross proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, mortgage,
pledge any of its assets or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified as a grantor trust for
United States Federal income tax purposes or the Trust to register as an
Investment Company.
By the acceptance of this Trust, none of the Trustees, the Sponsor,
the Holders of the Capital Securities or Common Securities or the Capital
Securities Beneficial Owners will take any position for United States Federal
income tax purposes which is contrary to the classification of the Trust as a
grantor trust.
Section D. Authority.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting on behalf of
the Trust, no person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
1. Except as otherwise expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any matter
over which the Regular Trustees have power to act, any power of the Regular
Trustees may be exercised by, or at the direction of, any one such Regular
Trustee;
2. Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute and deliver on behalf of the Trust any
documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that any registration
statements referred to in Section 3.6(b)(i), including any amendments thereto,
shall be signed by or on behalf of a majority of the Regular Trustees; and
3. a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
Section E. Title to Property of the Trust.
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16
Except as provided in Section 3.8 with respect to the Debentures and
the Property Account or as otherwise provided in this Declaration, legal title
to all assets of the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial ownership interest in the assets of the Trust.
Section F. Powers and Duties of the Regular Trustees.
The Regular Trustees shall have the exclusive power, duty and
authority, and are hereby authorized and directed, to cause the Trust to engage
in the following activities:
1. to establish the terms and form of the Capital Securities and the
Common Securities in the manner specified in Section 7.1 and execute,
deliver, issue and sell the Capital Securities and the Common Securities in
accordance with this Declaration; provided, however, that the Trust may
issue no more than two series of Capital Securities (which will consist
exclusively of the Transfer Restricted Securities and the New Capital
Securities) and no more than one series of Common Securities, and, provided
further, that there shall be no interests in the Trust other than the
Securities, and the issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Transfer Restricted Securities and Common
Securities on the Closing Date and a one-time issuance of New Capital
Securities pursuant to an exchange offer required pursuant to the
Registration Rights Agreement;
2. in connection with the issue and sale of the Capital Securities,
at the direction of the Sponsor, to:
a. execute and file with the Commission one or more
registration statements on the applicable forms prepared by the
Sponsor, including any amendments thereto, pertaining to the Capital
Securities, the Guarantee and the Debentures;
b. if deemed necessary or desirable by the Sponsor,
execute and file an application, prepared by the Sponsor, to the New
York Stock Exchange, Inc. or any other national stock exchange or the
Nasdaq National Market for listing of any Capital Securities, the
Guarantee and the Debentures;
c. if deemed necessary or desirable by the Sponsor,
execute and file with the Commission a registration statement on Form
8-A, including any amendments thereto, prepared by the Sponsor,
relating to the registration of the Capital Securities, the Guarantee
and the Debentures under Section 12(b) or 12(g) of the Exchange Act;
d. execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be
necessary, in order to
<PAGE>
17
qualify or register all or part of the Capital Securities in any State
in which the Sponsor has determined to qualify or register such
Capital Securities for sale;
e. execute and deliver or enter into a purchase agreement
and other related agreements providing for the sale of the Capital
Securities to the Initial Purchasers; and
f. execute and deliver or enter into the Registration
Rights Agreement.
3. to acquire the Debentures with the proceeds of the sale of the
Capital Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders
of the Capital Securities and the Holders of the Common Securities;
4. to give the Sponsor and the Property Trustee prompt written notice
of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any action in relation to any such Special Event;
5. to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
6. to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of this Declaration and the
Securities;
7. to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee
has the exclusive power to bring such Legal Action;
8. to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants to conduct only those services that the Regular Trustees have
authority to conduct directly, and to and pay reasonable compensation for
such services;
9. to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act, if any;
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18
10. to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Regular Trustee;
11. to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
12. to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
13. to give prompt written notice to the Property Trustee and the
Holders of the Securities of any notice received from the Debenture Issuer
of its election to defer payments of interest on the Debentures by
extending the interest payment period under the Debentures as authorized by
the Indenture;
14. to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Capital Securities and the Holders of the Common Securities or to
enable the Trust to effect the purposes for which the Trust was created;
15. to take any action, not inconsistent with applicable law, that
the Regular Trustees determine in their discretion to be necessary or
desirable in carrying out the purposes and functions of the Trust as set
out in Section 3.3 or the activities of the Trust as set out in this
Section 3.6, including, but not limited to:
a. causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
b. causing the Trust to be classified as a grantor trust
for United States Federal income tax purposes; and
c. cooperating with the Debenture Issuer to ensure that
the Debentures will be treated as indebtedness of the Debenture Issuer
for United States Federal income tax purposes;
16. to take all action necessary to consummate the Exchange Offer or
otherwise cause the Capital Securities to be registered pursuant to an
effective registration statement in accordance with the provisions of the
Registration Rights Agreement;
17. to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust; and
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18. to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees shall exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
Section G. Prohibition of Actions by the Trust and the Trustees.
1. The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees shall
not:
a. invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
b. acquire any assets other than the Debentures (and any
interest or proceeds received thereon);
c. possess Trust property for other than a Trust purpose;
d. make any loans or incur any indebtedness other than loans
represented by the Debentures;
e. possess any power or otherwise act in such a way as to vary
the Trust assets;
f. possess any power or otherwise act in such a way as to vary
the terms of the Securities in any way whatsoever (except to the extent
expressly authorized in this Declaration or by the terms of the
Securities);
g. issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
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h. other than as provided in this Declaration or by the terms
of the Securities, (A) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee or exercising
any trust or power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration that
the principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture or
the Debentures where such consent shall be required unless, in each case,
the Trust shall have received an opinion of counsel to the effect that such
amendment, modification or termination will not cause more than an
insubstantial risk that the Trust will be deemed an Investment Company
required to be registered under the Investment Company Act, or the Trust
will not be classified as a grantor trust for United States Federal income
tax purposes; or
i. take any action inconsistent with the status of the Trust
as a grantor trust for United States Federal income tax purposes.
Section H. Powers and Duties of the Property Trustee.
1. The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the
Property Trustee to the Debentures shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in accordance with Section 6.6.
Such vesting and cessation of title shall be effective whether or not
conveyancing documents with regard to the Debentures have been executed and
delivered.
2. The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
3. The Property Trustee shall:
a. establish and maintain a segregated non-interest bearing
trust account (the "Property Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments of funds made in respect of
the Debentures held by the Property Trustee, deposit such funds into the
Property Account and make payments to the Holders of the Capital Securities
and Holders of the Common Securities from the Property Account in
accordance with Section 7.2. Funds in the Property Account shall be held
uninvested until disbursed in accordance with this Declaration. The
Property Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness is at
least equal to the rating assigned to the Capital Securities by a
"nationally recognized statistical rating organization", as that term is
defined for purposes of Rule 436(g)(2) under the Securities Act;
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b. engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Capital Securities and the
Common Securities to the extent the Debentures are redeemed or mature;
c. upon written notice of distribution issued by the Regular
Trustees in accordance with the terms of the Securities, engage in such
ministerial activities as so directed and as shall be necessary or
appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of a Special Event; and
d. execute and deliver a Letter of Representation, dated on or
about the Closing Date, to DTC in such form as may be approved by any
Regular Trustee, such approval to be exclusively evidenced by the execution
of such document by a Regular Trustee on behalf of the Trust, together with
such riders and other statements as may be affixed thereto.
4. The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.
5. The Property Trustee shall take any Legal Action which arises out
of or in connection with a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act.
6. The Property Trustee shall continue to serve as a Trustee until
either:
a. the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to the
terms of the Securities; or
b. a Successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 6.6.
7. Subject to such limitations as are necessary to ensure compliance
with Section 3.3, the Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if a Trust Enforcement Event actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of this Declaration and the Securities.
8. The Property Trustee shall be authorized to undertake any actions
set forth in Section 317(a) of the Trust Indenture Act.
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9. For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional Paying
Agents to pay Distributions, redemption payments or liquidation payments on
behalf of the Trust with respect to all Securities and any such Paying Agent
shall comply with Section 317(b) of the Trust Indenture Act. While the Property
Trustee is so acting as Paying Agent, any such additional Paying Agent may be
removed by the Property Trustee and a successor Paying Agent or additional
Paying Agents may be (but are not required to be) appointed at any time by the
Property Trustee. In the event the Capital Securities do not remain in the form
of one or more Global Securities, the Property Trustee will act as Paying Agent
and may designate an additional or substitute Paying Agent at any time.
10. Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or the authority of the Regular Trustees set
forth in Section 3.6.
The Property Trustee shall exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
Section I. Certain Duties and Responsibilities of the Property
Trustee.
1. The Property Trustee, before the occurrence of any Trust
Enforcement Event and after the curing or waiving of all Trust Enforcement
Events that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case a Trust
Enforcement Event has occurred (that has not been cured or waived pursuant to
Section 2.6) of which a Responsible Officer of the Property Trustee has actual
knowledge, the Property Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
2. No provision of this Declaration shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that:
a. prior to the occurrence of a Trust Enforcement Event and
after the curing of all such Trust Enforcement Events that may have
occurred:
(1) the duties and obligations of the Property Trustee shall be
determined solely by the express provisions of this Declaration and
the Property Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Declaration and in the Securities, and no implied covenants or
obligations shall be read into this Declaration against the Property
Trustee; and
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23
(2) in the absence of bad faith on the part of the Property
Trustee, the Property 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 Property
Trustee and conforming to the requirements of this Declaration; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine the
same to determine whether or not on their face they conform to the
requirements of this Declaration;
b. the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
c. the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it without gross negligence, 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 Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under this Declaration;
d. no provision of this Declaration shall require the Property
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 it 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 Declaration or indemnity
reasonably satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
e. the Property Trustee's sole duty with respect to the
custody, safe-keeping and physical preservation of the Debentures and the
Property Account shall be to deal with such property in a similar manner as
the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust Indenture Act;
f. the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
g. the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Sponsor. Money held by the Property Trustee need not be segregated from
other funds held by it except in
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relation to the Property Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise required
by law; and
h. the Property Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee be
liable for any default or misconduct of the Regular Trustees or the
Sponsor.
Section J. Certain Rights of Property Trustee.
1. Subject to the provisions of Section 3.9:
a. the Property Trustee may conclusively 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 believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
b. any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by an
Officers' Certificate (or, with respect to the establishment of the terms
and form of the Securities by the Regular Trustees, by a Trustees'
Authentication Order);
c. whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
d. the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
e. the Property Trustee may consult with counsel of its choice
or other experts and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area
of expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of its
employees. The Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Declaration from any
court of competent jurisdiction;
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25
f. the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at
the request or direction of any Holder, unless such Holder shall have
provided to the Property Trustee security and indemnity, reasonably
satisfactory to the Property Trustee, against the costs, expenses
(including attorneys, fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) 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 Property Trustee; provided
that, nothing contained in this Section 3.10(a)(vi) shall be taken to
relieve the Property Trustee, upon the occurrence of a Trust Enforcement
Event, of its obligation to exercise the rights and powers vested in it by
this Declaration;
g. the Property 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 Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
h. the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;
i. any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Property Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be
required to inquire as to the authority of the Property Trustee to so act
or as to its compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the Property
Trustee's or its agent's taking such action;
j. whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders of the Securities (which instructions, if requested from the
Holders, may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the
Property Trustee under the terms of the Securities in respect of such
remedy, right or action), the Regular Trustees or the Sponsor, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions;
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26
k. If no Trust Enforcement Event has occurred and is
continuing and the Property Trustee is required to decide between
alternative causes of action, construe ambiguous provisions in this
Declaration or is unsure of the application of any provision of this
Declaration, and the matter is not one on which Holders of Capital
Securities are entitled under this Declaration to vote, then the Property
Trustee may, but shall be under no duty to, take such action as is directed
by the Sponsor and, if not so directed, shall take such action as it deems
advisable and in the best interests of the Holders of the Securities and
will have no liability except for its own bad faith, gross negligence or
willful misconduct;
l. except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration; and
m. the Property Trustee shall not be liable for any action
taken, suffered or omitted to be taken by it without negligence, in good
faith and reasonably believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Declaration.
2. No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property 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 Property 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 Property Trustee
shall be construed to be a duty.
Section K. Delaware Trustee.
Notwithstanding any other provision of this Declaration other than
Section 6.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Business Trust Act.
Section L. Execution of Documents.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute and deliver on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6.
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Section M. Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as
to the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities, the Debentures or the Indenture.
Section N. Duration of Trust.
The Trust shall exist until terminated pursuant to the provisions of
Article 8 hereof.
Section O. Mergers.
1. The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c).
2. The Trust may at the request of the Sponsor, with the consent of
the Regular Trustees or, if there are more than two, a majority of the Regular
Trustees and without the consent of the Holders of the Securities, the Delaware
Trustee or the Property Trustee, consolidate, amalgamate, merge with or into, or
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:
a. if the Trust is not the successor, such successor entity
(the "Successor Entity") either:
(1) expressly assumes all of the obligations of the Trust under
the Capital Securities; or
(2) 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;
b. the Sponsor expressly appoints a trustee of such Successor
Entity that possesses the same powers and duties as the Property Trustee as
the holder of the Debentures;
c. such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities
(including any
<PAGE>
28
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
d. 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;
e. such Successor Entity has a purpose identical to that of
the Trust;
f. prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease the Sponsor has received an
opinion of counsel experienced in such matters to the effect that:
(1) 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;
(2) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease neither the Trust nor the
Successor Entity will be required to register as an Investment
Company; and
(3) following such merger, consolidation, amalgamation or
replacement, the Trust (or the Successor Entity) will continue to be
classified as a grantor trust for United States Federal income tax
purposes;
g. the Sponsor 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;
h. such Successor Entity expressly assumes all of the
obligations of the Trust with respect to the Trustees; and
i. there shall have been furnished to the Property Trustee an
Officers' Certificate and an opinion of counsel, each to the effect that
all conditions precedent set forth in this Declaration to such transaction
have been satisfied.
3. Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties or assets substantially as an entity to
any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger,
<PAGE>
29
conveyance, transfer or lease replacement would cause the Trust or Successor
Entity to be classified as other than a grantor trust for United States Federal
income tax purposes.
Section P. Property Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
similar judicial proceeding relative to the Trust or the property of the Trust,
the Property Trustee (irrespective of whether any Distributions on the
Securities shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Property Trustee shall have made
any demand on the Trust for the payment of any past due Distributions) shall be
entitled and empowered, to the fullest extent permitted by law, by intervention
in such proceeding or otherwise (but shall have no duty):
1. to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount Securities, such portion of the
liquidation amount as may be specified in the terms of such Securities) and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of the Property Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Property Trustee, its agents and counsel) and of the Holders allowed in
such judicial proceeding, and
2. to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Securities or the rights of any Holder thereof or to authorize the Property
Trustee to vote in respect of the claim of any Holder in any such proceeding.
<PAGE>
30
ARTICLE IV.
SPONSOR
Section A. Responsibilities of the Sponsor.
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
1. to prepare for filing by the Trust with the Commission one or more
registration statements on the applicable forms, including any amendments
thereto, pertaining to the Capital Securities, the Guarantee and the
Debentures;
2. to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to
do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
3. to prepare any filing by the Trust of an application to the New
York Stock Exchange, Inc. or any other national stock exchange or the
Nasdaq National Market for listing, if such filing is determined to be
necessary or desirable by the Sponsor;
4. to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any amendments thereto, if
such filing is determined to be necessary or desirable by the Sponsor;
5. to negotiate the terms of a purchase agreement and other related
agreements providing for the sale of the Capital Securities to the Initial
Purchasers; and
6. to negotiate the terms of the Registration Rights Agreement.
Section B. Indemnification and Expenses of the Trustee.
The Sponsor, as borrower, agrees to indemnify the Property Trustee and
the Delaware Trustee for, and to hold each of them harmless against, any loss,
liability or expense incurred without negligence or bad faith on the part of the
Property Trustee or the Delaware Trustee, as the case may be, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending either of them against
any claim or liability in connection with the exercise or performance of any of
their respective powers or duties hereunder; the provisions of this Section 4.2
shall survive the resignation or removal of the Delaware Trustee or the Property
Trustee or the termination of this Declaration.
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31
ARTICLE V.
TRUST COMMON SECURITIES HOLDER
Section A. Debenture Issuer's Purchase of Common Securities.
On the Closing Date the Debenture Issuer will purchase all of the
Common Securities issued by the Trust, for an amount at least equal to 3% of the
capital of the Trust, at the same time as the Capital Securities are sold.
Section B. Covenants of the Common Securities Holder.
For so long as the Capital Securities remain outstanding, the Common
Securities Holder covenants (i) to maintain directly 100% ownership of the
Common Securities, (ii) to cause the Trust to remain a statutory business trust
and not to voluntarily dissolve, wind up, liquidate or be terminated, except as
permitted by this Declaration, (iii) to use its commercially reasonable efforts
to ensure that the Trust will not be an Investment Company, and (iv) to take no
action which 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.
ARTICLE VI.
TRUSTEES
Section A. Number of Trustees.
The number of Trustees initially shall be four (4), and:
1. at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
2. after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in
Liquidation Amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities or by written consent in lieu of
such meeting; provided that the number of Trustees shall be at least three;
and provided further that (1) the Delaware Trustee, in the case of a
natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its
principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law; (2) at least one Regular
Trustee is an employee or officer of, or is affiliated with, the Sponsor;
and (3) one Trustee shall be the Property Trustee for so long as this
<PAGE>
32
Declaration is required to qualify as an indenture under the Trust
Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements.
Section B. Delaware Trustee.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
1. a natural person who is a resident of the State of Delaware; or
2. 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 Delaware law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable
Delaware law, then the Property Trustee shall also be the Delaware Trustee and
Section 3.11 shall have no application.
Section C. Property Trustee; Eligibility.
1. There shall at all times be one Trustee which shall act as
Property Trustee which shall:
a. not be an Affiliate of the Sponsor; and
b. 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 corporation
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 6.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
2. If at any time the Property Trustee shall cease to be eligible to
so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.6(c).
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3. If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
"obligor" referred to in Section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
4. The Guarantee shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the first provision contained in
Section 310(b) of the Trust Indenture Act.
Section D. Certain Qualifications of Regular Trustees and Delaware
Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
Section E. Initial Trustees.
The initial Regular Trustees shall be:
Parker S. Kennedy and Thomas A. Klemens, the business address of all
of whom is c/o The First American Financial Corporation, 114 East Fifth
Street, Santa Ana, California 90271.
The initial Property Trustee and Delaware Trustee shall be:
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington Delaware 19890-0001, Attention: Corporate Trust Administration, fax:
302-427-4749, phone: 302-651-1000.
Section F. Appointment, Removal and Resignation of Trustees.
1. Subject to Section 6.6(b) and 7.5(j), Trustees may be appointed or
removed without cause at any time:
a. until the issuance of any Securities, by written instrument
executed by the Sponsor; and
b. after the issuance of any Securities, by vote of the
Holders of a Majority in Liquidation Amount of the Common Securities voting
as a class at a meeting of the Holders of the Common Securities.
2. The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 6.6(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 6.3 (a "Successor
Property Trustee") has been appointed and has
<PAGE>
34
accepted such appointment by written instrument executed by such Successor
Property Trustee and delivered to the Regular Trustees and the Sponsor. The
Trustee that acts as Delaware Trustee shall not be removed in accordance with
Section 66 until a successor Trustee possessing the qualifications to act as
Delaware Trustee under Sections 6.2 and 6.4 (a "Successor Delaware Trustee") has
been appointed and has accepted such appointment by written instrument executed
by such Successor Delaware Trustee and delivered to the Regular Trustees and the
Sponsor.
3. A Trustee appointed to office shall hold office until his or its
successor shall have been appointed, until his death or its dissolution or until
his or its removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later date as is specified therein;
provided, however, that:
a. No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(1) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(2) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the holders of the
Securities; and
b. no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor and
the resigning Delaware Trustee.
4. The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 6.6.
5. If no Successor Property Trustee or Successor Delaware Trustee, as
the case may be, shall have been appointed and accepted appointment as provided
in this Section 6.6 within 60 days after delivery to the Sponsor and the Trust
of an instrument of resignation or removal, the resigning or removed Property
Trustee or Delaware Trustee, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee, as applicable. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
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6. No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
7. At the time of resignation or removal of the Property Trustee or
the Delaware Trustee, the Debenture Issuer shall pay to such Trustee any amounts
that may be owed to such Trustee pursuant to Section 9.4.
Section G. Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 6.6.
Section H. Effect of Vacancies.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 6.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
Section I. Meetings.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter,
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provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Regular Trustees. In the event there is only one Regular Trustee,
any and all action of such Regular Trustee shall be evidenced by a written
consent of such Regular Trustee.
Section J. Delegation of Power.
1. Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any natural person over the age of 21 his, her or
its power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing.
2. The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
Section K. Merger, Conversion, Consolidation or Succession to
Business.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any Person resulting from an merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided such Person shall be otherwise qualified and eligible under this
Article.
ARTICLE VII.
THE SECURITIES
Section A. General Provisions Regarding Securities.
1. The Regular Trustees shall on behalf of the Trust issue one class
of capital securities representing undivided beneficial ownership interests in
the assets of the Trust, having such terms as are set forth in this Declaration
(the "Transfer Restricted Securities"), one class of capital securities
representing undivided beneficial ownership interests in the assets of the
Trust, having such terms as are set forth in this Declaration, to be only issued
in exchange for the Transfer Restricted Securities (the "New Capital
Securities," and together with the Transfer Restricted Securities the "Capital
Securities"), and one class of common securities representing undivided
beneficial ownership interests in the assets of the Trust,
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having such terms as are set forth in this Declaration (the "Common
Securities"). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common Securities.
a. Capital Securities. The Capital Securities of the Trust
have an aggregate liquidation amount with respect to the assets of the
Trust of $100,000,000 and a liquidation amount with respect to the assets
of the Trust of $1,000 per Capital Security. The New Capital Security
Certificates and the Transfer Restricted Security Certificates evidencing
the Capital Securities shall be substantially in the form of Exhibit A to
this Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to
conform to the rules of any stock exchange on which the Capital Securities
may be listed provided that the New Capital Security Certificate shall not
contain any of the provisions following the Trustee's authentication, and
shall not bear the legends required by Section 7.12(i) unless the Holder of
such New Capital Securities is either (A) a broker-dealer who purchased
Transfer Restricted Securities directly from the Trust for resale pursuant
to Rule 144A or any other available exemption under the Securities Act, (B)
a Person participating in the distribution of the Transfer Restricted
Securities or (C) a Person who is an Affiliate of the Trust.
b. Common Securities. The Common Securities of the Trust have
an aggregate liquidation amount with respect to the assets of the Trust of
$3,093,000 and a liquidation amount with respect to the assets of the Trust
of $1,000 per Common Security. The Common Security Certificates evidencing
the Common Securities shall be substantially in the form of Exhibit B to
this Declaration, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice.
2. Payment of Distributions on, and amounts payable on redemption 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 date on which Distributions on the
Securities, or amounts in respect of the redemption of the Securities or in
respect of the liquidation of the Trust, are payable an Indenture Event of
Default shall have occurred and be continuing, no payment of any Distribution
on, or redemption amount 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 amounts
payable on redemption the full amount of such redemption amounts 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, amounts payable
on redemption of the Capital Securities or amounts payable on liquidation of the
Trust then due and payable.
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3. The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case a Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of this
Declaration any such person was not such a Regular Trustee.
A Certificate shall not be valid until authenticated by the manual
signature of an Authorized Officer of the Property Trustee. Such signature
shall be conclusive evidence that the Certificate has been authenticated under
this Declaration.
Upon receipt by the Property Trustee of a Trustees' Authentication
Order with respect thereto, the Property Trustee shall authenticate the
Certificates for original issue. The aggregate liquidation amount of Capital
Securities outstanding at any time shall not exceed the liquidation amount set
forth in Section 7.1(a)(i).
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Certificates. An authenticating agent may
authenticate Certificates whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as
the Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor.
4. The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
5. Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
6. Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the terms of the Securities, the Guarantee,
the Indenture and the Debentures.
7. The Holders of the Securities shall have no preemptive rights or
rights to subscribe for additional Securities.
Section B. Distributions.
1. Holders of Securities shall be entitled to receive cumulative cash
Distributions at the rate per annum of 8.50% of the stated liquidation amount of
$1,000 per
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Security, calculated on the basis of a 360-day year consisting of twelve 30-day
months. For any period shorter than a full 180-day semi-annual period,
distributions will be computed on the basis of the actual number of days elapsed
in such 180-day semi-annual period. Subject to Section 7.1(b), Distributions
shall be made on the Capital Securities and the Common Securities on a Pro Rata
basis. Distributions on the Securities shall, from the date of original issue,
accrue and be cumulative and shall be payable semi-annually only to the extent
that the Trust has funds available for the payment of such Distributions in the
Property Account. Distributions not paid on the scheduled payment date will
accumulate and compound semi-annually at the rate of 8.50% per annum
("Compounded Distributions"). "Distributions" shall mean ordinary cumulative
distributions together with any Compounded Distributions. If and to the extent
that the Debenture Issuer makes a payment of interest (including Additional
Interest (as defined in the Indenture)) and/or principal on the Debentures held
by the Property Trustee (the amount of any such payment being a "Payment
Amount"), the Property Trustee shall and is directed, to the extent funds are
available for that purpose, to make a Pro Rata Distribution of the Payment
Amount to Holders, subject to the terms of Section 7.1(b).
2. Distributions on the Securities will be cumulative, will accrue
from the date of initial issuance and will be payable semi-annually in arrears
on each April 15 and October 15, commencing October 15, 1997, when, as and if
available for payment, by the Property Trustee, except as otherwise described
below. If Distributions are not paid when scheduled, the accrued Distributions
shall be paid to the Holders of record of Securities as they appear on the books
and records of the Trust on the record date as determined under Section 7.2(c).
3. Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which relevant record date shall be the first day of the month of
the relevant payment dates. In the event that any date on which Distributions
are payable on the Securities is not a Business Day, payment of the Distribution
payable on such date will be made on the next succeeding day which is a Business
Day (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 such date.
Section C. Redemption of Securities.
Upon the repayment or redemption of the Debentures, the proceeds from
such repayment or redemption shall be simultaneously applied Pro Rata (subject
to Section 7.1(b)) to redeem Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Debentures so repaid or redeemed
for an amount equal to the redemption price paid by the Debenture Issuer in
respect of such Debentures plus an amount equal to accrued and unpaid
Distributions thereon through the date of the redemption or such lesser amount
as shall be received by the Trust in respect of the Debentures so repaid or
redeemed (the "Redemption Price").
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40
Section D. Redemption Procedures.
1. Notice of any redemption of the Securities (a "Redemption Notice")
will be given by the Trust by mail to each Holder of Securities to be redeemed
not fewer than 30 nor more than 60 days before the date fixed for redemption
thereof which will be the date fixed for redemption of the Debentures. For
purposes of the calculation of the date of redemption and the date on which
notices are given pursuant to this Section 7.4, a Redemption Notice shall be
deemed to be given on the day such notice is first mailed by first-class mail,
postage prepaid, to Holders of Securities. Each Redemption Notice shall be
addressed to the Holders of Securities at the address of each such Holder
appearing in the books and records of the Trust. No defect in the Redemption
Notice or in the mailing thereof with respect to any Holder shall affect the
validity of the redemption proceedings with respect to any other Holder.
2. If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be redeemed as described
below. The Trust may not redeem the Securities unless all accrued and unpaid
Distributions have been paid in full on all Securities then outstanding plus
accrued but unpaid Distributions to the date of redemption. For all purposes of
this Declaration, unless the context otherwise requires, all provisions relating
to the redemption of Capital Securities shall relate, in the case of any Capital
Security redeemed or to be redeemed only in part, to the portion of the
aggregate liquidation amount of Capital Securities which has been or is to be
redeemed.
3. If Securities are to be redeemed and the Trust gives a Redemption
Notice, which notice may only be issued if the Debentures are to be redeemed as
set forth in this Section 7.4 (which notice will be irrevocable), then (A) by
12:00 noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid to the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures by 10:00
a.m., Wilmington, Delaware time, on the date of redemption of the Securities,
the Property Trustee will deposit irrevocably with DTC (in the case of Capital
Securities held by the Depositary) or its nominee (or successor Depositary or
its nominee), funds sufficient to pay the applicable Redemption Price with
respect to the Capital Securities and will give DTC irrevocable instructions and
authority to pay the Redemption Price with respect to Capital Securities held as
a Global Security, to the Capital Security Beneficial Owners and (B) with
respect to Capital Securities and Common Securities held in definitive form,
provided that the Debenture Issuer has paid to the Property Trustee a sufficient
amount of cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee, will irrevocably deposit with the Paying Agent
for such Capital Securities and the Common Securities funds sufficient to pay
the Redemption Price and will give such Paying Agent irrevocable instructions
and authority to pay the Redemption Price to the Holders thereof upon surrender
of their Certificates evidencing the Capital Securities and the Common
Securities. If a Redemption Notice shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities
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41
will cease, except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Securities shall cease to be outstanding. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price 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 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 such date fixed for redemption. If payment of the
Redemption Price in respect of any Securities is improperly withheld or refused
and not paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the Guarantee, Distributions on such Securities will continue to
accrue at the then applicable rate from the original redemption date to the
actual date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the Redemption Price.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Security called for redemption shall be payable to the
Holders who were Holders of such Security on the relevant record dates for the
related Distribution Dates. Accordingly, for these purposes, the applicable
Redemption Price shall not include Distributions which are being paid to Holders
who were Holders on a relevant record date. Upon satisfaction of the foregoing
conditions, then immediately prior to the close of business on the date of such
deposit or payment, all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price, and
such Securities shall cease to be outstanding, and from and after the date fixed
for redemption, such Securities will not accrue distributions or bear interest.
Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have been
called for redemption.
4. Subject to the foregoing and applicable law (including, without
limitation, United States Federal securities laws), the Debenture Issuer or its
subsidiaries may at any time and from time to time purchase outstanding Capital
Securities by tender, in the open market or by private agreement.
Section E. Voting Rights of Capital Securities.
1. Except as provided under this Declaration and as otherwise
required by the Business Trust Act, the Trust Indenture Act and other applicable
law, the Holders of the Capital Securities will have no voting rights.
2. Subject to the requirement of the Property Trustee receiving a tax
opinion in certain circumstances set forth in Section 7.5 (d) below, the Holders
of a Majority in Liquidation Amount of the Capital Securities 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 this Declaration, including the
right to direct the Property Trustee, as holder of the Debentures, to
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(i) exercise the remedies available to it under the Indenture as a holder of the
Debentures or (ii) consent to any amendment or modification of the Indenture or
the Debentures where such consent shall be required; provided, however, that
where a consent or action under the Indenture would require the consent or act
of the holders of more than a majority of the aggregate principal amount of
Debentures affected thereby, only the Holders of the percentage of the aggregate
stated liquidation amount of the Capital Securities which is at least equal to
the percentage required under the Indenture may direct the Property Trustee to
give such consent or to take such action.
3. If the Property Trustee fails to enforce its rights under the
Debentures, any Holder of record of Capital Securities may institute a legal
proceeding directly against the Debenture Issuer to enforce the Property
Trustee's rights under the Indenture without first instituting any legal
proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to make any required payment when due and payable under the Indenture, then a
Holder of Capital Securities may on or after the respective due dates specified
in the Debenture (and after the expiration of any applicable cure period)
institute a proceeding directly against the Debenture Issuer for enforcement of
payment on Debentures having a principal amount equal to the aggregate
liquidation amount of the Capital Securities held by such Holder.
4. The Property Trustee shall notify all Holders of the Capital
Securities of any written notice of any Indenture Event of Default received by
the Property Trustee from the Debenture Issuer with respect to the Debentures.
Such notice shall state that such Indenture Event of Default also constitutes a
Trust Enforcement Event. The Property Trustee shall be under no obligation to
take any of the actions described in clauses 7.5(b)(i) and (ii) above unless the
Property Trustee has received an opinion of counsel rendered by a law firm
having a national tax practice to the effect that as a result of such action,
the Trust will not fail to be classified as a grantor trust for United States
Federal income tax purposes and each Holder will be treated as owning an
undivided beneficial ownership interest in the Debentures.
5. In the event the consent of the Property Trustee, as the holder of
the Debentures, is required under the Indenture with respect to any amendment or
modification of the Indenture, the Property Trustee shall request the direction
of the Holders of the Securities with respect to such amendment or modification
and shall vote with respect to such amendment or modification as directed by a
Majority in Liquidation Amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of the Holders of more than a majority of the aggregate principal
amount of the Debentures, the Property Trustee may only give such consent at the
direction of the Holders of at least the same proportion in aggregate stated
liquidation amount of the Securities, voting together as a single class. The
Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Securities unless the Property Trustee and the
other Trustees have received an opinion of counsel rendered by a law firm having
a national tax practice to the effect that, as a result of such action, the
Trust will not be classified
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as other than a grantor trust for United States Federal income tax purposes and
each Holder will be treated as owning an undivided beneficial ownership interest
in the Debentures.
6. A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
7. Any required approval or direction of Holders of Capital
Securities may be given at a separate meeting of Holders of Capital Securities
convened for such purpose, at a meeting of the Holders of Securities 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 mailed to
the Property Trustee and each Holder of record of Capital Securities. Each such
notice will include a statement setting forth the following information: (i) the
date of such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents.
8. No vote or consent of the Holders of Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or distribute
Debentures in accordance with this Declaration and the terms of the Securities.
9. 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 at such time by the Debenture Issuer or any
entity directly or indirectly controlled by, or under direct or indirect common
control with, the Debenture Issuer, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Securities
were not outstanding; provided, however that persons otherwise eligible to vote
to whom the Debenture Issuer or any of its subsidiaries have pledged Capital
Securities may vote or consent with respect to such pledged Capital Securities
under any of the circumstances described herein; provided, further however, the
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Regular Trustees shall certify in writing to the Property Trustee the results of
any such vote or consent.
10. Except as provided in the following sentence, Holders of the
Capital Securities will have no rights to appoint or remove the Trustees, who
may be appointed, removed or replaced solely by the Debenture Issuer, as the
Holder of all of the Common Securities. If an Indenture Event of Default has
occurred and is continuing, the Property Trustee and the Delaware Trustee may be
removed at such time by a Majority in Liquidation Amount of the Capital
Securities.
Section F. Voting Rights of Common Securities.
1. Except as provided under Section 6.1(b) or this Section 7.6 or as
otherwise required by the Business Trust Act, the Trust Indenture Act or other
applicable law or provided by this Declaration, the Holders of the Common
Securities will have no voting rights.
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2. The Holders of the Common Securities are entitled, in accordance
with Article VI of this Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
3. Subject to Section 2.6 of this Declaration and only after all
Trust Enforcement Events with respect to the Capital Securities have been cured,
waived, or otherwise eliminated and subject to the requirement of the Property
Trustee receiving a tax opinion in certain circumstances set forth in this
paragraph (c), the Holders of a Majority in Liquidation Amount of the Common
Securities 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 this
Declaration, including the right to direct the Property Trustee, as holder of
the Debentures, to (i) exercise the remedies available to it under the Indenture
as a holder of the Debentures, or (ii) consent to any amendment or modification
of the Indenture or the Debentures where such consent shall be required;
provided, however, that where a consent or action under the Indenture would
require the consent or act of the holders of more than a majority of the
aggregate principal amount of Debentures affected thereby, only the Holders of
the percentage of the aggregate stated liquidation amount of the Common
Securities which is at least equal to the percentage required under the
Indenture may direct the Property Trustee to give such consent or take such
action. The Property Trustee shall be under no obligation to take any of the
actions described in clause 7.6(c)(i) and (ii) above unless the Property Trustee
has received an opinion of counsel rendered by a law firm having a national tax
practice to the effect that, as a result of such action, for United States
Federal income tax purposes the Trust will not fail to be classified as a
grantor trust and each Holder will be treated as owning an undivided beneficial
ownership interest in the Debentures.
4. If the Property Trustee fails to enforce its rights under the
Debentures, the Holder of record of Common Securities may institute a legal
proceeding directly against the Debenture Issuer to enforce the Property
Trustee's rights under the Indenture without first instituting any legal
proceeding against the Property Trustee or any other person or entity.
5. A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.
6. Any required approval or direction of Holders of Common Securities
may be given at a separate meeting of Holders of Common Securities convened for
such purpose, at a meeting of the Holders of Securities or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
Holders of Common Securities are entitled to vote, or of any matter on which
action by written consent of such Holders is to be taken, to be mailed to the
Property Trustee and each Holder of record of Common Securities. Each such
notice will include a statement setting forth the following information: (i) the
date of such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents.
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7. No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
Debentures in accordance with this Declaration and the terms of the Securities.
Section G. Paying Agent, Securities Registrar or Exchange Agent.
In the event that any Capital Securities are not in book-entry only
form, the Trust shall maintain in Wilmington, Delaware (i) an office or agency
where Securities may be presented for registration of transfer ("Security
Registrar" or "Securities Registrar"), (ii) an office or agency where Securities
may be presented for payment ("Paying Agent") and (iii) an office or agency
where Securities may be presented for exchange ("Exchange Agent"). The Security
Registrar shall keep a register of the Capital Securities and of their transfer
(the "Securities Register"). The Trust may appoint the Security Registrar, the
Paying Agent and the Exchange Agent and may appoint one or more co-registrars,
one or more additional paying agents and one or more additional exchange agents
in such other locations as it shall determine. The term "Security Registrar"
includes any additional registrar, "Paying Agent" includes any additional paying
agent and the term "Exchange Agent" includes any additional exchange agent. The
Trust may change any Paying Agent, Securities Registrar or Exchange Agent
without prior notice to the Holders; provided that the Trust will provide the
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Holders of the Securities written notice of any such change within 30 days after
the date of such change. Any Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Regular Trustees. The Trust
shall notify the Property Trustee of the name and address of any Paying Agent,
Securities Registrar or Exchange Agent not a party to this Declaration. If the
Trust fails to appoint or maintain another entity as Paying Agent, Securities
Registrar or Exchange Agent, the Property Trustee shall act as such. The Trust
or any of its Affiliates may act as Paying Agent, Securities Registrar or
Exchange Agent. The Trust shall act as Paying Agent, Registrar and Exchange
Agent for the Common Securities. The Trust initially appoints the Property
Trustee to act as Paying Agent, Securities Registrar and Exchange Agent for the
Capital Securities. In the event the Property Trustee shall no longer be Paying
Agent, Securities Registrar or Exchange Agent, the Regular Trustees shall
appoint a successor (which shall be a bank or trust company acceptable to the
Regular Trustees and the Debenture Issuer) to act as Paying Agent, Securities
Registrar or Exchange Agent.
Section H. Transfer of Securities.
1. Upon surrender for registration of transfer of any Security at an
office or agency of the Trust designated for such purpose, the Trust shall
execute, and the Property Trustee shall authenticate and make available for
delivery by the Trust, in the name of the designated transferee or transferees,
one or more new Securities of any authorized denominations and of a like
aggregate liquidation amount; provided that no Capital Security shall be issued
in an amount representing less than $100,000 in aggregate liquidation amount of
Capital Securities.
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2. At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate liquidation
amount, upon surrender of the Securities to be exchanged at an office or agency
of the Trust designated for such purpose. Whenever any Securities are so
surrendered for exchange, the Trust shall execute, and the Property Trustee
shall authenticate and make available for delivery by the Trust, the Securities
which the Holder making the exchange is entitled to receive; provided that no
Capital Security shall be issued in an amount representing less than $100,000 in
aggregate liquidation amount of Capital Securities.
3. Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Trust or the Security
Registrar) be duly endorsed or be accompanied by a written instrument of
transfer in form satisfactory to the Trust and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. A
transferee of a Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Security from the Trust. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
4. No service charge shall be made for any registration of transfer
or exchange of Securities, but the Trust may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities.
5. If the Securities are to be redeemed in part, the Trust shall not
be required (A) to issue, register or cause to be registered the transfer of or
exchange of any Securities during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of any such
Securities selected for redemption under Section 7.4 and ending at the close of
business on the day of such mailing, or (B) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
6. The Trust or the Sponsor at any time may deliver Capital
Securities to the Property Trustee for cancellation. The Security Registrar,
Paying Agent and Exchange Agent shall forward to the Property Trustee any
Capital Securities surrendered to them for registration of transfer, redemption,
exchange or payment. The Property Trustee shall promptly cancel all Capital
Securities, surrendered for registration of transfer, redemption, exchange,
payment, replacement or cancellation and shall dispose of cancelled Capital
Securities in accordance with its customary procedures unless the Trust
otherwise directs. Except as provided herein, the Trust may not issue new
Capital Securities to replace Capital Securities that it has paid or that have
been delivered to the Property Trustee for cancellation or that any Holder has
exchanged.
Section I. Mutilated, Destroyed, Lost or Stolen Certificates.
<PAGE>
47
If:
1. any mutilated Certificates should be surrendered to the Securities
Registrar, or if the Securities Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Certificate; and
2. there shall be delivered to the Securities Registrar such security
or indemnity as may be required by it to keep it, the Sponsor, the Regular
Trustees, the Property Trustee, the Delaware Trustee and the Trust
harmless, then, in the absence of notice that such Certificate shall have
been acquired by a bona fide purchaser, the Securities Registrar on behalf
of the Trust shall execute and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like denomination. In connection with the issuance of any new Certificate
under this Section 7.9, the Securities Registrar may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant
to this Section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
Section J. Deemed Security Holders.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
Section K. Form and Dating.
The Capital Securities shall be evidenced by one or more certificates
substantially in the form of Exhibit A and the Common Securities shall be
evidenced by one or more certificates substantially in the form of Exhibit B,
each of which is hereby incorporated in and expressly made a part of this
Declaration. The Property Trustee's certificate of authentication shall be
substantially in the form set forth in Exhibits A and B. Certificates
representing the Securities may be printed, typewritten, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Regular Trustees, as evidenced by their execution thereof. The Securities
may have letters, CUSIP or other numbers, notations or other marks of
identification or designation and such legends or endorsements required by law,
stock exchange rule, agreements to which the Trust is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
-------- ----
to the Trust). The Trust at the direction of the Sponsor shall furnish any such
legend not contained in Exhibit A to the Property Trustee in writing. Each
Capital Security
<PAGE>
48
shall be dated the date of its authentication. The forms of Securities set forth
in Exhibits A and B are part of the terms of this Declaration and to the extent
applicable, the Property Trustee and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby.
1. Global Securities. Securities offered and sold to QIBs in
-----------------
reliance on Rule 144A shall be issued in the form of one or more Global
Securities in definitive, fully registered form without distribution coupons
with the appropriate global legends in the form set forth in Exhibit A hereto,
and the Private Placement Legend, which shall be deposited with the Property
Trustee, at its Wilmington, Delaware office, as custodian for the Depositary,
and registered in the name of the Depositary or a nominee of the Depositary,
duly executed by the Trust and authenticated by the Property Trustee as herein
provided. The aggregate liquidation amount of Capital Securities represented by
Global Security may from time to time be increased or decreased by adjustments
made on the records of the Property Trustee at the direction of the Sponsor, and
the Depositary or its nominee as hereinafter provided.
2. Book-Entry Provisions. This Section 7.11(b) shall apply only to
---------------------
Global Securities to be deposited with or on behalf of the Depositary. A
Regular Trustee shall execute and the Property Trustee shall, in accordance with
this Section 7.11(b), authenticate and make available for delivery initially one
or more Global Securities that (i) shall be registered in the name of Cede & Co.
or other nominee of the Depositary and (ii) shall be delivered by the Property
Trustee to the Depositary pursuant to the Depositary's written instructions or,
if no such instructions are received by the Property Trustee, held by the
Property Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary shall have no rights
under this Declaration with respect to any Global Security held on their behalf
by the Depositary or by the Property Trustee as the custodian of the Depositary
or under such Global Security, and the Depositary may be treated by the Trust,
the Property Trustee and any agent of the Trust or the Property Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
3. Definitive Capital Securities. Except as provided in this
-----------------------------
Declaration, owners of beneficial interests in a Global Security will not be
entitled to receive physical delivery of certificated Capital Securities
("Definitive Capital Securities"). Purchasers of Securities (other than QIBs)
who are "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) will receive Capital Securities in the form of
individual certificates in definitive, fully registered form without
distribution coupons and with the Private Placement Legend ("Restricted
Definitive Capital Securities"); provided, however, that upon transfer of such
-------- -------
Restricted Definitive Capital Securities to a QIB, such Restricted
<PAGE>
49
Definitive Capital Securities will, unless the Global Security has previously
been exchanged, be exchanged for an interest in a Global Security pursuant to
the provisions of Section 7.12(d). Restricted Definitive Capital Securities will
bear the Private Placement Legend unless removed in accordance with Section
7.12.
4. Authorized Denominations. The Capital Securities are issuable
------------------------
only in denominations of $100,000 and integral multiples of $1,000 in excess
thereof.
Section L. Transfer Procedures and Restrictions.
1. General. Except as otherwise provided in Section 7.12(b), if
-------
Capital Securities are issued upon the transfer, exchange or replacement of
Capital Securities bearing the Private Placement Legend, or if a request is made
to remove such Private Placement Legend on Capital Securities, the Capital
Securities so issued shall bear the Private Placement Legend, or the Private
Placement Legend shall not be removed, as the case may be, unless either (i) the
date of such issuance or request is two years after the later of the date of
original issue and the last date on which the Sponsor or any Affiliate of the
Sponsor was the owner of such Capital Securities (or any predecessor thereto) or
(ii) there is delivered to the Trust and the Property Trustee such satisfactory
evidence, which shall include an opinion of counsel rendered by a law firm
having a national securities practice, as may be reasonably required by the
Sponsor and the Property Trustee, that neither the legend nor the restrictions
on transfer set forth therein are required to ensure that transfers thereof are
made pursuant to an exception from the registration requirements of the
Securities Act or, with respect to Transfer Restricted Securities, that such
Securities are not "restricted" within the meaning of Rule 144. Upon provision
of such satisfactory evidence, the Property Trustee, at the written direction of
the Trust, shall authenticate and deliver Capital Securities that do not bear
the legend.
2. Transfers After Effectiveness of a Registration Statement. After
---------------------------------------------------------
the effectiveness of any registration statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply (other than (i) the legend requiring that transfers of
Capital Securities be made in blocks having an aggregate liquidation amount of
not less than $100,000 and (ii) the Private Placement Legend with respect to any
Holder of such Capital Securities who is (A) a broker-dealer who purchased
Transfer Restricted Securities directly from the Trust for resale pursuant to
Rule 144A or any other available exemption under the Securities Act, (B) a
Person participating in the distribution of the Transfer Restricted Securities
or (C) a Person who is an Affiliate of the Trust), and beneficial interests in a
Global Security will be available to transferees of such Capital Securities,
upon exchange of the transferring Holder's Restricted Definitive Capital
Security or directions to transfer such Holder's beneficial interest in the
Global Security as the case may be. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Global Security shall be
effective unless the transferor delivers to the Trust a certificate in a form
substantially similar to that attached hereto as the form of "Assignment" in
Exhibit A. Except as otherwise provided in Section 7.12(l), after the
effectiveness of any such registration statement, the Trust shall issue and the
Property Trustee, upon a written order of
<PAGE>
50
the Trust signed by one Regular Trustee, shall authenticate a Global Security
without the Private Placement Legend for deposit with the Depositary to evidence
transfers of (i) beneficial interests from the Global Security with the Private
Placement Legend and (ii) Restricted Definitive Capital Securities to the Global
Security without the Private Placement Legend.
3. Transfer and Exchange of Definitive Capital Securities. When
------------------------------------------------------
Definitive Capital Securities are presented to the Security Registrar:
(x) to register the transfer of such Definitive Capital Securities;
or
(y) to exchange such Definitive Capital Securities for an equal
aggregate liquidation amount of Definitive Capital Securities,
the Securities Registrar shall register the transfer or make the exchange as
requested if the requirements of Section 7.8 or 7.9 are satisfied and in the
case of Definitive Capital Securities that are Restricted Definitive Capital
Securities:
(A) if such Restricted Definitive Capital Securities are being
delivered to the Security Registrar by a Holder for registration in
the name of such Holder, without transfer, receipt by the Securities
Registrar of a certification from such Holder to that effect; or
(B) if such Restricted Definitive Capital Securities are being
transferred: (i) receipt by the Security Registrar of a certification
from the transferor in a form substantially similar to that attached
hereto as the form of "Assignment" in Exhibit A, and (ii) if the Trust
or Security Registrar so requests, evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in the
Private Placement Legend.
4. Restrictions on Transfer of a Definitive Capital Security for a
---------------------------------------------------------------
Beneficial Interest in a Global Capital Security. A Definitive Capital Security
- ------------------------------------------------
may not be exchanged for a beneficial interest in the applicable Global Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Securities Registrar of a Definitive Capital Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Securities Registrar, together with:
a. if such Definitive Capital Security is a Restricted Definitive
Capital Security, certification in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit A; and
b. whether or not such Definitive Capital Security is a Restricted
Definitive Capital Security, written instructions directing the Securities
Registrar to make, or to direct the Depositary to make, an adjustment on
its books and records with respect to
<PAGE>
51
the appropriate Global Security to reflect an increase in the number of the
Capital Securities represented by such Global Security,
then the Securities Registrar shall cancel such Definitive Capital Security and
cause, or direct the Depositary to cause, the aggregate liquidation amount of
Capital Securities represented by the appropriate Global Security shall be
increased accordingly. If no Global Securities are then outstanding, the Trust
shall issue and the Property Trustee shall authenticate, upon written order of
any Regular Trustee, an appropriate number of Capital Securities in global form.
5. Transfer and Exchange of Global Securities. Subject to Section
------------------------------------------
7.12(f), the transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depositary, in accordance with this
Declaration (including applicable restrictions on transfer set forth herein, if
any) and the procedures of the Depositary therefor.
6. Transfer of a Beneficial Interest in a Global Security for a
------------------------------------------------------------
Definitive Capital Security.
- ---------------------------
a. Any Person having a beneficial interest in a Global Security may
upon request, but only upon 20 days prior written notice to the Securities
Registrar and only if accompanied by the information specified below,
exchange such beneficial interest for a Definitive Capital Security
representing the same aggregate liquidation amount of Capital Securities.
Upon receipt by the Securities Registrar from the Depositary or its nominee
on behalf of any Person having a beneficial interest in a Global Security
of written transfer instructions and a certification from the transferor in
a form substantially similar to that attached hereto as the form of
"Assignment" in Exhibit A, which may be submitted by facsimile, then the
Securities Registrar will cause the aggregate number of Capital Securities
referenced in such transfer instructions represented by the applicable
Global Security to be reduced on its books and records and, following such
reduction, the Trust will execute and the Property Trustee will
authenticate and make available for delivery to the transferee a Definitive
Capital Security.
b. Definitive Capital Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 7.12(f) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its participants or otherwise,
shall instruct the Securities Registrar in writing. The Property Trustee
shall deliver such Definitive Capital Securities to the Persons in whose
names such Definitive Capital Securities are so registered in accordance
with such instructions of the Depositary.
7. Restrictions on Transfer and Exchange of Global Securities.
----------------------------------------------------------
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in Section 7.12(h)), a Global Security may not be
transferred as a whole except by the Depositary
<PAGE>
52
to a nominee of the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
8. Authentication of Definitive Capital Securities. If at any time:
-----------------------------------------------
a. there occurs a Trust Enforcement Event which is continuing, or
b. the Trust, in its sole discretion, notifies the Property Trustee
in writing that it elects to cause the issuance of Definitive Capital
Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a written
order of the Trust signed by one Regular Trustee requesting the authentication
and delivery of Definitive Capital Securities to the Persons designated by the
Trust, will authenticate and make available for delivery Definitive Capital
Securities, equal in number to the aggregate liquidation amount of Capital
Securities represented by the Global Securities, in exchange for such Global
Securities.
9. Legend.
------
a. Except as permitted by the following paragraph (ii), each
Certificate evidencing the Global Securities and the Definitive
Capital Securities (and all Certificates issued in exchange therefor
or substitution thereof) shall bear a legend (the "Private Placement
Legend") in substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE `SECURITIES
ACT'), OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY,
BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR
THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A
`RESTRICTED' SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE
<PAGE>
53
TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS
TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR) EXCEPT
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C)
FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
`QUALIFIED INSTITUTIONAL BUYER' (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH
CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND
(III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS
SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION
PURSUANT TO THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO THE RIGHT
OF THE ISSUER OF THIS SECURITY AND THE PROPERTY TRUSTEE FOR SUCH
SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM
AND SUBSTANCE.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY
IN 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
<PAGE>
54
DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL
SECURITIES."
(ii) Upon any sale or transfer of a Restricted Capital Security
(including any Restricted Capital Security represented by a Global
Security) pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 under the Securities Act after such
registration statement ceases to be effective:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Security Registrar shall permit the
Holder thereof to exchange such Restricted Capital Security for a
Definitive Capital Security that does not bear the Private Placement
Legend (other than the legend requiring that transfers of Capital
Securities be made in blocks having an aggregate liquidation amount of
not less than $100,000) and rescind any restriction on the transfer of
such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is
represented by a Global Security, the Security Registrar shall permit
the Holder of such Global Security to exchange such Global Security
for another Global Security that does not bear the Private Placement
Legend (other than the legend requiring that transfers of Capital
Securities be made in blocks having an aggregate liquidation amount of
not less than $100,000).
(j) Cancellation or Adjustment of Global Security. At such time as
---------------------------------------------
all beneficial interests in a Global Security have either been exchanged for
Definitive Capital Securities to the extent permitted by this Declaration or
redeemed, repurchased or canceled in accordance with the terms of this
Declaration, such Global Security shall be returned to the Depositary for
cancellation or retained and canceled by the Property Trustee. At any time
prior to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Capital Securities, Capital Securities represented by
such Global Security shall be reduced and an adjustment shall be made on the
books and records of the Depositary and the Security Registrar, to reflect such
reduction.
(k) No Obligation.
-------------
(i) Neither the Sponsor, the Trust nor the any Trustee shall have any
responsibility or obligation to any beneficial owner of a Global Security,
any participant in the Depositary or other Person with respect to the
accuracy of the records of the Depositary or its nominee or of any
participant thereof, with respect to any ownership interest in the Capital
Securities or with respect to the delivery to any participant in the
Depositary, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the
payment of any amount, under or with
<PAGE>
55
respect to such Capital Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders under the
Capital Securities shall be given or made only to or upon the order of the
registered Holders (which shall be the Depositary or its nominee in the
case of a Global Security). The rights of beneficial owners in any Global
Security shall be exercised only through the Depositary subject to the
applicable rules and procedures of the Depositary. The Property Trustee and
Securities Registrar may conclusively rely and shall be fully protected in
relying upon information furnished by the Depositary or any agent thereof
with respect to its participants and any beneficial owners.
(ii) The Property Trustee and the Security Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance with
any restrictions on transfer imposed under this Declaration or under
applicable law with respect to any transfer of any interest in any Capital
Security (including any transfers between or among Depositary participants
or beneficial owners in any Global Security) other than to require delivery
of such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by, the terms of
this Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
(l) Exchange of Transfer Restricted Securities for New Capital
----------------------------------------------------------
Securities. The Transfer Restricted Securities may be exchanged for New Capital
- ----------
Securities pursuant to the terms of the Exchange Offer. The Property Trustee
shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the New Capital Securities, the
transactions contemplated by the Exchange Offer have been
consummated; and
(B) the number of Transfer Restricted Securities properly
tendered in the Exchange Offer that are represented by a
Global Security and the number of Transfer Restricted
Securities properly tendered in the Exchange Offer that are
represented by Definitive Capital Securities, the name of
each Holder of such Definitive Capital Securities, the
liquidation amount of Capital Securities properly tendered
in the Exchange Offer by each such Holder and the name and
address to which Definitive Capital Securities for New
Capital Securities shall be registered and sent for each
such Holder.
The Property Trustee, upon receipt of (i) such Officers' Certificate
and (ii) an opinion of counsel (x) to the effect that the New Capital Securities
have been registered under
<PAGE>
56
Section 5 of the Securities Act and the Indenture has been qualified under the
Trust Indenture Act and (y) with respect to the matters set forth in Section 1
of the Registration Rights Agreement, shall authenticate (A) a Global Security,
executed and delivered by the Trust to the Property Trustee, representing New
Capital Securities in aggregate liquidation amount equal to the aggregate
liquidation amount of Transfer Restricted Securities represented by a Global
Security indicated in such Officers' Certificate as having been properly
tendered and (B) Definitive Capital Securities, executed and delivered by the
Trust to the Property Trustee, representing New Capital Securities registered in
the names of and in the liquidation amounts indicated in such Officers'
Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Transfer Restricted Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Security representing Transfer Restricted Securities indicating the reduction in
the number and aggregate liquidation amount represented thereby as a result of
the Exchange Offer.
The Trust shall deliver such authenticated Definitive Capital
Securities representing New Capital Securities to the Holders thereof as
indicated in such Officer's Certificate.
(m) Minimum Transfers. Transfer Restricted Securities and, when
-----------------
issued, New Capital Securities may only be transferred in minimum blocks of
$100,000 aggregate liquidation amount. Any transfer of 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 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.
Section M. CUSIP Numbers.
The Trust in issuing the Capital Securities may use "CUSIP" numbers
(if then generally in use), and, if so used, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
-------- ----
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
<PAGE>
57
ARTICLE VIII.
DISSOLUTION AND TERMINATION OF TRUST
Section A. Terminating Events. The Trust shall dissolve upon the
first to occur of any of the following events:
1. the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Holder of the Common Securities;
2. the written direction to the Property Trustee from the Sponsor at
any time to terminate the Trust and, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to distribute
Debentures to Holders in exchange for the Securities (which direction is
optional and wholly within the discretion of the Sponsor);
3. the redemption of all of the Capital Securities in connection with
the redemption or maturity of all of the Debentures; and
4. the entry of an order for dissolution of the Trust by a court of
competent jurisdiction.
Section B. Termination. The respective obligations and
responsibilities of the Trustees and the Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Holders upon the liquidation of the Trust pursuant to
Section 8.3, or upon the redemption of all of the Securities pursuant to Section
7.3, of all amounts required to be distributed hereunder upon the final payment
of the Securities; (b) the payment of any expenses owed by the Trust; and (c)
the discharge of all duties of the Regular Trustees, including the performance
of any tax reporting obligations with respect to the Trust or the Holders.
Section C. Liquidation. 1. At such time as an event specified in
clause (a), (b) or (d) of Section 8.1 occurs, the Trust shall be liquidated by
the Regular Trustees as expeditiously as the Regular Trustees determine to be
possible by distributing, after satisfaction or the making of reasonable
provisions for the payment of liabilities to creditors of the Trust as provided
by applicable law, to each Holder an interest in the Debentures Pro Rata,
subject to Sections 7.1(b) and 8.3(d). The date of liquidation (the
"Liquidation Date") shall be as specified in writing by the Regular Trustees to
the Property Trustee, and thereafter notice of liquidation shall be given by the
Property Trustee by first-class mail, postage prepaid mailed not less than 30
nor more than 60 days prior to the Liquidation Date to each Holder of Securities
at such Holder's address appearing in the Securities Register. All notices of
liquidation shall:
a. state the CUSIP number of the Securities;
<PAGE>
58
b. state the Liquidation Date;
c. state that from and after the Liquidation Date, the
Securities will no longer be deemed to be outstanding and any Certificates
not surrendered for exchange will be deemed to represent a Pro Rata portion
of Debentures; and
d. provide such information with respect to the mechanics by
which Holders may exchange Certificates for Debentures, or if Section
8.3(d) applies receive a Liquidation Distribution, as the Regular Trustees
shall determine is appropriate.
2. Except where Section 8.1(c) or 8.3(d) applies, in order to effect
the liquidation of the Trust and distribution of the Debentures to Holders, the
Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as Exchange Agent or through the appointment of a separate Exchange
Agent, shall establish such procedures as directed by the Trust to effect the
distribution of Debentures in exchange for the outstanding Certificates.
3. Except where Section 8.1(c) or 8.3(d) applies, after the
Liquidation Date, (i) the Securities will no longer be deemed to be outstanding,
(ii) certificates representing a Pro Rata portion of Debentures will be issued
to Holders of Securities, upon surrender of such Certificates to the Security
Registrar or its agent for exchange, (iii) any Certificates not so surrendered
for exchange will be deemed to represent a Pro Rata portion of Debentures,
accruing interest at the rate provided for in the Debentures from the last
Distribution date on which a Distribution was made on such Securities until such
Certificates are so surrendered (and until such Certificates are so surrendered,
no payments of interest or principal will be made to Holders of Securities with
respect to such Debentures) and (iv) all rights of Holders holding Securities
will cease, except the right of such Holders to receive Debentures upon
surrender of Certificates.
4. In the event that, notwithstanding the other provisions of this
Section 8.3, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Regular Trustees not to be
practical, the assets of the Trust shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Regular Trustees. In such event, on
the date of the dissolution, winding-up or other termination of the Trust,
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 liquidation amount
per Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding up or termination, the 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 by the Trust
on the Securities shall be applied Pro Rata (subject to Section 7.1(b)) based
upon liquidation amounts.
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ARTICLE IX.
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
Section A. Liability.
1. Except as expressly set forth in this Declaration, the Guarantee
and the terms of the Securities, the Sponsor:
a. shall not be personally liable for the return of any
portion of the capital contributions (or any return thereon) of the Holders
of the Securities which shall be made solely from assets of the Trust; and
b. shall not be required to pay to the Trust or to any Holder
of Securities any deficit upon a liquidation of the Trust or otherwise.
2. The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
3. Pursuant to Section 3803(a) of the Business Trust Act, the Holders
of the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
Section B. Exculpation.
1. No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be liable or any such loss, damage or claim incurred
by reason of such Indemnified Person's gross negligence or willful misconduct
with respect to such acts or omissions.
2. An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses or any other facts
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pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
Section C. Fiduciary Duty.
1. To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to an other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
2. Unless otherwise expressly provided herein:
a. whenever a conflict of interest exists or arises between
any Covered Persons; or
b. whenever this Declaration or any other agreement
contemplated herein provides that an Indemnified Person shall act in a
manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
3. Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
a. in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no duty
or obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
b. in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
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Section D. Indemnification.
1.a. The Sponsor shall indemnify, to the full extent permitted by
law, any Debenture Issuer Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Trust) by reason of the fact
that he is or was a Debenture Issuer Indemnified Person against expenses
(including attorney fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith, without gross negligence and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the Debenture Issuer Indemnified Person did not act in good faith, without gross
negligence and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
b. The Sponsor shall indemnify, to the full extent permitted by law,
any Debenture Issuer Indemnified Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Trust to procure a judgment in its favor by reason of the
fact that he is or was a Debenture Issuer Indemnified Person against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith, without gross negligence and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust and except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such Debenture Issuer Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such Person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
c. Any indemnification under paragraphs (i) and (ii) of this Section
94 (unless ordered by a court) shall be made by the Sponsor only as authorized
in the specific case upon a determination that indemnification of the Debenture
Issuer Indemnified Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority vote of a
Quorum consisting of such Regular Trustees who were not parties to such action,
suit or proceeding, (2) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Holder of the
Common Securities.
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d. Expenses (including attorneys' fees) incurred by a Debenture
Issuer Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in paragraphs (i) and (ii)
of this Section 94 shall be paid by the Sponsor in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Debenture Issuer Indemnified Person to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Sponsor as authorized in this Section 94. Notwithstanding the foregoing, no
advance shall be made by the Sponsor if a determination is reasonably and
promptly made (i) by the Regular Trustees by a majority vote of a Quorum of
disinterested Regular Trustees, (ii) if such a Quorum is not obtainable, or,
even if obtainable, if a Quorum of disinterested Regular Trustees so directs, by
independent legal counsel in a written opinion or (iii) the Holder of the Common
Securities, that, based upon the facts known to the Regular Trustees, counsel or
the Holder of the Common Securities at the time such determination is made, such
Debenture Issuer Indemnified Person acted in bad faith, was grossly negligent or
in a manner that such person did not believe to be in or not opposed to the best
interests of the Trust, or, with respect to any criminal proceeding, that such
Debenture Issuer Indemnified Person believed or had reasonable cause to believe
his conduct was unlawful. In no event shall any advance be made in instances
where the Regular Trustees, independent legal counsel or the Holder of the
Common Securities reasonably determine that such person deliberately breached
his duty to the Trust or the Holders.
e. The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 9.4(a) shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, or by any vote of
stockholders or disinterested directors of the Sponsor or by any vote of Holders
of Capital Securities or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 9.4(a) shall be deemed to be provided by a
contract between the Sponsor and each Debenture Issuer Indemnified Person who
serves in such capacity at any time while this Section 9.4(a) is in effect. Any
repeal or modification of this Section 9.4(a) shall not affect any rights or
obligations then existing.
f. The Sponsor or the Trust may purchase and maintain insurance on
behalf of any person who is or was a Debenture Issuer Indemnified Person against
any liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 9.4(a).
g. For purposes of this Section 9.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4(a) with
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respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
h. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 94 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a Debenture
Issuer Indemnified Person and shall inure to the benefit of the heirs, executors
and administrators of such a person. The obligation to indemnify as set forth
in this Section 94 shall survive the satisfaction and discharge of this
Declaration.
2. The Sponsor agrees 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 of
the Persons in (i) through (iv) 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 9.4(b)
shall survive the satisfaction and discharge of this Declaration and the
resignation or removal of the Property Trustee or the Delaware Trustee.
Section E. Outside Businesses.
Each Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the activities of the Trust, and the Trust and the Holders of Securities shall
have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the activities of the Trust, shall not be deemed
wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee or
the Property Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and each Covered Person,
the Sponsor, the Delaware Trustee and the Property Trustee shall have the right
to take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Each
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
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ARTICLE X.
ACCOUNTING
Section A. Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
Section B. Certain Accounting Matters.
1. At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles. The
Trust shall use the accrual method of accounting for United States Federal
income tax purposes. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust by
a firm of independent certified public accountants selected by the Regular
Trustees.
2. The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust, including a
balance sheet of the Trust as of the end of such Fiscal Year, and the related
statements of income or loss.
3. The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, an annual United States Federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
4. The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States Federal income
tax return, on a Form 1041 or such other form required by United States Federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
Section C. Banking.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
respect of the Debentures held by the Property Trustee shall be made directly to
the Property Account and no
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other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Property Trustee shall designate the signatories for
the Property Account.
Section D. Withholding.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of
any claim for excess withholding, Holders shall be limited to an action against
the applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XI.
AMENDMENTS AND MEETINGS
Section A. Amendments.
1. Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by (i) the Regular Trustees (or, if
there are more than two Regular Trustees, a majority of the Regular Trustees)
and (ii) by the Property Trustee if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee; and (iii) by the
Delaware Trustee if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee.
2. No amendment shall be made, and any such purported amendment shall
be void and ineffective:
a. unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities);
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b. unless, in the case of any proposed amendment which affects
the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(1) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(2) an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities) and
that all conditions precedent, if any, in this Declaration to the
execution and delivery of such amendment have been satisfied,
provided, however, the Property Trustee shall not be required to sign any
-------- -------
such amendment; and
c. unless the Trust shall have first received an opinion of
counsel rendered by a law firm having a national tax and securities
practice to the effect that such amendment would not:
(1) cause the Trust to be classified as an association or
publicly traded partnership taxable as a corporation for United States
Federal income tax purposes;
(2) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(3) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act.
3. At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would (i) adversely affect the rights,
privileges or preferences of the Holders, (ii) result in the dissolution,
winding-up or termination of the Trust other than pursuant to the terms of this
Declaration, (iii) change the amount or timing of any Distribution of the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date or (iv) restrict
the right of a Holder of Securities to institute suit for the enforcement of any
such payment on or after such date, then the Holders of the Securities voting
together as a single class will be entitled to vote on such amendment and such
amendment shall not be effective except with the approval of at least a Majority
in Liquidation Amount of the Securities affected thereby; provided that, if any
amendment referred to in clause (i) above would adversely affect only the
Capital Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment
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and such amendment shall not be effective except with the approval of a Majority
in Liquidation Amount of such class of Securities.
4. Section 9.1(c) and this Section 11.1 shall not be amended without
the consent of all of the Holders of the Securities.
5. Article 5 shall not be amended without the consent of the Holders
of a Majority in Liquidation Amount of the Common Securities.
6. The rights of the Holders of the Common Securities under Article 6
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities.
7. Notwithstanding Section 11.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
a. cure any ambiguity;
b. correct or supplement any provision in this Declaration
that may be inconsistent with any other provision of this Declaration; and
c. to modify, eliminate or add to any provision of this
Declaration, provided such modification, elimination or,addition would not
adversely affect the rights, privileges or preferences of any Holder of the
Securities.
8. The issuance of a Trustees' Authentication Order by the Regular
Trustees for purposes of establishing the terms and form of the Securities as
contemplated by Section 7.1 shall not be deemed an amendment of this Declaration
subject to the provisions of this Section 11.1.
Section B. Meetings of the Holders of Securities; Action by Written
Consent.
1. Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in Liquidation Amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more notices in
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing
the Certificates held by the Holders of Securities exercising the right to call
a meeting and only those
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Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
2. Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
a. notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days and
not more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is permitted or required
under this Declaration or the rules of any stock exchange on which the
Capital Securities are listed or admitted for trading, such vote, consent
or approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting forth the action so
taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written ballot submitted to the
Security Holders for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
b. each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. No proxy shall be valid after the expiration
of 11 months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the pleasure of the Holder of Securities
executing such proxy. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be governed by
the General Corporation Law of the State of Delaware relating to proxies,
and judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
c. each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the Regular
Trustees may designate; and
d. unless the Business Trust Act, this Declaration, the terms
of the Securities, the Trust Indenture Act or the listing rules of any
stock exchange on which the Capital Securities are then listed for trading,
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting
at which any matter is to be voted on by any Holders of Securities, waiver
of any such
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notice, action by consent without a meeting, the establishment of a record
date, quorum requirements, voting in person or by proxy or any other matter
with respect to the exercise of any such right to vote.
ARTICLE XII.
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
Section A. Representations and Warranties of the Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
1. the Property Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization, with trust power and authority to
execute and deliver, and to carry out and perform its obligations under the
terms of, this Declaration;
2. the Property Trustee satisfies the requirements set forth in
Section 6.3(a);
3. the execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Declaration under Delaware law
has been duly executed and delivered by the Property Trustee, and
constitutes a legal, valid and binding obligation of the Property Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency and other similar laws
affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
4. the execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
5. no consent, approval or authorization of, or registration with or
notice to, any Delaware or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration.
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Section B. Representations and Warranties of the Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
1. the Delaware Trustee satisfies the requirements set forth in
Section 6.2 and has the power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration
and, if it is not a natural person, is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation or
organization;
2. the execution, delivery and performance by the Delaware Trustee of
this Declaration has been duly authorized by all necessary corporate action
on the part of the Delaware Trustee. This Declaration under Delaware law
constitutes a legal, valid and binding obligation of the Delaware Trustee,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, reorganization, moratorium, insolvency and other similar laws
affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
3. the execution, delivery and performance of this Declaration by the
Delaware Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Delaware Trustee; and
4. no consent, approval or authorization of, or registration with or
notice to, any Delaware or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this
Declaration.
ARTICLE XIII.
MISCELLANEOUS
Section A. Notices.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
1. if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust
may give notice of to the Property Trustee, the Delaware Trustee and the
Holders of the Securities):
<PAGE>
71
The First American Financial Corporation
114 East Fifth Street
Santa Ana, California 90271
2. if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice of to
the Regular Trustees, the Property Trustee and the Holders of the
Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington Delaware 19890-0001
Attention: Corporate Trust Administration
fax: 302-427-4749
phone: 302-651-1000
3. if given to the Property Trustee, at its Corporate Trust Office
(or such other address as the Property Trustee may give notice of to the
Regular Trustees, the Delaware Trustee and the Holders of the Securities).
4. if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder
of the Common Securities may give notice of to the Property Trustee, the
Delaware Trustee and the Trust).
5. if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices 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 B. Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
(without regard to principles of conflicts of laws).
Section C. Intention of the Parties.
<PAGE>
72
It is the intention of the parties hereto that the Trust be classified
for United States Federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted in a manner consistent with
such classification.
Section D. Headings.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
Section E. Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether or not so expressed.
Section F. Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
Section G. Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
THE FIRST AMERICAN FINANCIAL CORPORATION,
as Sponsor and Holder of Common Securities
BY: /s/ THOMAS A. KLEMENS
--------------------------------------
Name: Thomas A. Klemens
Title: Executive Vice President and Chief
Financial Officer
WILMINGTON TRUST COMPANY, as Property
Trustee
BY: /s/ EMMETT R. HARMON
-------------------------------------
Name: Emmett R. Harmon
Title: Vice President
WILMINGTON TRUST COMPANY, as Delaware
Trustee
BY: /s/ EMMETT R. HARMON
-------------------------------------
Name: Emmett R. Harmon
Title: Vice President
Thomas A. Klemens, as Regular Trustee
BY: /s/ THOMAS A. KLEMENS
-------------------------------------
Name: Thomas A. Klemens
Title: Executive Vice President and Chief
Financial Officer
Parker S. Kennedy, as Regular Trustee
BY: /s/ PARKER S. KENNEDY
-------------------------------------
Name: Parker S. Kennedy
Title: Regular Trustee
<PAGE>
EXHIBIT A
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.
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS,
ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED
A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT;
(II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE
LATER OF THE DATE WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF
AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR) EXCEPT (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
<PAGE>
2
IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE
RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION
PURSUANT TO THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO THE RIGHT OF THE ISSUER
OF THIS SECURITY AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION
ACCEPTABLE TO THEM IN FORM AND SUBSTANCE.
THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
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. 31847J AA8
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 the aggregate liquidation
amount of Capital Securities of the Trust specified in Schedule A hereto
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.
<PAGE>
3
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.
<PAGE>
4
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.
Dated: _____ ___, 19__ Wilmington Trust Company
as Trustee
By:____________________________________________
Authorized Signatory
<PAGE>
5
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:/*/:________________________________________________________
In connection with any transfer of any of the Capital Securities
evidenced by this certificate, the undersigned confirms that such Capital
Securities are being:
CHECK ONE BOX BELOW
(1) [_] exchanged for the undersigned's own account without transfer; or
- --------------
/*/ 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.
<PAGE>
6
(2) [_] transferred pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) [_] transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act of 1933, as amended that is acquiring the Capital
Securities for its own account, or for the account of such an
institutional "accredited investor," for investment purposes and not
with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act of 1933, as amended;
or
(4) [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(5) [_] transferred pursuant to an effective registration statement under the
Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Security Registrar will refuse
to register any of the Capital Securities evidenced by this certificate in the
name of any Person other than the registered Holder thereof; provided, however,
-------- -------
that if box (3) or (4) is checked, the Registrar may require, prior to
registering any such transfer of the Capital Securities, such legal opinions,
certifications and other information as the Trust or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, such as the exemption provided by Rule 144 under such
Act; provided, further, that (i) if box (2) is checked, the transferee must also
-------- -------
certify that it is a qualified institutional buyer as defined in Rule 144A or
(ii) if box (3) is checked, the transferee must also provide to the Registrar a
Transferee Letter of Representation in the form attached to the Offering
Memorandum of the Trust dated April 17, 1997; provided, further, that after the
date that a registration statement has been filed and so long as such
registration statement continues to be effective, the Security Registrar may
only permit transfers for which box (5) has been checked.
--------------------------------------------
Signature
<PAGE>
7
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate No. Number of Common Securities:
Certificate Evidencing Common Securities
of
First American Capital Trust I
8.50% Common Securities
(liquidation amount $1,000 per Common 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 the aggregate liquidation
amount of Common Securities of the Trust specified in schedule A hereto
representing undivided beneficial ownership interests in the assets of the Trust
designated the 8.50% Common Securities (liquidation amount $1,000 per Common
Security) (the "Common Securities"). The Common 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
Common 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.
<PAGE>
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common 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.
Dated: ________ ___, 19__
Wilmington Trust Company
as Trustee
By:
-------------------------------
Authorized Signatory
<PAGE>
9
EXHIBIT C
FORM OF TRUSTEES' AUTHENTICATION ORDER
__________, _____
Wilmington Trust Company
as Property Trustee
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Ladies and Gentlemen:
Reference is made to the Amended and Restated Declaration of Trust of First
American Capital Trust I, dated as of April 22, 1997 (the "Trust Agreement"),
among The First American Financial Corporation (the "Sponsor"), Wilmington Trust
Company, as Property Trustee (the "Property Trustee") and Delaware Trustee and
the Regular Trustees named therein, the resolution of the Finance Committee of
the Corporation's Chief Financial Officer to whom the Finance Committee
delegated certain authority, providing for the issuance of the Certificates
evidencing _______ Capital Securities (liquidation amount $1,000 per Capital
Security) and _____ Common Securities (liquidation amount $1,000 per Common
Security), there have been delivered to you _______ Capital Securities and
______ Common Securities in the liquidation amount of $___________. Please
authenticate such Capital Securities and hold the same as Property Trustee on
behalf of The Depository Trustee Company. Please authenticate such Common
Securities and hold the same as Property Trustee on behalf of the Sponsor.
Very truly yours,
THE FIRST AMERICAN CAPITAL TRUST
By:________________________
[Name]
Regular Trustee
By:________________________
Mark R Arnesen
Secretary
<PAGE>
EXHIBIT 4.4
Composite Conformed Copy
************************************************************
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
July 29, 1997
among
THE FIRST AMERICAN FINANCIAL CORPORATION
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
_________________________
CHASE SECURITIES INC.,
as Arranger
************************************************************
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Section 1. Definitions and Accounting Matters.......................... 1
1.01 Certain Defined Terms................................. 1
1.02 Accounting Terms and Determinations................... 19
1.03 Types of Loans........................................ 20
Section 2. Revolving Credit Commitments, Loans, Notes and Prepayments.. 20
2.01 Loans................................................. 20
2.02 Borrowings............................................ 21
2.03 Changes of Revolving Credit Commitments............... 21
2.04 Commitment Fee........................................ 22
2.05 Lending Offices....................................... 22
2.06 Several Obligations; Remedies Independent............. 22
2.07 Notes................................................. 22
2.08 Optional Prepayments and Conversions or Continuations
of Revolving Credit Loans............................. 23
Section 3. Payments of Principal and Interest.......................... 24
3.01 Repayment of Loans.................................... 24
3.02 Interest.............................................. 24
Section 4. Payments; Pro Rata Treatment; Computations; Etc............. 25
4.01 Payments.............................................. 25
4.02 Pro Rata Treatment.................................... 26
4.03 Computations.......................................... 26
4.04 Minimum Amounts....................................... 26
4.05 Certain Notices....................................... 27
4.06 Non-Receipt of Funds by the Administrative Agent...... 27
4.07 Sharing of Payments, Etc.............................. 28
Section 5. Yield Protection, Etc....................................... 29
5.01 Additional Costs...................................... 29
5.02 Limitation on Types of Revolving Credit Loans......... 32
5.03 Illegality............................................ 32
5.04 Treatment of Affected Loans........................... 33
5.05 Compensation.......................................... 33
5.06 U.S. Taxes............................................ 34
5.07 Replacement of a Lender............................... 35
Section 6. Conditions Precedent........................................ 35
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION> Page
----
<S> <C>
Section 7. Representations and Warranties......................... 37
7.01 Corporate Existence.............................. 37
7.02 Financial Condition.............................. 37
7.03 Litigation....................................... 38
7.04 No Breach........................................ 38
7.05 Action........................................... 39
7.06 Approvals........................................ 39
7.07 Use of Credit.................................... 39
7.08 ERISA............................................ 39
7.09 Taxes, Etc....................................... 39
7.10 Investment Company Act........................... 40
7.11 Public Utility Holding Company Act............... 40
7.12 Environmental Matters............................ 40
7.13 Title to Assets.................................. 41
7.14 True and Complete Disclosure..................... 41
Section 8. Covenants of the Company............................... 41
8.01 Financial Statements, Etc........................ 41
8.02 Litigation....................................... 45
8.03 Existence, Etc................................... 45
8.04 Insurance........................................ 46
8.05 Fundamental Changes.............................. 46
8.06 Limitation on Liens.............................. 46
8.07 Indebtedness..................................... 48
8.08 Total Stockholders' Equity....................... 49
8.09 Total Debt to Total Capitalization............... 49
8.10 Minimum Combined Earnings........................ 49
8.11 Lines of Business................................ 50
8.12 Transactions with Affiliates..................... 50
8.13 Use of Proceeds, Etc............................. 50
8.14 Foreclosure; Etc................................. 50
8.15 Communication with Accountants................... 51
8.16 Sale/Leaseback Transactions...................... 51
Section 9. Events of Default...................................... 51
Section 10. The Administrative Agent............................... 55
10.01 Appointment, Powers and Immunities............... 55
10.02 Reliance by Administrative Agent................. 55
10.03 Defaults......................................... 56
10.04 Rights as a Lender............................... 56
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
10.05 Indemnification......................................... 56
10.06 Non-Reliance on Administrative Agent and Other Lenders.. 57
10.07 Failure to Act.......................................... 57
10.08 Resignation or Removal of Administrative Agent.......... 57
10.09 Consents under Basic Documents.......................... 58
Section 11. Miscellaneous.................................................. 58
11.01 Waiver.................................................. 58
11.02 Notices................................................. 58
11.03 Expenses, Etc........................................... 58
11.04 Amendments, Etc......................................... 60
11.05 Successors and Assigns.................................. 60
11.06 Assignments and Participations.......................... 60
11.07 Survival................................................ 62
11.08 Captions................................................ 62
11.09 Counterparts............................................ 62
11.10 Governing Law; Submission to Jurisdiction............... 62
11.11 Waiver of Jury Trial.................................... 62
11.12 Treatment of Certain Information; Confidentiality....... 63
11.13 Amendment Fees.......................................... 63
11.14 Pledge Agreement........................................ 64
SCHEDULE I - Hazardous Materials
SCHEDULE II - Liens
SCHEDULE III - Indebtedness
EXHIBIT A - Form of Revolving Credit Note
EXHIBIT B - Form of Opinion of Counsel to the Company
EXHIBIT C - Form of Confidentiality Agreement
</TABLE>
(iii)
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 29, 1997 among
THE FIRST AMERICAN FINANCIAL CORPORATION, the LENDERS party hereto, and THE
CHASE MANHATTAN BANK, as Administrative Agent.
The Company (as defined below), the Lenders (as defined below), and
the Administrative Agent are parties to an Amended and Restated Credit Agreement
dated as of April 28, 1993 (as heretofore amended by Amendment No. 1 dated as of
March 31, 1994, Amendment No. 2 dated as of November 22, 1994, Amendment No. 3
dated as of March 31, 1995, Amendment No. 4 dated as of June 1, 1995, Amendment
No. 5 dated as of February 16, 1996, and Amendment No. 6 dated as of April 1,
1997 (which Amended and Restated Credit Agreement amended and restated the First
Credit Agreement, as defined below) and, as supplemented and in effect on the
date hereof, the "Existing Credit Agreement"), pursuant to which certain term
-------------------------
loans and a revolving credit facility were continued and/or made available to
the Company. As of the date hereof, the aggregate outstanding principal amount
of such term loans is $6,140,000 and the revolving credit commitments are equal
to $30,000,000. The parties hereto desire to amend and restate the Existing
Credit Agreement to provide, among other things, for the continuation of the
"Fixed Rate Loan" (as defined in the Existing Credit Agreement), for the
increase of the revolving credit commitments to $75,000,000 and for the
extension of the availability of the Revolving Credit Availability Period, as
hereinafter set forth. Effective as of the Effective Date (as defined below),
the Existing Credit Agreement shall be amended and restated to read in its
entirety as follows, provided that this Amended and Restated Credit Agreement
shall terminate and be of no further force or effect (except for the provisions
of this Amended and Restated Credit Agreement referred to in Sections 11.03 and
11.07 and the definitions ancillary thereto) and the Existing Credit Agreement
shall not be so amended and restated unless the Effective Date shall occur
before August 5, 1997.
Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
----------------------------------
1.01 Certain Defined Terms. As used herein, the following terms
---------------------
shall have the following meanings (all terms defined in this Section 1.01 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
---- -----
"Affiliate" shall mean any Person that directly or indirectly
---------
controls, or is under common control with, or is controlled by, the Company and,
if such Person is an individual, any member of the immediate family (including
parents, spouse, children and siblings) of such individual and any trust whose
principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including, with its correlative meanings,
-------
"controlled by" and "under common control with") shall mean possession, directly
------------- -------------------------
or indirectly, of power to direct
<PAGE>
-2-
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person that owns directly or
--------
indirectly securities having 5% or more of the voting power for the election of
directors or other governing body of a corporation or 5% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person. Without limiting the generality of the foregoing, each of the
following Persons shall, at all times, be Affiliates of the Company: Donald P.
Kennedy, Parker S. Kennedy, any member of their immediate families (including
parents, spouses, children and siblings), any trust whose principal beneficiary
is Donald P. Kennedy or Parker S. Kennedy or one of more members of their
immediate families and any Person who is controlled by such member or trust.
Notwithstanding the foregoing, (a) no individual (other than any Person
specified in the preceding sentence) shall be an Affiliate solely by reason of
his or her being a director, officer or employee of the Company or any of its
Subsidiaries and (b) none of the Subsidiaries of the Company shall be
Affiliates.
This "Agreement" shall mean the Existing Credit Agreement as amended
---------
and restated by this Amendment and Restatement and as the same shall be further
amended and modified and in effect from time to time.
"Applicable Bank Regulatory Authority" shall mean, for any Bank
------------------------------------
Subsidiary, the Federal Deposit Insurance Corporation and all other relevant
bank or thrift regulatory authorities (including, without limitation, relevant
state bank or thrift regulatory authorities) having jurisdiction over such Bank
Subsidiary.
"Applicable Insurance Regulatory Authority" shall mean, for any
-----------------------------------------
Insurance Company, the insurance commission or similar administrative authority
or agency of the State in which such Insurance Company is domiciled.
"Applicable Lending Office" shall mean, for each Lender and for each
-------------------------
Type of Loan made by such Lender, the "Lending Office" of such Lender (or of an
affiliate of such Lender) designated for such Type of Loan on the signature
pages hereof or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify to the Administrative Agent
and the Company as the office by which its Loans of such Type are to be made and
maintained.
"Applicable Margin" shall mean, for any day, with respect to any Base
-----------------
Rate Loan or Eurodollar Loan, or with respect to the commitment fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "Base Rate Spread", "Eurodollar Spread" or "Commitment Fee
Rate", as the case may be, corresponding to the ratings by Moody's and S&P,
respectively, as provided for in the definitions of "Category 1", "Category 2",
"Category 3", "Category 4", and "Category 5" in this Section 1.01.
Credit Agreement
----------------
<PAGE>
-3-
<TABLE>
<CAPTION>
===========================================================
Index Debt Base Rate Eurodollar Committment
Ratings: Spread Spread Fee
- ---------- --------- ---------- -----------
<S> <C> <C> <C>
Category 1 0.0000% 0.3000% 0.1000%
Category 2 0.0000% 0.3500% 0.1250%
Category 3 0.0000% 0.4000% 0.1500%
Category 4 0.0000% 0.5000% 0.2000%
Category 5 0.0000% 0.7500% 0.2500%
===========================================================
</TABLE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this definition), then such
rating agency shall be deemed to have established a rating equivalent to the
rating provided by the rating agency then having a rating in effect; (ii) if the
Moody's Rating or the S&P Rating established or deemed to have been established
shall fall within different Categories, the Applicable Margin shall be based on
the higher of the Moody's Rating or the S&P Rating unless one of the Moody's
Rating or the S&P Rating is two or more Categories lower than the other, in
which case the Applicable Margin shall be determined by reference to the
Category next below that of the higher of the Moody's Rating or the S&P Rating;
and (iii) if the Moody's Rating or the S&P Rating established or deemed to have
been established shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Margin shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Company and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Margin shall be determined
by reference to the rating most recently in effect prior to such change or
cessation.
"Arbitrage Loans" shall mean loans made by any financial institution
---------------
(a "lender") which is, at the time of the making of such loan, a depository of
the Company or any Subsidiary of the Company, to the Company or any such
Subsidiary in an amount not exceeding the amount of the deposits of the Company
or any such Subsidiary held by such depository, the proceeds of which are
invested in U.S. Government securities and/or
Credit Agreement
----------------
<PAGE>
-4-
certificates of deposit rated A-1 or P-1 and having a term not exceeding the
maturity date of such loan (but in no event longer than 92 days), provided that
(i) the relevant borrower shall have a right of offset against such investment
(in the case of certificates of deposit) and (ii) all such loans must be off the
balance sheet of the Company and its Subsidiaries at the last day of any
quarterly fiscal period.
"Bank Subsidiary" shall mean First Security Thrift, First American
---------------
Trust and any other Subsidiary of the Company which is a federally- or state-
chartered thrift, bank or trust company.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as
---------------
amended from time to time.
"Base Rate" shall mean, for any day, a rate per annum equal to the
---------
higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the
Prime Rate for such day. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Base Rate shall take
effect at the time of such change in the Base Rate.
"Basic Documents" shall mean, collectively, this Agreement, the Notes
---------------
and the Pledge Agreement.
"Business Day" shall mean (a) any day (other than a Saturday or a
------------
Sunday) on which commercial banks are not authorized or required to close in New
York City and (b) if such day relates to a payment or prepayment of principal of
or interest on, a Conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Company with respect to any such payment, prepayment,
Conversion or Interest Period, any day (other than a Saturday or a Sunday) on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Capital Lease Obligations" shall mean, for any Person, all
-------------------------
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board), and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"Capital Securities" shall mean preferred securities issued by a
------------------
Subsidiary of the Company organized as a Delaware business trust that are
redeemable, at the option of such issuer, ten years or more after the issuance
thereof, which securities are guaranteed by the
Credit Agreement
----------------
<PAGE>
-5-
Company and the proceeds of which are invested in junior subordinated securities
of the Company.
"Category 1" shall mean a period when the Moody's Rating is at or
----------
above A2 and the S&P Rating is at or above A; "Category 2" shall mean a period
----------
when the Moody's Rating is at or above Baa1 and the S&P Rating is at or above
BBB+; "Category 3" shall mean a period when the Moody's Rating is at or above
----------
Baa2 and the S&P Rating is at or above BBB; "Category 4" shall mean a period
----------
when the Moody's Rating is at or above Baa3 and the S&P Rating is at
or above BBB-; "Category 5" shall mean a period when the Moody's Rating is below
----------
Baa3 and the S&P Rating is below BBB-.
"Chase" shall mean The Chase Manhattan Bank.
-----
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time.
"Combined Earnings" shall mean, for any period, the sum of the
-----------------
following: (a) consolidated earnings (calculated before income taxes, Interest
Expense and minority interest expense) of the Company and its Consolidated
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP) for such period plus depreciation and amortization (to the
----
extent deducted in determining such consolidated earnings) for such period plus
----
(b) Deferred Revenues (or, in the case of a Deferred Revenue deficit, minus an
-----
amount equal to such deficit) for such period.
"Company" shall mean The First American Financial Corporation, a
-------
California corporation.
"Consolidated Subsidiary" shall mean, for any Person, each Subsidiary
-----------------------
of such Person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated with
the financial statements of such Person in accordance with GAAP.
"Continue", "Continuation" and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 2.08 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 2.08 hereof of one Type of Revolving Credit Loans into the
other Type of Revolving Credit Loans, which may be accompanied by the transfer
by a Revolving Credit
Credit Agreement
----------------
<PAGE>
-6-
Lender (at its sole discretion) of a Revolving Credit Loan from one Applicable
Lending Office to another.
"Default" shall mean an Event of Default or an event that with notice
-------
or lapse of time or both would become an Event of Default.
"Deferred Revenues" shall mean, with respect to the Company and its
-----------------
Consolidated Subsidiaries, for any fiscal period, the amount of revenue received
but not recognized (in accordance with GAAP) during such fiscal period minus the
-----
amount of revenue recognized (in accordance with GAAP) but not received during
such fiscal period.
"Dollars" and "$" shall mean lawful money of the United States of
------- -
America.
"Effective Date" shall mean the date on which the conditions specified
--------------
in Section 6 are satisfied (or waived in accordance with Section 11.04 hereof).
"Environmental Claim" shall mean, with respect to any Person, (a) any
-------------------
written notice, claim, demand or other written communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability for
- ------
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law. The term "Environmental Claim"
shall include, without limitation, any claim by any governmental authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Laws" shall mean any and all present and future
------------------
Federal, state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or toxic or
hazardous substances or wastes.
Credit Agreement
----------------
<PAGE>
-7-
"Equity Issuance" shall mean (a) any issuance or sale by the Company
---------------
of (i) any capital stock, (ii) any warrants or options exercisable in respect of
capital stock (other than any warrants or options issued to directors, officers
or employees of the Company or any of its Subsidiaries in their capacity as such
and any capital stock of the Company issued upon the exercise of such warrants)
or (iii) any other security or instrument representing an equity interest (or
the right to obtain any equity interest) in the Company or (b) the receipt by
the Company of any contribution to its capital (whether or not evidenced by any
equity security).
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that
---------------
is a member of any group of organizations (i) described in Section 414(b) or (c)
of the Code of which the Company is a member and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the Company
is a member.
"ERISA Event" shall mean (a) any "reportable event", as defined in
-----------
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Company or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Company or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Company or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar Base Rate" shall mean, with respect to any Eurodollar Loan
--------------------
for any Interest Period therefor, the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the respective rates per annum quoted
by each Reference Bank at approximately 11:00 a.m. London time (or as soon
thereafter as practicable) on the date two Business Days prior to the first day
of such Interest Period for the offering by such Reference Bank to leading banks
in the London interbank market of Dollar deposits having a term comparable to
such
Credit Agreement
----------------
<PAGE>
-8-
Interest Period and in an amount comparable to the principal amount of the
Eurodollar Loan to be made by such Reference Bank for such Interest Period. If
any Reference Bank is not participating in any Eurodollar Loan during any
Interest Period therefor, the Eurodollar Base Rate for such Loan for such
Interest Period shall be determined by reference to the amount of the Loan that
such Reference Bank would have had outstanding had it been participating in such
Loan during such Interest Period.
"Eurodollar Loans" shall mean Revolving Credit Loans the interest
----------------
rates on which are determined on the basis of rates referred to in the
definition of "Eurodollar Base Rate" in this Section 1.01.
"Eurodollar Rate" shall mean, for any Eurodollar Loan for any Interest
---------------
Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Administrative Agent to be equal to the
Eurodollar Base Rate for such Loan for such Interest Period divided by 1 minus
-----
the Reserve Requirement for such Loan for such Interest Period.
"Event of Default" shall have the meaning assigned to such term in
----------------
Section 9 hereof.
"Existing Lender" shall mean each Lender party to the Existing Credit
---------------
Agreement.
"Existing Credit Agreement" has the meaning given to such term in the
-------------------------
recitals to this Agreement.
"FAREISI" shall mean First American Real Estate Information Services,
-------
Inc., a California corporation and a Wholly Owned Subsidiary of the Company.
"FATICO" shall mean First American Title Insurance Company, a
------
California corporation and a Wholly Owned Subsidiary of the Company.
"Federal Funds Rate" shall mean, for any day, the rate per annum
------------------
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for which such rate is to
--------
be determined is not a Business Day, the Federal Funds Rate for such day shall
be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day and (b) if such rate is not so
published for any Business Day, the
Credit Agreement
----------------
<PAGE>
-9-
Federal Funds Rate for such Business Day shall be the average rate charged to
Chase on such Business Day on such transactions as determined by the
Administrative Agent.
"First American Title & Trust Company" shall mean First American Title
------------------------------------
& Trust Company, an Oklahoma corporation and a Subsidiary of the Company.
"First American Trust" shall mean First American Trust Company, a
--------------------
California corporation and a Wholly Owned Subsidiary of the Company.
"First Credit Agreement" shall mean the Credit Agreement between the
----------------------
Company, the Lenders, and the Administrative Agent dated as of April 21, 1992
(as amended by Amendment No. 1 dated as of June 30, 1992, Amendment No. 2 dated
as of September 25, 1992 and Amendment No. 3 dated as of October 29, 1992),
pursuant to which term loans were made to the Company by the Lenders in the
aggregate principal amount of $65,000,000, which such Credit Agreement was
amended and restated by the Existing Credit Agreement.
"First Security Thrift" shall mean First Security Thrift Company, a
---------------------
California corporation and an indirect Subsidiary of FATICO.
"Fixed Rate" shall mean a rate per annum equal to 9.38%.
----------
"Fixed Rate Lender" shall mean any Lender from time to time holding
-----------------
the Fixed Rate Loan, including after giving effect to any assignment permitted
by Section 11.06 hereof.
"Fixed Rate Loan" shall mean the Loan made by the Fixed Rate Lender
---------------
pursuant to the First Credit Agreement (as more fully described in Section
2.01(b)).
"Fixed Rate Note" shall mean the promissory note provided for by
---------------
Section 2.07(b) hereof or any promissory note delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"Funded Debt" shall mean, for any Person: (a) all Indebtedness for
-----------
such Person that should be reflected on a balance sheet of such Person in
accordance with GAAP, (b) all Indebtedness of any other Person that should be
reflected on a balance sheet of such other Person in accordance with GAAP and
that is secured by a Lien on the Property of such Person, is supported by a
letter of credit issued for account of, or is Guaranteed by, such Person and (c)
all Capital Lease Obligations of such Person; provided that, Funded Debt shall
--------
include (i) the aggregate liquidation preference of all preferred securities
that are mandatorily redeemable, exchangeable or convertible into debt at the
option of the holder or redeemable at the option of the holder, less than ten
years after issue and (ii) the aggregate liquidation preference of all
Credit Agreement
----------------
<PAGE>
-10-
Capital Securities but only that portion of such aggregate liquidation
preference that is on such date equal to, or in excess of, 15% of Total
Capitalization on such date.
"GAAP" shall mean generally accepted accounting principles applied on
----
a basis consistent with those which, in accordance with the last sentence of
Section 1.02(a) hereof, are to be used in making the calculations for purposes
of determining compliance with this Agreement.
"Governmental Authority" shall mean the government of the United
----------------------
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" shall mean a guarantee, an endorsement, a contingent
---------
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss,
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding endorsements for collection or deposit in the ordinary
course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall
--------- ----------
have a correlative meaning. Notwithstanding the foregoing, the issuance by an
Insurance Company of title insurance shall not be deemed to be a "Guarantee".
"Hazardous Material" shall mean, collectively, (a) any petroleum or
------------------
petroleum products, flammable explosives, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid containing
polychlorinated biphenyls (PCB's) in amounts exceeding 50 parts per million, (b)
any chemicals or other materials or substances which are now or hereafter become
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import under any Environmental Law and (c) any
other chemical or other material or substance, exposure to which is now or
hereafter prohibited, limited or regulated under any Environmental Law.
Credit Agreement
----------------
<PAGE>
-11-
"Indebtedness" shall mean, for any Person: (a) obligations created,
------------
issued, assumed or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities (including surplus debentures or notes
whether or not characterized as liabilities for the purposes of GAAP or SAP and
non-perpetual preferred stock requiring redemption or repurchase and any option
exercisable in respect thereof to the extent of such redemption or repurchase)
or the sale of Property to another Person subject to an understanding or
agreement, contingent or otherwise, to repurchase such Property from such
Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective indebtedness so secured
has been assumed by such Person; (d) obligations of such Person in respect of
letters of credit or similar instruments issued or accepted by banks and other
financial institutions for account of such Person; (e) Capital Lease Obligations
of such Person; and (f) Indebtedness of others Guaranteed by such Person.
"Index Debt" shall mean senior, unsecured, long-term indebtedness for
----------
borrowed money of the Company that is not guaranteed by any other Person or
subject to any other credit enhancement; provided that if such indebtedness is
--------
not rated by Moody's or S&P, "Index Debt" shall mean indebtedness in respect of
Capital Securities.
"Insurance Company" shall mean FATICO, First American Home Buyers
-----------------
Protection Corporation and any other Subsidiary of the Company which is a
licensed insurance company or a licensed underwritten title company.
"Interest Expense" shall mean, for any period, the sum, for the
----------------
Company and its Consolidated Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP), of the following: (a) all
interest in respect of Indebtedness accrued or capitalized during such period
(whether or not actually paid during such period) plus (b) the net amounts
----
payable (or minus the net amounts receivable) under Interest Rate Protection
-----
Agreements accrued during such period (whether or not actually paid or received
during such period).
"Interest Period" shall mean, with respect to any Eurodollar Loan,
---------------
each period commencing on the date such Eurodollar Loan is Converted from a Base
Rate Loan or the last day of the next preceding Interest Period for such Loan
and ending on the numerically corresponding day in the first, second, third or
sixth calendar month thereafter, as the Company may select as provided in
Section 4.05 hereof, except that each Interest Period that commences on the last
Business Day of a calendar month (or on any day for which there is no
Credit Agreement
----------------
<PAGE>
-12-
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may end after the
Revolving Credit Commitment Termination Date; (ii) each Interest Period that
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day); and (iii)
no Interest Period shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loan would otherwise be a shorter period,
such Loan shall not be available hereunder for such period.
"Interest Rate Protection Agreement" shall mean, for any Person, an
----------------------------------
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
For purposes hereof, the "credit exposure" at any time of any Person under an
---------------
Interest Rate Protection Agreement to which such Person is a party shall be
determined at such time in accordance with the standard methods of calculating
credit exposure under similar arrangements as prescribed from time to time by
the Administrative Agent, taking into account potential interest rate movements
and the respective termination provisions and notional principal amount and term
of such Interest Rate Protection Agreement.
"Lenders" shall mean the Revolving Credit Lenders and the Fixed Rate
-------
Lender.
"Licenses" shall mean any licenses or certificates of authority from
--------
any Applicable Insurance Regulatory Authority, or permits or authorizations to
transact title insurance business.
"Lien" shall mean, with respect to any Property, any mortgage, lien,
----
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Basic Documents, a
Person shall be deemed to own subject to a Lien any Property that it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
(other than an operating lease) relating to such Property.
"Loans" shall mean the Revolving Credit Loans and the Fixed Rate Loan.
-----
"Majority Revolving Credit Lenders" shall mean Revolving Credit
---------------------------------
Lenders holding at least 66-2/3% of the aggregate unpaid principal amount of the
Revolving Credit Loans and the unused Revolving Credit Commitments.
Credit Agreement
----------------
<PAGE>
-13-
"Majority Lenders" shall mean (a) Lenders holding at least 66-2/3% of
----------------
the aggregate unpaid principal amount of the Fixed Rate Loan, Revolving Credit
Loans and the unused Revolving Credit Commitments; provided that, at any time
--------
that both the Revolving Credit Loans and the Fixed Rate Loan are outstanding,
then "Majority Lenders" under this clause (a) shall also require no fewer than
three Lenders or (b) for purposes of administering the Pledge Agreement pursuant
to Section 10 hereof if the Loans have been paid in full, Lenders holding at
least 66-2/3% of the aggregate Secured Obligations.
"Make-Whole Amount" shall mean, in connection with any acceleration of
-----------------
the Fixed Rate Loan pursuant to the last paragraph of Section 9 hereof, the
amount (but not less than zero) equal to the excess, if any, of
(a) the sum of the Present Values (as hereinafter defined) of (i) the
outstanding principal amount of the Fixed Rate Loan on the date of such
acceleration (assuming such principal amount will be paid on the originally
scheduled due date therefor) and (ii) the amount of interest that would
have been payable on each Quarterly Date on or after the date of such
acceleration on the principal amount of the Fixed Rate Loan (assuming such
principal amount and interest thereon are paid on the originally scheduled
due date therefor), over
----
(b) the outstanding principal amount of the Fixed Rate Loan on the
date of such acceleration.
For the purposes of this definition, "Present Value" shall be determined in
-------------
accordance with generally accepted financial practice on a quarterly basis at a
discount rate equal to the sum of the applicable Treasury Yield plus 1/2 of 1%;
----
and the "Treasury Yield" for such purposes shall be the yield of actively traded
--------------
United States Treasury securities having a maturity equal to the then-remaining
weighted average life to maturity (determined in accordance with generally
accepted financial practice) of the Fixed Rate Loan as determined by reference
to the most recent Federal Reserve Statistical Release H.15(519) (or, if such
Statistical Release is no longer published, any publicly available source of
similar market data) that became publicly available at least one Business Day
prior to the date of such acceleration; provided that if such weighted average
--------
life to maturity is not equal to the maturity of any actively traded United
States Treasury securities as set forth in said Statistical Release (or said
substitute source of market data), such yield shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the yields
of actively traded United States Treasury securities set forth in said
Statistical Release (or said substitute source of market data) having a maturity
closest to such weighted average life to maturity.
"Margin Stock" shall mean "margin stock" within the meaning of
------------
Regulation U and Regulation X.
Credit Agreement
----------------
<PAGE>
-14-
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the Property, business, operations, financial condition, prospects, liabilities
or capitalization of the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company to perform its obligations under any of the Basic
Documents, (c) the validity or enforceability of any of the Basic Documents, (d)
the rights and remedies of the Lenders and the Administrative Agent under any of
the Basic Documents or (e) the timely payment of the principal of or interest on
the Loans or other amounts payable in connection therewith.
"Material Subsidiary" shall mean, at any date: (a) each of the
-------------------
following: FATICO, First American Trust, First Security Thrift and FAREISI; and
(b) any other Subsidiary of the Company with (i) assets at such date with a net
book value in excess of $5,000,000 and (ii) total assets at such date in excess
of $10,000,000.
"Minority Stockholders Put Documents" shall mean (a) the Stock
-----------------------------------
Restriction Agreement dated May 3, 1983 among First American Title Guaranty
Holding Company, FATICO and the management-shareholders and outside-shareholders
named therein, (b) the letter agreement dated March 2, 1988 among Philip B.
Branson, Daniel T. Langston, Gene D. Merlo, Lawrence A. Newland, Martin R. Wool,
First American Home Buyers Protection Corporation and FATICO, (c) the Financing
Agreement dated as of June 28, 1984 among FATICO, First American Home Buyers
Protection Corporation and each of the persons listed on Exhibit A thereto as
modified by the Amendment to Financing Agreement, dated as of March 29, 1985,
and (d) the stock purchase agreements entered into by First American Home Buyers
Protection Corporation, FATICO and certain employees of First American Home
Buyers Protection Corporation who are parties to stock option agreements entered
into pursuant to the First American Home Buyers Protection Corporation 1988 Non-
Qualified Stock Option Plan.
"Minority Stockholders Put Obligations" shall mean the respective
-------------------------------------
obligations of FATICO, First American Title Guaranty Holding Company and First
American Home Buyers Protection Corporation to buy back shares of capital stock
(whether for cash, Property, through issuance of a note or otherwise) from
minority stockholders of First American Title Guaranty Holding Company and First
American Home Buyers Protection Corporation, as the case may be, pursuant to
exercise by such minority stockholders of put options, all as provided in the
Minority Stockholders Put Documents in effect on the date hereof.
"Moody's" shall mean Moody's Investors Service, Inc.
-------
"Moody's Rating" shall mean the Moody's rating in respect of the Index
--------------
Debt, provided that if such rating is in respect of Index Debt consisting of
--------
Capital Securities, "Moody's Rating" shall mean the rating that is one grade
higher than the rating of the Index Debt.
Credit Agreement
----------------
<PAGE>
-15-
"Multiemployer Plan" shall mean a multiemployer plan defined as such
------------------
in Section 3(37) of ERISA to which contributions have been made by the Company
or any ERISA Affiliate at any time during the six calendar years immediately
preceding April 21, 1992 and which is covered by Title IV of ERISA.
"NAIC" shall mean the National Association of Insurance Commissioners.
----
"New Lender" shall mean each Lender which is party to this Agreement
----------
but is not party to the Existing Credit Agreement.
"Notes" shall mean the Revolving Credit Notes and the and the Fixed
-----
Rate Note, and any replacement or substitute notes received in exchange
therefore.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
----
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan established or
----
maintained by the Company or any ERISA Affiliate and that is covered by Title IV
of ERISA, other than a Multiemployer Plan.
"Pledge Agreement" shall mean the Pledge Agreement dated as of April
----------------
27, 1992 between the Company and the Administrative Agent, as the same shall be
modified and supplemented and in effect from time to time.
"Post-Default Rate" shall mean, in respect of any principal of any
-----------------
Loan or any other amount under this Agreement, any Note or the Pledge Agreement
that is not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period from and including the due date
to but excluding the date on which such amount is paid in full equal to 2% plus
----
the Base Rate as in effect from time to time plus the Applicable Margin for Base
----
Rate Loans; provided that, if the amount so in default is the principal of a
--------
Eurodollar Loan and the due date thereof is a day other than the last day of the
Interest Period therefor, the "Post-Default Rate" for such principal shall be,
for the period from and including such due date to but excluding the last day of
the Interest Period, 2% plus the interest rate for such Loan as provided in
----
Section 3.02(b) hereof and, thereafter, the rate provided for above in this
definition; and provided further that, with respect to the principal of the
-------- -------
Fixed Rate Loan or any other amount payable in connection with the Fixed Rate
Loan under this Agreement or under
Credit Agreement
----------------
<PAGE>
-16-
the Fixed Rate Note, the "Post-Default Rate" shall be a rate equal to 2% plus
----
the Fixed Rate.
"Prime Rate" shall mean the rate of interest from time to time
----------
announced by Chase at the Principal Office as its prime commercial lending rate.
"Principal Office" shall mean the principal office of Chase, in New
----------------
York, New York, as is designated as such by Chase from time to time.
"Principal Payment Dates" shall mean the Principal Payment Dates as
-----------------------
provided for by Section 3.01.
"Property" shall mean any right or interest in or to property of any
--------
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Quarterly Dates" shall mean the 21st day of each January, April, July
---------------
and October, commencing with July 21, 1992; provided that if any such day is not
--------
a Business Day, then such Quarterly Date shall be the next succeeding Business
Day (unless such Business Day falls in a subsequent calendar month, in which
event such Quarterly Date shall be the next preceding Business Day).
"Reference Banks" shall mean Chase and Sanwa Bank California (or their
---------------
respective Applicable Lending Offices, as the case may be).
"Regulation A", "Regulation D", "Regulation U" and "Regulation X"
------------ ------------ ------------ ------------
shall mean, respectively, Regulation A, Regulation D, Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.
"Regulatory Change" shall mean, with respect to any Lender, any change
-----------------
(in the case of a change affecting Eurodollar Loans, after the date hereof and,
in all other cases, after April 21, 1992) in Federal, state or foreign law or
regulations or the adoption or making (after such date) of any interpretation,
directive or request applying to a class of lenders including such Lender of or
under any Federal, state or foreign law or regulations (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Release" shall mean any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor
Credit Agreement
----------------
<PAGE>
-17-
environment, including, without limitation, the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata.
"Relevant 8-K Report" shall mean the Current Report filed with the
-------------------
Securities and Exchange Commission and the National Association of Securities
Dealers Automated Quotation System on Form 8-K as a result of the execution and
delivery of the Pledge Agreement.
"Reserve Requirement" shall mean, for any Interest Period for any
-------------------
Eurodollar Loan, the average maximum rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any Regulatory Change with respect to (i) any category of liabilities
that includes deposits by reference to which the Eurodollar Base Rate is to be
determined as provided in the definition of "Eurodollar Base Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets that
includes Eurodollar Loans.
"Reserves" shall mean, for any Insurance Company, as at any date, the
--------
aggregate reserves for undetermined title losses of such Insurance Company
(which amount is shown at the date hereof on the most recent annual Statutory
Statement of such Insurance Company at page 3, line 1(b), column 1) as at the
last day of the fiscal year of such Insurance Company ending on or most recently
ended prior to such date.
"Revolving Credit Availability Period" shall mean the period from and
------------------------------------
including the Effective Date to but excluding the earlier of the Revolving
Credit Commitment Termination Date and the date of termination of the Revolving
Credit Commitments.
"Revolving Credit Commitment" shall mean, for each Revolving Credit
---------------------------
Lender, the obligation of such Lender to make Revolving Credit Loans in an
aggregate principal amount at any one time outstanding up to but not exceeding
the amount set forth opposite the name of such Lender on the signature pages
hereof under the caption "Revolving Credit Commitment" (as the same may be
reduced from time to time pursuant to Section 2.05 hereof). The aggregate
amount of the Revolving Credit Commitments is $75,000,000.
"Revolving Credit Commitment Termination Date" shall mean the fifth
--------------------------------------------
anniversary of the Effective Date, and if such date is not a Business Day, the
next preceding Business Day.
Credit Agreement
----------------
<PAGE>
-18-
"Revolving Credit Lenders" shall mean the Lenders from time to time
------------------------
holding Revolving Credit Loans or unused Revolving Credit Commitments after
giving effect to any assignments thereof permitted by Section 11.06 hereof.
"Revolving Credit Loans" shall mean Loans made by the Revolving Credit
----------------------
Lenders, as more fully described in Section 2.01(a) hereto.
"Revolving Credit Notes" shall mean the promissory notes provided for
----------------------
by the second sentence of Section 2.07(a) hereof and all promissory notes
delivered in substitution or exchange therefor, in each case as the same shall
be modified and supplemented and in effect from time to time.
"S&P" shall mean Standard & Poor's.
---
"S&P Rating" shall mean the S&P rating in respect of the Index Debt,
----------
provided that if such rating is in respect of Index Debt consisting of Capital
- --------
Securities, "S&P Rating" shall mean the rating that is one grade higher than the
rating of the Index Debt.
"Sale/Leaseback Transactions" shall have the meaning assigned to such
---------------------------
term in Section 8.16.
"SAP" shall mean, for any Insurance Company, the statutory accounting
---
procedures or practices required by the Applicable Insurance Regulatory
Authority applied on a basis consistent with those which, in accordance with the
last sentence of Section 1.02(a) hereof, are to be used in making the
calculations for purposes of determining compliance with certain terms of this
Agreement.
"Secured Obligations" shall have the meaning assigned to such term in
-------------------
the Pledge Agreement.
"Statutory Statement" shall mean, for any Insurance Company, for any
-------------------
fiscal year of such Insurance Company, the most recent annual statement required
to be filed with the Applicable Insurance Regulatory Authority and, for any
fiscal quarter of such Insurance Company, the quarterly statement required to be
filed with the Applicable Insurance Regulatory Authority, which annual and
quarterly statements shall be prepared in accordance with statutory accounting
practices or generally accepted accounting principles as specified by the
Applicable Insurance Regulatory Authority.
"Subsidiary" shall mean, for any Person, any corporation, partnership
----------
or other entity of which at least a majority of the securities or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or other
Credit Agreement
----------------
<PAGE>
-19-
persons performing similar functions of such corporation, partnership or other
entity (irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person. "Wholly Owned Subsidiary" shall mean any
-----------------------
such corporation, partnership or other entity of which all of the equity
securities or other ownership interests (other than, in the case of a
corporation, directors' qualifying shares) are so owned or controlled.
"Tax Sharing Agreements" shall have the meaning assigned to such term
----------------------
in Section 7.09(b) hereof.
"Total Capitalization" shall mean, at any date, the sum of Total Debt
--------------------
plus Total Stockholders' Equity.
- ----
"Total Debt" shall mean, as at any date, the sum for the Company and
----------
its Consolidated Subsidiaries of all Funded Debt.
"Total Stockholders' Equity" shall mean at any date the aggregate
--------------------------
stockholders' equity (including minority interests in subsidiaries) for the
Company and its Consolidated Subsidiaries; provided that, the aggregate
--------
liquidation preference of Capital Securities shall be included in the
calculation of Total Stockholders' Equity only with respect to that portion of
such aggregate liquidation preference that is less than 15% of Total
Capitalization on such date; provided further that, for purposes of
----------------
determining compliance with Section 8.08, the definition of "Total Stockholders'
Equity" shall not include any amount with respect to Capital Securities.
"Type" shall have the meaning assigned to such term in Section 1.03
----
hereof.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
--------------------
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
1.02 Accounting Terms and Determinations.
-----------------------------------
(a) Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with (in the case of the Company and its
Credit Agreement
----------------
<PAGE>
-20-
Subsidiaries on a consolidated basis) generally accepted accounting principles
or (in the case of certain of the Insurance Companies) statutory accounting
practices, as the case may be, applied on a basis consistent with those used in
the preparation of the latest financial statements furnished to the Lenders
hereunder (which, prior to the delivery of the first financial statements (after
the date hereof) under Section 8.01 hereof, shall mean the financial statements
as at December 31, 1996 referred to in Section 7.02 hereof). All calculations
made for the purposes of determining compliance with this Agreement shall
(except as otherwise expressly provided herein) be made by application of (in
the case of the Company and its Subsidiaries on a consolidated basis) generally
accepted accounting principles or (in the case of certain of the Insurance
Companies) statutory accounting practices, as the case may be, applied on a
basis consistent with those used in the preparation of the latest annual or
quarterly financial statements furnished to the Lenders pursuant to Section 8.01
hereof (or, prior to the delivery of the first financial statements (after the
date hereof) under Section 8.01 hereof, used in the preparation of the financial
statements as at December 31, 1996 referred to in Section 7.02 hereof) unless
(i) the Company shall have objected to determining such compliance on such basis
at the time of delivery of such financial statements or (ii) the Majority
Lenders shall so object within 30 days after delivery of such financial
statements, in either of which events such calculations shall be made on a basis
consistent with those used in the preparation of the latest financial statements
as to which such objection shall not have been made (which, if objection is made
in respect of the first financial statements delivered under Section 8.01
hereof, shall mean the financial statements referred to in Section 7.02 hereof).
(b) The Company shall deliver to the Lenders at the same time as the
delivery of any annual or quarterly financial statement under Section 8.01
hereof (i) a description in reasonable detail of any material variation between
the application of accounting principles or practices employed in the
preparation of such statement and the application of accounting principles or
practices employed in the preparation of the next preceding annual or quarterly
financial statements as to which no objection has been made in accordance with
the last sentence of subsection (a) above and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.
(c) The Company will not change the last day of its fiscal year from
December 31 of each year, or the last days of the first three fiscal quarters in
each of its fiscal years from March 31, June 30 and September 30 of each year,
respectively.
1.03 Types of Loans. Loans hereunder are distinguished by "Type".
--------------
The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or a
Eurodollar Loan or a Fixed Rate Loan, each of which constitutes a Type.
Section 2. Revolving Credit Commitments, Loans, Notes and
----------------------------------------------
Prepayments.
- -----------
Credit Agreement
----------------
<PAGE>
-21-
2.01 Loans.
-----
(a) Revolving Credit Commitments. On the Effective Date, (i) the
----------------------------
"Revolving Credit Loans" (as defined in the Existing Credit Agreement) held by
the Existing Lenders under the Existing Credit Agreement shall automatically,
and without any action on the part of any Person, be designated as Revolving
Loans hereunder and each of the New Lenders (and each Existing Lender, if any,
whose relative proportion of Revolving Credit Commitments hereunder is
increasing over its relative proportion of "Revolving Credit Commitments" held
by it under the Existing Credit Agreement (each an "Increasing Existing
-------------------
Revolving Credit Lender")) shall, by assignments from the Existing Lenders, if
- -----------------------
any, whose relative proportion of the Revolving Credit Commitments hereunder is
decreasing from its relative proportion of "Revolving Credit Commitments" held
by it under the Existing Credit Agreement (which assignments shall be deemed to
occur automatically on the Effective Date), acquire a portion of the Revolving
Credit Loans and Revolving Credit Commitments of the Existing Lenders so
designated in such amounts (and the Revolving Credit Lenders shall, through the
Administrative Agent, make such additional adjustments among themselves as shall
be necessary), (ii) each New Lender and each Increasing Existing Revolving
Credit Lender severally agrees, on the terms and conditions of this Agreement,
to make (on a non pro-rata basis) a revolving credit loan to the Company in
Dollars and/or (iii) the Company shall prepay the Revolving Credit Loans of the
Existing Lenders (on a non pro-rata basis) in such amounts, such that after
giving effect to such assignments and adjustments and such revolving credit
loans, the Revolving Credit Lenders shall hold the Revolving Loans hereunder
ratably in accordance with their respective Revolving Credit Commitments. As of
the Effective Date, all Interest Periods under the Existing Credit Agreement in
respect of the "Revolving Credit Loans" under and as defined in the Existing
Credit Agreement shall continue hereunder until the end of such Interest Periods
and not be terminated. All accrued and unpaid interest on the "Revolving Credit
Loans" held by the Existing Lenders under the Existing Credit Agreement as of
the Effective Date shall remain payable and be paid by the Company to the
respective Existing Lenders in accordance with Section 3.01 hereof as if such
Revolving Credit Loans were made hereunder.
Subject to the terms and conditions set forth herein and as of the
Effective Date, each Lender agrees to make Revolving Loans to the Company from
time to time during the Revolving Credit Availability Period in an aggregate
principal amount that will not result in (a) such Lender's Revolving Credit
Loans plus such Lender's unused Revolving Credit Commitments exceeding such
----
Lender's Revolving Credit Commitment or (b) the sum of the total Revolving
Credit Loans plus the sum of the total unused Revolving Credit Commitments
----
exceeding the total Revolving Credit Commitments. Within the foregoing limits
and subject to the terms and conditions set forth herein, the Company may
borrow, prepay and reborrow Revolving Credit Loans.
Credit Agreement
----------------
<PAGE>
-22-
(b) Fixed Rate Loan. On April 21, 1992, the Fixed Rate Lender
---------------
agreed, on the terms and conditions of the First Credit Agreement, to make the
"Fixed Rate Loan" (as defined in the First Credit Agreement) to the Company in
Dollars in an amount up to but not exceeding the amount of the "Fixed Rate
Commitment" (as defined in the First Credit Agreement) and the Company hereby
confirms and acknowledges that on April 27, 1992, the Fixed Rate Lender made
such a term loan in an amount equal to the Fixed Rate Commitment and that, as a
result thereof, the "Fixed Rate Commitment" was terminated on such date. The
Company further hereby confirms and acknowledges that, as of the date hereof,
the aggregate outstanding principal amount of the Fixed Rate Loan is $6,140,000.
The Fixed Rate Loan may not be Converted into a Loan of any other Type.
2.02 Borrowings. The Company shall give the Administrative Agent
----------
(which shall promptly notify the Lenders) notice of any borrowing hereunder as
provided in Section 4.05 hereof. Not later than 1:00 p.m. New York time on the
date specified for the borrowing hereunder, each Revolving Credit Lender shall
make available the amount of the Revolving Credit Loan to be made by it on such
date to the Administrative Agent, at an account designated and maintained by the
Administrative Agent with Chase at the Principal Office, in immediately
available funds, for account of the Company. The amount so received by the
Administrative Agent shall be made available to the Company by depositing the
same, in immediately available funds, in an account of the Company, designated
by the Company, maintained with Chase at the Principal Office.
2.03 Changes of Revolving Credit Commitments.
---------------------------------------
(a) The Company has the right to terminate or reduce the aggregate
unused amount of the Revolving Credit Commitments; provided that (i) the Company
--------
give notice of each such termination or reduction as provided in Section 4.05
thereof and (ii) each partial reduction be in an aggregate amount at least equal
to $3,000,000 or in multiples of $500,000 in excess thereof.
(b) The Revolving Credit Commitments, once terminated or reduced, may
not be reinstated.
2.04 Commitment Fee. The Company shall pay to the Administrative
--------------
Agent for account of each Revolving Credit Lender a commitment fee on the daily
average unused amount of such Lender's Revolving Credit Commitment, for the
period from and including the date of this Agreement to but not including the
earlier of the date such Revolving Credit Commitment is terminated and the
Revolving Credit Commitment Termination Date, at a rate per annum equal to the
Applicable Margin. Accrued commitment fee is payable on each Quarterly Date and
on the earlier of the date the Revolving Credit Commitments are terminated and
the Revolving Credit Commitment Termination Date.
Credit Agreement
----------------
<PAGE>
-23-
2.05 Lending Offices. The relevant Type of Loan made by each Lender
---------------
shall be maintained at such Lender's Applicable Lending Office for Loans of such
Type.
2.06 Several Obligations; Remedies Independent. The failure of any
-----------------------------------------
Lender to make the Loan to be made by it on the date specified therefor shall
not relieve any other Lender of its obligation to make its Loan on such date,
but neither any Lender nor the Administrative Agent shall be responsible for the
failure of any other Lender to make a Loan to be made by such other Lender, and
no Lender shall have any obligation to the Administrative Agent or any other
Lender for the failure by such Lender to make the Loan required to be made by
such Lender. The amounts payable by the Company at any time hereunder and under
the Notes to each Lender shall be a separate and independent debt and each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and the Notes, and it shall not be necessary for any other Lender or
the Administrative Agent to consent to, or be joined as an additional party in,
any proceedings for such purposes.
2.07 Notes.
-----
(a) The Revolving Credit Commitment and Revolving Credit Loans of
each Lender shall be evidenced by a single promissory note of the Company
substantially in the form of Exhibit A-1 hereto, appropriately dated, in an
amount equal to the Revolving Credit Commitment of such Lender and otherwise
duly completed. Thereafter, the Revolving Credit Commitment of each Revolving
Credit Lender shall be evidenced by a single promissory note of the Company
substantially in the form of Exhibit A hereto, appropriately dated, payable to
such Lender in an amount equal to the amount of the Revolving Credit Commitment
held by such Lender on the Effective Date and otherwise duly completed.
(b) The Fixed Rate Loan made by the Fixed Rate Lender shall be
evidenced by a single promissory note of the Company substantially in the form
as previously agreed between the Fixed Rate Lender and the Borrower,
appropriately dated, payable to the Fixed Rate Lender or its designated nominee
in a principal amount equal to the amount of the Fixed Rate Loan and otherwise
duly completed.
(c) The date, amount, Type, interest rate and duration of Interest
Period (if applicable) of the Loan made by each Lender to the Company, and each
payment made on account of the principal thereof, shall be recorded by such
Lender on its books and, prior to any transfer of the Note held by it, endorsed
by such Lender on the schedule attached to such Note or any continuation
thereof; provided that the failure of such Lender to make any such recordation
--------
or endorsement shall not affect the obligations of the Company to make a payment
when due of any amount owing hereunder or under such Note in respect of such
Loan.
Credit Agreement
----------------
<PAGE>
-24-
(d) No Lender shall be entitled to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise, except in
connection with a permitted assignment of all or any portion of such Lender's
Loan and Note pursuant to Section 11.06(b) hereof.
2.08 Optional Prepayments and Conversions or Continuations of
--------------------------------------------------------
Revolving Credit Loans. Subject to Section 4.04 hereof, the Company shall have
- ----------------------
the right to prepay Revolving Credit Loans, or to Convert Revolving Credit Loans
of one Type into Revolving Credit Loans of the other Type or Continue Revolving
Credit Loans of one Type as Revolving Credit Loans of the same Type, at any time
or from time to time, provided that: (a) the Company shall give the
--------
Administrative Agent irrevocable notice of each such prepayment, Conversion or
Continuation as provided in Section 4.05 hereof (and, upon the date specified in
any such notice of prepayment, the amount to be prepaid shall become due and
payable hereunder); and (b) upon any prepayment or Conversion of Eurodollar
Loans other than on the last day of an Interest Period for such Loans the
Company shall pay any amounts owing under Section 5.05 hereof as a result of
such prepayment or Conversion. Notwithstanding the foregoing, and without
limiting the rights and remedies of the Revolving Credit Lenders under Section 9
hereof, in the event that any Event of Default shall have occurred and be
continuing, the Administrative Agent may (and at the request of the Majority
Revolving Credit Lenders shall) suspend the right of the Company to Convert any
Base Rate Loan into a Eurodollar Loan, or to Continue any Eurodollar Loan as a
Eurodollar Loan, in which event all Revolving Credit Loans shall be Converted
(on the last day(s) of the respective Interest Periods therefor) or Continued,
as the case may be, as Base Rate Loans. The Company may not prepay the Fixed
Rate Loan without the consent of the Fixed Rate Lender.
Section 3. Payments of Principal and Interest.
----------------------------------
3.01 Repayment of Loans.
------------------
(a) The Company hereby unconditionally promises to pay to the
Administrative Agent for the account of each Revolving Credit Lender the then
unpaid principal amount of each Revolving Loan on the Revolving Credit
Commitment Termination Date.
(b) The Company hereby unconditionally promises to pay to the
Administrative Agent for the account of each Fixed Rate Lender the principal of
the Fixed Rate Loan in eight installments payable on the Principal Payment Dates
as follows:
Credit Agreement
----------------
<PAGE>
-25-
<TABLE>
<CAPTION>
Principal Payment Date Amount of Installment
- ---------------------- ---------------------
<S> <C>
October 21, 1997 $ 820,000
January 21, 1998 $ 820,000
April 21, 1998 $ 820,000
July 21, 1998 $ 820,000
October 21, 1998 $ 820,000
January 21, 1999 $ 820,000
April 21, 1999 $1,220,000
</TABLE>
3.02 Interest. The Company hereby promises to pay to the
--------
Administrative Agent for account of each Lender interest on the unpaid principal
amount of each Loan made by such Lender for the period from and including the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:
(a) if such Loan is a Revolving Credit Loan, during such periods as
such Loan is a Base Rate Loan, the Base Rate (as in effect from time to time)
plus the Applicable Margin;
- ----
(b) if such Loan is a Revolving Credit Loan, during such periods as
such Loan is a Eurodollar Loan, for each Interest Period relating thereto, the
Eurodollar Rate for such Loan for such Interest Period plus the Applicable
----
Margin; and
(c) if such Loan is a Fixed Rate Loan, the Fixed Rate.
Notwithstanding the foregoing, the Company hereby promises to pay to the
Administrative Agent for account of each Lender interest at the applicable Post-
Default Rate on any principal of any Loan made by such Lender and on any other
amount payable by the Company hereunder or under the Note held by such Lender to
or for account of such Lender, which shall not be paid in full when due (whether
at stated maturity, by acceleration or otherwise), for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Loan shall be payable (i) in the case of a Base
Rate Loan or the Fixed Rate Loan, quarterly on the Quarterly Dates, (ii) in the
case of a Eurodollar Loan, on the last day of each Interest Period therefor and,
if such Interest Period is longer than three months, at three month intervals
following the first day of such Interest Period, (iii) in the case of any Loan,
upon the payment or prepayment thereof (but only on the principal amount so paid
or prepaid) and (iv) in the case of any Revolving Credit Loan, upon the
Conversion of such Loan to a Revolving Credit Loan of the other Type (but only
on the principal amount so Converted), except that interest payable at the Post-
Default Rate shall be payable from time to time on demand. Promptly after the
determination of any interest rate provided for herein or
Credit Agreement
----------------
<PAGE>
-26-
any change therein, the Administrative Agent shall give notice thereof to the
Lenders to which such interest is payable and to the Company.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
------------------------------------------------
4.01 Payments.
--------
(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Company under this
Agreement and the Notes, and, except to the extent otherwise provided therein,
all payments to be made by the Company under the Pledge Agreement, shall be made
in Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Administrative Agent at an account designated and
maintained by the Administrative Agent with Chase at the Principal Office, not
later than 1:00 p.m. New York time on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day).
(b) The Company shall, at the time of making each payment under this
Agreement or any Note for account of any Lender, specify to the Administrative
Agent (which shall so notify the intended recipient(s) thereof) the relevant
Type of Loans or other amounts payable by the Company hereunder to which such
payment is to be applied, subject to Section 4.02 hereof (and in the event that
the Company fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may distribute such payment to the Lenders
for application in such manner as it or the Majority Lenders, subject to Section
4.02 hereof, may determine to be appropriate).
(c) Each payment received by the Administrative Agent under this
Agreement or any Note for account of any Lender shall be paid by the
Administrative Agent promptly to such Lender, in immediately available funds,
for account of such Lender's Applicable Lending Office for the Loan or other
obligation in respect of which such payment is made.
(d) If the due date of any payment under this Agreement or any Note
would otherwise fall on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest shall be payable for
any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise provided
------------------
herein: (a) each payment of commitment fees under Section 2.04 hereof shall be
made for account of the Revolving Credit Lenders, and each termination or
reduction of the amount of the Revolving Credit Commitments under Section 2.03
shall be applied to the respective Revolving Credit Commitments of the Revolving
Credit Lenders, pro rata according to the amounts of their respective Revolving
Credit Commitments; (b) the Revolving Credit Loans shall have been made by the
relevant Revolving Credit Lenders pro rata according to the amounts of
Credit Agreement
----------------
<PAGE>
-27-
their respective Revolving Credit Commitments; (b) the Revolving Credit Loans
shall have been made by the relevant Revolving Credit Lenders pro rata
according to the amounts of their respective Revolving Credit Commitments;
(c) the Conversion and Continuation of Revolving Credit Loans of a particular
Type (other than Conversions provided for by Section 5.04 hereof) shall be made
pro rata among the Revolving Credit Lenders according to the amounts of their
respective Revolving Credit Loans and the then current Interest Period for each
Eurodollar Loan shall be coterminous; (d) each payment or prepayment of
principal of Revolving Credit Loans by the Company shall be made for account of
the relevant Revolving Credit Lenders pro rata in accordance with the respective
unpaid principal amounts of such Revolving Credit Loans held by them; and (e)
each payment of interest on the Loans by the Company shall be made for account
of the Lenders pro rata in accordance with the amounts of interest on such Loans
then due and payable to the respective Lenders. Notwithstanding the foregoing,
each payment of principal or interest by the Company shall be made for the
account of the Lenders pro rata in accordance with the amounts of principal or
interest, as the case may be, then due and payable to the Lenders.
4.03 Computations. Interest on Eurodollar Loans shall be computed on
------------
the basis of a year of 360 days and actual days elapsed (including the first day
but excluding the last day) occurring in the period for which payable and
interest on Base Rate Loans, the Fixed Rate Loan and commitment fees shall be
computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed (including the first day but excluding the last day)
occurring in the period for which payable. Notwithstanding the foregoing, for
each day that the Base Rate is calculated by reference to the Federal Funds
Rate, interest on Base Rate Loans shall be computed on the basis of a year of
360 days and actual days elapsed.
4.04 Minimum Amounts. Except for Conversions or prepayments made
---------------
pursuant to Section 5.04 hereof, each borrowing of the principal of the Loans
and each Conversion and partial optional prepayment of principal of Revolving
Credit Loans shall be in an aggregate amount at least equal to $300,000 or in
multiples of $50,000 in excess thereof (Conversions or prepayments of or into
Revolving Credit Loans of different Types or, in the case of Eurodollar Loans,
having different Interest Periods at the same time hereunder shall be deemed
separate Conversions and prepayments for purposes of the foregoing, one for each
Type or Interest Period). Anything in this Agreement to the contrary
notwithstanding, the aggregate principal amount of Eurodollar Loans having the
same Interest Period shall be in an amount at least equal to $5,000,000 or in
multiples of $1,000,000 in excess thereof and, if any Eurodollar Loans would
otherwise be in a lesser principal amount for any period, such Revolving Credit
Loans shall be Base Rate Loans during such period.
4.05 Certain Notices. Notices by the Company to the Administrative
---------------
Agent of Conversions, Continuations and optional prepayments of Revolving Credit
Loans and of the duration of Interest Periods shall be irrevocable and shall be
effective only if received by the
Credit Agreement
----------------
<PAGE>
-28-
Administrative Agent not later than 1:00 p.m. New York time on the number of
Business Days set forth below prior to the date of the relevant Conversion,
Continuation or prepayment or the first day of such Interest Period:
<TABLE>
<CAPTION>
Number of
Business
Notice Days Prior
------ ----------
<S> <C>
Prepayment of, or Conversions
into, Base Rate Loans two
Prepayment of,
Conversions into,
Continuations as, or
duration of Interest Period
for, Eurodollar Loans three
</TABLE>
Each such notice of Conversion, Continuation or optional prepayment shall
specify the amount (subject to Section 4.04 hereof) and Type of the Revolving
Credit Loans to be Converted, Continued or prepaid, the date of Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Revolving Credit
Loans to which such Interest Period is to relate. The Administrative Agent
shall promptly notify the Lenders of the contents of each such notice. In the
event that the Company fails to select the Type of Revolving Credit Loan, or the
duration of any Interest Period for any Eurodollar Loan, within the time period
and otherwise as provided in this Section 4.05, such Loan (if outstanding as a
Eurodollar Loan) will be automatically Converted into a Base Rate Loan on the
last day of the then current Interest Period for such Loan or (if outstanding as
a Base Rate Loan) will remain as a Base Rate Loan.
4.06 Non-Receipt of Funds by the Administrative Agent. Unless the
------------------------------------------------
Administrative Agent shall have been notified by a Lender or the Company (the
"Payor") prior to the date on which the Payor is to make payment to the
- ------
Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be
made by such Lender hereunder or (in the case of the Company) a payment to the
Administrative Agent for account of one or more of the Lenders hereunder (such
payment being herein called the "Required Payment"), which notice shall be
----------------
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Administrative Agent, the Administrative Agent may assume that
the Required Payment has been made and may, in reliance upon such assumption
(but shall not be required to), make the amount thereof available to the
intended recipient(s) on such date; and, if the Payor has not in fact made the
Required Payment to the Administrative Agent, the recipient(s) of such payment
shall, on demand, repay to the Administrative Agent the amount so made available
Credit Agreement
----------------
<PAGE>
-29-
together with interest thereon in respect of each day during the period
commencing on the date (the "Advance Date") such amount was so made available by
------------
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day and, if
such recipient(s) shall fail promptly to make such payment, the Administrative
Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, provided that if neither the recipient(s)
--------
nor the Payor shall return the Required Payment to the Administrative Agent
within three Business Days of the Advance Date, then, retroactively to the
Advance Date, the Payor and the recipient(s) shall each be obligated to pay
interest on the Required Payment as follows:
(i) if the Required Payment shall represent a payment to be made by
the Company to the Lenders, the Company and the recipient(s) shall jointly
and severally be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the applicable Post-Default
Rate (and, in case the recipient(s) shall return the Required Payment to
the Administrative Agent, without limiting the obligation of the Company
under Section 3.02 hereof to pay interest to such recipient(s) at the
applicable Post-Default Rate in respect of the Required Payment) and
(ii) if the Required Payment shall represent proceeds of a loan to be
made by the Lenders to the Company, the Payor and the Company shall jointly
and severally be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the rate of interest
provided for such Required Payment pursuant to Section 3.02 hereof (and, in
case the Company shall return the Required Payment to the Administrative
Agent, without limiting any claim the Company may have against the Payor in
respect of the Required Payment).
4.07 Sharing of Payments, Etc.
------------------------
(a) The Company agrees that, in addition to (and without limitation
of) any right of set-off, banker's lien or counterclaim a Lender may otherwise
have, each Lender shall be entitled upon and after the occurrence and during the
continuance of a Default, at its option, to offset balances held by it for
account of the Company at any of its offices, in Dollars or in any other
currency, against any principal of or interest on any of such Lender's Loans or
any other amount payable to such Lender hereunder, that is not paid when due
(regardless of whether such balances are then due to the Company), in which case
it shall promptly notify the Company and the Administrative Agent thereof,
provided that such Lender's failure to give such notice shall not affect the
- --------
validity thereof.
(b) If any Lender shall obtain from the Company payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement or any other Basic Document through the exercise of any
right of set-off, banker's lien or similar right
Credit Agreement
----------------
<PAGE>
-30-
or otherwise (other than from the Administrative Agent as provided herein), and,
as a result of such payment, such Lender shall have received a greater
percentage of the principal of or interest on the Loans or such other amounts
then due hereunder or thereunder by the Company to such Lender than the
percentage received by any other Lender, it shall promptly purchase from such
other Lenders participations in (or, if and to the extent specified by such
Lender, direct interests in) that portion of the Loans or such other amounts,
respectively, then due and payable to such other Lenders (or in interest due
thereon, as the case may be) in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that all the Lenders shall
share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) pro rata
in accordance with the unpaid principal of and/or interest on the Loans or such
other amounts, respectively, then due and payable to each of the Lenders. To
such end all the Lenders shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) The Company agrees that any Lender so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien or similar rights with respect to such participation as fully as if such
Lender were a direct holder of Loans or other amounts (as the case may be) owing
to such Lender in the amount of such participation.
(d) Nothing contained herein shall require any Lender to exercise any
such right or shall affect the right of any Lender to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness or
obligation of the Company. If, under any applicable bankruptcy, insolvency or
other similar law, any Lender receives a secured claim in lieu of a set-off to
which this Section 4.07 applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with
the rights of the Lenders entitled under this Section 4.07 to share in the
benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
---------------------
5.01 Additional Costs.
----------------
(a) The Company shall pay directly to each Revolving Credit Lender
from time to time such amounts as such Revolving Credit Lender may determine to
be necessary to compensate such Revolving Credit Lender for any costs that such
Revolving Credit Lender determines are attributable to its maintaining of any
Eurodollar Loans or its obligation to maintain any Eurodollar Loans hereunder,
or any reduction in any amount receivable by such Revolving Credit Lender
hereunder in respect of any of such Loans or such obligation (such increases in
costs and reductions in amounts receivable being herein called "Additional
----------
Costs"), resulting from any Regulatory Change that:
- -----
Credit Agreement
----------------
<PAGE>
-31-
(i) changes the basis of taxation of any amounts payable to such
Revolving Credit Lender under this Agreement or its Note in respect of any
of such Loans (other than any change in the rate at which taxes imposed on
or measured by the overall net income or capital of such Revolving Credit
Lender or of its Applicable Lending Office for any of such Loans by the
jurisdiction in which such Revolving Credit Lender has its principal office
or such Applicable Lending Office are levied); or
(ii) imposes or modifies any reserve, special deposit or similar
requirements (other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate for such Loan) relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Revolving Credit Lender (including, without
limitation, any of such Loans or any deposits referred to in the definition
of "Eurodollar Base Rate" in Section 1.01 hereof), or any commitment of
such Revolving Credit Lender; or
(iii) affects any Revolving Credit Lender or the interbank Eurodollar
market or the position of any Revolving Credit Lender in such market.
If any Revolving Credit Lender requests compensation from the Company under this
Section 5.01(a), the Company may, by notice to such Revolving Credit Lender
(with a copy to the Administrative Agent), suspend the obligation of such
Revolving Credit Lender thereafter to Continue Eurodollar Loans, or to Convert
Base Rate Loans into Eurodollar Loans, until the Regulatory Change giving rise
to such request ceases to be in effect (in which case the provisions of Section
5.04 hereof shall be applicable), provided that such suspension shall not affect
--------
the right of such Revolving Credit Lender to receive the compensation so
requested.
(b) Without limiting the effect of the provisions of paragraph (a) of
this Section 5.01, in the event that, by reason of any Regulatory Change, any
Revolving Credit Lender either (i) incurs Additional Costs based on or measured
by the excess above a specified level of the amount of a category of deposits or
other liabilities of such Revolving Credit Lender that includes deposits by
reference to which the interest rate on Eurodollar Loans is determined as
provided in this Agreement or a category of extensions of credit or other assets
of such Revolving Credit Lender that includes Eurodollar Loans or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets that it may hold, then, if such Revolving Credit Lender so elects by
notice to the Company (with a copy to the Administrative Agent), the obligation
of such Revolving Credit Lender to Continue, or to Convert Base Rate Loans into,
Eurodollar Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 5.04 hereof
shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 5.01 (but without duplication), the Company shall pay directly to each
Lender from time to time on
Credit Agreement
----------------
<PAGE>
-32-
request such amounts as such Lender may determine to be necessary to compensate
such Lender (or, without duplication, the bank holding company of which such
Lender is a subsidiary) for any additional costs that it determines are
attributable to the maintenance by such Lender (or, subject to Section
5.01(b)(ii) hereof, any Applicable Lending Office or such bank holding company)
of capital in respect of its Loans, pursuant to any law or regulation or any
interpretation, directive or request (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) of any court or
governmental or monetary authority (i) following any Regulatory Change or (ii)
implementing any risk-based capital guideline or other requirement (whether or
not having the force of law and whether or not the failure to comply therewith
would be unlawful) heretofore or hereafter issued by any government or
governmental or supervisory authority implementing at the national level the
Basel Accord (including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based
Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R.
Part 3, Appendix A)). Such compensation shall include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Lender (or any Applicable Lending Office or such bank holding company) to a
level below that which such Lender (or any Applicable Lending Office or such
bank holding company) could have achieved but for such law, regulation,
interpretation, directive or request. For purposes of this Section
5.01(c), "Basel Accord" shall mean the proposals for risk-based capital
------------
framework described by the Basel Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended, modified
and supplemented and in effect from time to time or any replacement thereof.
(d) Each Lender shall notify the Company of any event entitling such
Lender to compensation under paragraph (a) or (c) of this Section 5.01 as
promptly as practicable, but in any event within 45 days, after such Lender
obtains actual knowledge thereof; provided that (i) if any Lender fails to give
--------
such notice within 45 days after it obtains actual knowledge of such an event,
such Lender shall, with respect to compensation payable pursuant to this Section
5.01 in respect of any costs resulting from such event, only be entitled to
payment under this Section 5.01 for costs incurred from and after the date 45
days prior to the date that such Lender does give such notice and (ii) each
Lender will designate a different Applicable Lending Office for the Loans of
such Lender affected by such event if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the sole opinion of
such Lender, be disadvantageous to such Lender, except that such Lender shall
have no obligation to designate an Applicable Lending Office located in the
United States of America. Each Lender will furnish to the Company a certificate
setting forth the basis and amount of each request by such Lender for
compensation under paragraph (a) or (c) of this Section 5.01. Determinations and
allocations by any Lender for purposes of this Section 5.01 of the effect of any
Regulatory Change pursuant to paragraph (a) or (b) of this Section 5.01, or
Credit Agreement
----------------
<PAGE>
-33-
the effect of capital maintained pursuant to paragraph (c) of this Section 5.01,
on its costs or rate of return of maintaining Loans or its obligation to make
Loans, or on amounts receivable by it in respect of Loans or its obligation to
make Loans, and of the amounts required to compensate such Lender under this
Section 5.01, shall be conclusive, provided that such determinations and
--------
allocations are made on a reasonable basis.
5.02 Limitation on Types of Revolving Credit Loans. Anything herein
---------------------------------------------
to the contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Base Rate for any Interest Period:
(a) the Administrative Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Base Rate" in Section 1.01
hereof are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining rates of interest for Eurodollar
Loans as provided herein; or
(b) the Majority Revolving Credit Lenders determine, which
determination shall be conclusive, and notify the Administrative Agent that
the relevant rates of interest referred to in the definition of "Eurodollar
Base Rate" in Section 1.01 hereof upon the basis of which the rate of
interest for Eurodollar Loans for such Interest Period is to be determined
are not likely adequately to cover the cost to such Revolving Credit
Lenders of making or maintaining Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Company and each Revolving Credit
Lender prompt notice thereof and, so long as such condition remains in effect,
the Revolving Credit Lenders shall be under no obligation to Continue Eurodollar
Loans or to Convert Base Rate Loans into Eurodollar Loans, and the Company
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans
into Base Rate Loans in accordance with Section 2.08 hereof.
5.03 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Revolving Credit Lender
or its Applicable Lending Office to honor its obligation to make or maintain
Eurodollar Loans hereunder, then such Revolving Credit Lender shall promptly
notify the Company thereof (with a copy to the Administrative Agent) and such
Revolving Credit Lender's obligation to Continue, or to Convert Loans of any
other Type into, Eurodollar Loans shall be suspended until such time as such
Revolving Credit Lender may again make and maintain Eurodollar Loans (in which
case the provisions of Section 5.04 hereof shall be applicable).
5.04 Treatment of Affected Loans. If the obligation of any Revolving
---------------------------
Credit Lender to Continue, or to Convert Base Rate Loans into, Eurodollar Loans
shall be suspended
Credit Agreement
----------------
<PAGE>
-34-
pursuant to Section 5.01 or 5.03 hereof, such Revolving Credit Lender's
Eurodollar Loans shall be automatically Converted into Base Rate Loans on the
last day(s) of the then current Interest Period(s) for Eurodollar Loans (or, in
the case of a Conversion required by Section 5.01(b) or 5.03 hereof, on such
earlier date as such Revolving Credit Lender may specify to the Company with a
copy to the Administrative Agent) and, unless and until such Revolving Credit
Lender gives notice as provided below that the circumstances specified in
Section 5.01 or 5.03 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Revolving Credit Lender's Eurodollar
Loans have been so Converted, all payments and prepayments of principal
that would otherwise be applied to such Revolving Credit Lender's
Eurodollar Loans shall be applied instead to its Base Rate Loans; and
(b) all Loans that would otherwise be Continued by such Revolving
Credit Lender as Eurodollar Loans shall be Continued instead as Base Rate
Loans, and all Base Rate Loans of such Revolving Credit Lender that would
otherwise be Converted into Eurodollar Loans shall remain as Base Rate
Loans.
If such Revolving Credit Lender gives notice to the Company with a copy to the
Administrative Agent that the circumstances specified in Section 5.01 or 5.03
hereof that gave rise to the Conversion of such Revolving Credit Lender's
Eurodollar Loans pursuant to this Section 5.04 no longer exist (which such
Revolving Credit Lender agrees to do promptly upon such circumstances ceasing to
exist) at a time when Eurodollar Loans made by other Revolving Credit Lenders
are outstanding, such Revolving Credit Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Loans held by the Revolving Credit
Lenders holding Eurodollar Loans and by such Revolving Credit Lender are held in
accordance with their respective pro rata shares of the outstanding Revolving
Credit Loans (as to principal amounts, Types and Interest Periods).
5.05 Compensation. The Company shall pay to the Administrative Agent
------------
for account of each Revolving Credit Lender, upon the request of such Revolving
Credit Lender through the Administrative Agent, such amount or amounts as shall
be sufficient (in the reasonable opinion of such Revolving Credit Lender) to
compensate it for any loss, cost or expense that such Revolving Credit Lender
determines is attributable to any payment, mandatory or optional prepayment or
Conversion of a Eurodollar Loan made by such Revolving Credit Lender for any
reason (including, without limitation, the acceleration of the Loans pursuant to
Section 9 hereof) on a date other than the last day of the Interest Period for
such Loan. Without limiting the effect of the preceding sentence, such
compensation shall include an amount equal to the excess, if any, of (i) the
amount of interest that otherwise would have accrued on the principal amount so
paid, prepaid or Converted for the period from the
Credit Agreement
----------------
<PAGE>
-35-
date of such payment, prepayment or Conversion to the last day of the then
current Interest Period for such Loan at the applicable rate of interest for
such Loan provided for herein over (ii) the amount of interest that otherwise
would have accrued on such principal amount at a rate per annum equal to the
interest component of the amount such Revolving Credit Lender would have bid in
the London interbank market for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Revolving Credit Lender).
5.06 U.S. Taxes.
----------
(a) The Company agrees to pay to each Lender that is not a U.S.
Person such additional amounts as are necessary in order that the net payment of
any amount due to such non-U.S. Person hereunder after deduction for or
withholding in respect of any U.S. Tax imposed with respect to such payment (or
in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be
less than the amount stated herein to be then due and payable, provided that the
--------
foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to a Lender hereunder unless such Lender was, on
April 21, 1992 (or on the date it becomes a Lender as provided in Section
11.06(b) hereof) and on the date of any change in the Applicable Lending
Office of such Lender, either entitled to submit a Form 1001 (relating to
such Lender and entitling it to a complete exemption from withholding on
all interest to be received by it hereunder in respect of the Loans) or
Form 4224 (relating to all interest to be received by such Lender hereunder
in respect of the Loans), or
(ii) to any U.S. Tax imposed solely by reason of the failure by such
non-U.S. Person to comply with applicable certification, information,
documentation or other reporting requirements concerning the nationality,
residence, identity or connections with the United States of America of
such non-U.S. Person if such compliance is required by statute or
regulation of the United States of America as a precondition to relief or
exemption from such U.S. Tax.
For the purposes of this Section 5.06(a), (w) "Form 1001" shall mean Internal
---------
Revenue Service Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of
the Department of the Treasury of the United States of America, (x) "Form 4224"
---------
shall mean Internal Revenue Service Form 4224 (Exemption from Withholding of Tax
on Income Effectively Connected with the Conduct of a Trade or Business in the
United States) of the Department of the Treasury of the United States of America
(or in relation to either such Form such successor and related forms as may from
time to time be adopted by the relevant taxing authorities of the United States
of America to document a claim to which such Form relates), (y) "U.S. Person"
-----------
shall have the meaning set forth in Section 7701(a)(30) of the Code and (z)
"U.S. Taxes" shall
----------
Credit Agreement
----------------
<PAGE>
-36-
mean any present or future tax, assessment or other charge or levy imposed by or
on behalf of the United States of America or any taxing authority thereof or
therein.
(b) Within 30 days after paying any amount to the Administrative
Agent or any Lender from which it is required by law to make any deduction or
withholding, and within 30 days after it is required by law to remit such
deduction or withholding to any relevant taxing or other authority, the Company
shall deliver to the Administrative Agent for delivery to such non-U.S. Person
evidence satisfactory to such Person of such deduction, withholding or payment
(as the case may be).
5.07 Replacement of a Lender. Anything in this Agreement to the
-----------------------
contrary notwithstanding, in the event that (and for so long as) any Lender is
subject to a conservatorship or a receivership with, or is otherwise directly or
indirectly under the control of, the Federal Deposit Insurance Corporation (or
any successor thereto) or the Resolution Trust Company (or any successor
thereto), then unless a Default shall have occurred and be continuing, the
Company may designate another lender willing to purchase such Lender's Loan and
Note and reasonably acceptable to the Administrative Agent (such lender being
herein called a "Replacement Lender") to purchase the Loan and Note of such
------------------
Lender, as the case may be, and such Lender's rights hereunder, for a purchase
price equal to the outstanding principal amount of the Loan and Note payable to
such Lender plus any accrued but unpaid interest on such Loan and Note, and upon
such purchase and sale (which such Lender shall promptly complete), and subject
to the execution and delivery to the Administrative Agent by the Replacement
Lender of documentation reasonably satisfactory to the Administrative Agent
(pursuant to which the Replacement Lender shall assume the obligations of such
original Lender under this Agreement), the Replacement Lender shall succeed to
the rights and obligations of such Lender hereunder and such Lender shall no
longer be a party hereto or have any rights hereunder.
Section 6. Conditions Precedent. The effectiveness of the Amendment
--------------------
and Restatement (except for Sections 11.03 and 11.07 hereof and the definitions
ancillary thereto) is subject to the receipt by the Administrative Agent of the
following documents and evidence, each of which shall be satisfactory to the
Administrative Agent (and to the extent specified below, to each Lender) in form
and substance:
(a) Corporate Documents. A certificate of the Secretary or an
-------------------
Assistant Secretary of the Company, dated the Effective Date and certifying
(A) that attached thereto is a true and complete copy of the articles of
incorporation of the Company as amended and in effect at all times from the
date of such certification, (B) that attached thereto is a true and
complete copy of the by-laws of the Company as amended and in effect at all
times from the date on which the resolutions referred to in clause (C)
below were adopted to and including the date of such certificate, (C) that
attached thereto is a
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true and complete copy of resolutions duly adopted by the board of
directors of the Company authorizing the execution, delivery and
performance of the Amendment and Restatement and the Revolving Credit
Notes, and that such resolutions have not been modified, rescinded or
amended and are in full force and effect, and (D) as to the incumbency and
specimen signature of each officer of the Company executing the Amendment
and Restatement and the Revolving Credit Notes and each other document to
be delivered by the Company from time to time in connection therewith (and
the Administrative Agent and each Lender may conclusively rely on such
certificate until it receives notice in writing from the Company);
(b) Officer's Certificate. A certificate of a senior officer of the
---------------------
Company, dated the Effective Date, to the effect set forth in clauses (a)
and (b) of the last paragraph of this Section 6.
(c) Opinion of Counsel to the Company. An opinion, dated the
---------------------------------
Effective Date, of Craig I. DeRoy, general counsel of the Company,
substantially in the form of Exhibit B hereto and covering such other
matters as the Administrative Agent or any Lender may reasonably request
(and the Company hereby instructs such counsel to deliver such opinion to
the Lenders and the Administrative Agent).
(d) Revolving Credit Notes. The Revolving Credit Notes, duly
----------------------
completed and executed (and the Existing Lenders shall promptly return to
the Company the notes executed in connection with the Existing Credit
Agreement).
(e) Other Documents. Such other documents as the Administrative
---------------
Agent or any Lender or special New York counsel to Chase may reasonably
request.
The effectiveness of the Amendment and Restatement (except for Sections 11.03
and 11.07 hereof and the definitions ancillary thereto) is also subject to the
payment by the Company of such fees as the Company shall have agreed to pay or
deliver to any Lender or the Administrative Agent in connection herewith,
including, without limitation, the reasonable fees and expenses of Milbank,
Tweed, Hadley & McCloy, special New York counsel to Chase in connection with the
negotiation, preparation, execution and delivery of this Amendment and
Restatement and the other Basic Documents (to the extent that statements for
such fees and expenses have been delivered to the Company).
The effectiveness of the Amendment and Restatement (except for
Sections 11.03 and 11.07 hereof and the definitions ancillary thereto) is
subject to the further conditions precedent that, both immediately prior to and
on the Effective Date: (a) no Default shall have occurred and be continuing; and
(b) the representations and warranties made by the Company in Section 7 hereof,
and in each of the other Basic Documents, shall be true and complete on
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and as of the Effective Date with the same force and effect as if made on and as
of such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
Section 7. Representations and Warranties. The Company represents
------------------------------
and warrants to the Lenders that:
7.01 Corporate Existence. Each of the Company and its Material
-------------------
Subsidiaries: (a) is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization; (b) has all requisite corporate or other power, and has all
material governmental licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being or as proposed to be
conducted; and (c) is qualified to do business and is in good standing in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure so to qualify could have a Material
Adverse Effect.
7.02 Financial Condition.
-------------------
(a) The Company has heretofore furnished to the Lenders its
consolidated and consolidating balance sheet and statements of income,
stockholders equity and cash flows (i) as of and for the fiscal year ended
December 31, 1996, reported on by Price Waterhouse, independent public
accountants, and (ii) as of and for the fiscal quarter and the portion of the
fiscal year ended March 31, 1997, certified by its chief financial officer.
Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Company and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(b) The Company has heretofore furnished to each of the Lenders the
Statutory Statements for the year ended December 31, 1996 of each Insurance
Company that is a Material Subsidiary and that is required by any Applicable
Insurance Regulatory Authority to file such Statutory Statements. Such
Statutory Statements have been prepared in accordance with statutory accounting
practices and filed with the Applicable Insurance Regulatory Authorities, and
fairly present the financial condition of such Insurance Company as at said date
and its results of operations for the fiscal year ended on said date in
accordance with statutory accounting practices.
(c) The Company has heretofore furnished to each of the Lenders
consolidated balance sheets of each Material Subsidiary which is not an
Insurance Company described in paragraph (b) above and its consolidated
Subsidiaries as at December 31, 1996, and the related consolidated statements of
income, stockholders' equity and cash flow of such Material
Credit Agreement
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-39-
Subsidiary and its consolidated Subsidiaries for its fiscal year ended on said
date. All such financial statements are complete and correct and fairly present
the consolidated financial condition of such Material Subsidiary and its
Consolidated Subsidiaries as at the applicable date and the consolidated results
of their operations for the fiscal year ended on said date, all in accordance
with generally accepted accounting principles and practices applied on a
consistent basis.
(d) Since December 31, 1996, there has been no material adverse
change in the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and its Subsidiaries, taken as a whole.
(e) Set forth on Schedule II hereto is a list of all Liens (other
than Liens created pursuant to the Pledge Agreement) of the Company and its
Subsidiaries existing on the date hereof, to the extent any such Lien secures
Indebtedness in an aggregate principal or face amount which equals or exceeds
(or may equal or exceed) $5,000,000. Liens of the Company and its Consolidated
Subsidiaries existing on the date hereof and not set forth on Schedule II secure
Indebtedness in an aggregate principal or face amount not exceeding $30,000,000.
(f) Set forth on Schedule III hereto is a list of all Indebtedness
(other than Indebtedness created pursuant to this Agreement) of the Company and
its Subsidiaries on the date hereof, to the extent that any such Indebtedness
has an aggregate principal or face amount which equals or exceeds (or may equal
or exceed) $5,000,000. Indebtedness of the Company and its Consolidated
Subsidiaries existing on the date hereof does not exceed an aggregate principal
or face amount of $165,000,000.
7.03 Litigation. There are no legal or arbitral proceedings, or any
----------
proceedings by or before any governmental or regulatory authority or agency, now
pending or (to the knowledge of the Company) threatened against the Company or
any of its Subsidiaries which, if adversely determined could have a Material
Adverse Effect.
7.04 No Breach. None of the execution and delivery of this Agreement
---------
and the Notes, the consummation of the transactions herein and therein
contemplated or compliance with the terms and provisions hereof and thereof will
conflict with or result in a breach of, or require any consent under, the
articles of incorporation or by-laws of the Company, or any applicable law or
regulation, or any applicable order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their Property is bound or to which any of them is subject, or constitute a
default under any such agreement or instrument, or (except for the Liens created
pursuant to the Pledge Agreement) result in the creation or imposition of any
Lien upon any Property of the Company or any of its Subsidiaries pursuant to the
terms of any such agreement or instrument.
Credit Agreement
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7.05 Action. The Company has all necessary corporate power,
------
authority and legal right to execute, deliver and perform its obligations under
each of the Basic Documents; the execution, delivery and performance by the
Company of each of the Basic Documents have been duly authorized by all
necessary corporate action on its part (including, without limitation, any
required shareholder approvals); and each of this Agreement, the Pledge
Agreement and the Notes has been duly and validly executed and delivered by the
Company and constitutes its legal, valid and binding obligation, enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of creditors' rights.
7.06 Approvals. Except for the Relevant 8-K Report which was filed
---------
by the Company within fifteen days following its execution and delivery of the
Pledge Agreement, no authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency, or any
securities exchange, are necessary for the execution, delivery or performance by
the Company of the Basic Documents or for the legality, validity or
enforceability hereof or thereof; provided, however, that the enforceability of
--------
the remedies contained in the Pledge Agreement is subject to compliance by the
Administrative Agent (or any Person acquiring rights from the Administrative
Agent) with the provisions of Section 4.06 thereof.
7.07 Use of Credit. Neither the Company nor any of its Subsidiaries
-------------
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose, whether immediate, incidental or ultimate,
of buying or carrying Margin Stock, and no part of the proceeds of any extension
of credit hereunder will be used to buy or carry any Margin Stock.
7.08 ERISA. No ERISA Event has occurred or is reasonably likely to
-----
occur that, when taken together with all other such ERISA Events for which
liability is reasonably likely to occur, could reasonably be expected to result
in a Material Adverse Effect.
7.09 Taxes, Etc.
----------
(a) The Company and its Subsidiaries are members of an affiliated
group of corporations filing consolidated returns for Federal income tax
purposes, of which the Company is the "common parent" (within the meaning of
Section 1504 of the Code) of such group. The Company and its Subsidiaries have
filed all Federal income tax returns and all other material tax returns that are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment except (a) taxes that are being contested
in good faith by appropriate proceedings and for which the Company or such
Subsidiary, as applicable, has set aside on its books adequate reserves or (b)
to the extent that the failure to do
Credit Agreement
----------------
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so could not reasonably be expected to result in a Material Adverse Effect. The
charges, accruals and reserves on the books of the Company and its Subsidiaries
in respect of taxes and other governmental charges are, in the opinion of the
Company, adequate. The Company has not given or been requested to give a waiver
of the statute of limitations relating to the payment of Federal, state, local
and foreign taxes or other impositions.
(b) The Company has heretofore furnished to each Lender a true and
complete copy of each tax sharing agreement as in effect on the date hereof
between any of the Company, any Affiliate or any Material Subsidiary
(collectively, the "Tax Sharing Agreements"). The Tax Sharing Agreements and
----------------------
the implementation thereof are and will be in compliance with applicable laws
and regulations (including, without limitation, the Code).
(c) Under the Tax Sharing Agreements, the Company receives payments
each year in amounts at least equal to the excess of (i) the tax liability of
the Company's consolidated group, over (ii) the Company's tax liability computed
on a separate return basis as if the Company were a stand alone corporation that
derived no income from its subsidiaries.
7.10 Investment Company Act. Neither the Company nor any of its
----------------------
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
7.11 Public Utility Holding Company Act. Neither the Company nor any
----------------------------------
of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
7.12 Environmental Matters. Except as set forth in Schedule I
---------------------
hereto, each of the Company and its Subsidiaries has obtained all environmental,
health and safety permits, licenses and other authorizations required under all
Environmental Laws to carry on its business as now being or as proposed to be
conducted, except to the extent failure to have any such permit, license or
authorization would not have a Material Adverse Effect. Except as set forth in
Schedule I hereto, each of such permits, licenses and authorizations is in full
force and effect and each of the Company and its Subsidiaries is in material
compliance with the terms and conditions thereof, and is also in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply therewith would not have a
Material Adverse Effect. In addition, no notice, notification, demand, request
for information, citation, summons or order has been issued, no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or threatened by any governmental or other entity
Credit Agreement
----------------
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-42-
with respect to any alleged failure by the Company or any of its Subsidiaries to
have any environmental, health or safety permit, license or other authorization
required under any applicable Environmental Law in connection with the conduct
of the business of the Company or any of its Subsidiaries or with respect to any
generation, treatment, storage, recycling, transportation, discharge or
disposal, or any Release of any Hazardous Materials generated by the Company or
any of its Subsidiaries. There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by or that are in
the possession of the Company or any of its Subsidiaries in relation to any site
or facility now or previously owned, operated or leased by the Company or any of
its Subsidiaries which have not been made available to the Lenders.
7.13 Title to Assets.
---------------
(a) Each of the Company and its Subsidiaries has good title to, or
valid leasehold interests in, all its real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Company and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Company and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
7.14 True and Complete Disclosure. The Company has disclosed to the
----------------------------
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Company to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Section 8. Covenants of the Company. The Company covenants and
------------------------
agrees with the Lenders and the Administrative Agent that, so long as any Loan
is outstanding and until payment in full of all amounts payable by the Company
hereunder:
8.01 Financial Statements, Etc. The Company will deliver to each of
-------------------------
the Lenders:
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(a) as soon as available and in any event within 45 days after the
end of each of the first three quarterly fiscal periods of each fiscal year
of the Company, consolidated and consolidating statements of income and
consolidated statements of stockholders' equity and cash flow of the
Company and its Consolidated Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated and consolidating balance sheets of
the Company and its Consolidated Subsidiaries as at the end of such period,
setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the corresponding period in the
preceding fiscal year, accompanied by a certificate of a senior financial
officer of the Company, which certificate shall state that said
consolidated financial statements fairly present the consolidated financial
condition and results of operations of the Company and its Consolidated
Subsidiaries, and said consolidating statements of income and balance
sheets fairly present the individual unconsolidated financial condition and
results of operations of the Company, in each case in accordance with
generally accepted accounting principles, consistently applied, as at the
end of, and for, such period (subject to normal year-end audit
adjustments);
(b) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, consolidated and consolidating
statements of income and consolidated statements of stockholders' equity
and cash flow of the Company and its Consolidated Subsidiaries for such
fiscal year and the related consolidated and consolidating balance sheets
of the Company and its Consolidated Subsidiaries as at the end of such
fiscal year, setting forth in each case in comparative form the
corresponding consolidated and consolidating figures for the preceding
fiscal year, and accompanied (i) in the case of said consolidated
statements and balance sheet of the Company, by an opinion thereon of
independent certified public accountants of recognized national standing,
which opinion shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of
operations of the Company and its Consolidated Subsidiaries as at the end
of, and for, such fiscal year in accordance with generally accepted
accounting principles, and a certificate of such accountants stating that,
in making the examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default, and (ii) in the
case of said consolidating statements and balance sheets, to the extent
that they relate to the Company on a parent company stand alone basis, by a
certificate of a senior financial officer of the Company, which certificate
shall state that said consolidating statements of income and balance sheets
fairly present the individual unconsolidated financial condition and
results of operations of the Company, in each case in accordance with
generally accepted accounting principles, consistently applied, as at the
end of, and for, such fiscal year;
Credit Agreement
----------------
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(c) as soon as available and in any event within 45 days after the end
of each of the first three quarterly fiscal periods of each fiscal year of
FATICO, Statutory Statements of FATICO (prepared in accordance with
statutory accounting practices required or permitted by the Applicable
Insurance Regulatory Authority) for such fiscal period, accompanied by a
certificate of a senior financial officer of FATICO which certificate shall
state that such financial statements present the financial condition of
FATICO in accordance with statutory accounting practices required or
permitted by the Applicable Insurance Regulatory Authority;
(d) as soon as available and in any event within 60 days after the end
of each fiscal year of FATICO, the annual Statutory Statement of FATICO
(prepared in accordance with statutory accounting practices required or
permitted by the Applicable Insurance Regulatory Authority) for such year
and as filed with the Insurance Department of the State of California,
accompanied by (i) a certificate of a senior financial officer of FATICO
stating that said Statutory Statement presents the financial condition of
FATICO in accordance with the statutory accounting practices required or
permitted by the applicable Insurance Regulatory Authority, (ii) a
certificate of a senior financial officer of FATICO, affirming the adequacy
of Reserves of FATICO as at the end of such fiscal year and (iii) a report
by Milliman & Robertson, Inc. affirming the adequacy of Reserves of FATICO
as at the end of such fiscal year;
(e) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which the
Company shall have filed with the Securities and Exchange Commission (or
any governmental agency substituted therefor) or any national securities
exchange;
(f) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Company and its Subsidiaries in an aggregate
amount exceeding $10,000,000;
(h) as soon as received by the Company, a copy of any final financial
examination report (including, without limitation, any report in respect of
any tri-annual examination conducted by any Applicable Insurance Regulatory
Authority) or market conduct examination report issued by or prepared for
any governmental authority (including any Applicable Insurance Regulatory
Authority and NAIC) with respect to any Insurance Company that is a
Material Subsidiary; and to the extent disclosure to the Lenders is
permitted by law, a copy of any financial examination report issued by or
prepared for any governmental authority (including any Applicable
Credit Agreement
----------------
<PAGE>
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Bank Regulatory Authority) with respect to the Company, First American
Trust or First Security Thrift;
(i) immediately, notice of actual (or threatened action that could
lead to the) suspension, termination or revocation of any License of any
Insurance Company which is a Material Subsidiary by any governmental
authority (including any Applicable Insurance Regulatory Authority),
including any notice by any governmental authority of the commencement of
any proceeding, hearing or administrative action to suspend, terminate or
revoke any such License as a result of the failure by any such Insurance
Company to take or refrain from taking, any action which adversely affects
the authority of such Insurance Company to conduct its business after
notice thereof by such governmental authority (including any such
Applicable Insurance Regulatory Authority);
(j) promptly after the Company knows or has reason to believe that any
insurance, banking or other regulator having jurisdiction over the Company
or any of its Material Subsidiaries has commenced any proceeding, issued
any order, given notice of a formal hearing, sought relief from any court
or taken any similar action with respect to the Company or any of its
Material Subsidiaries that seeks to, or would, result in the revocation of
any license or authorization of the Company or any of its Material
Subsidiaries or materially restrict the ability of the Company or any of
its Material Subsidiaries to do business in any jurisdiction, a notice
describing in reasonable detail such proceeding, order, hearing or similar
action;
(k) at the time it furnishes statements pursuant to paragraph (a) or
(b) above, a certificate of a senior financial officer of the Company which
certificate shall list all Subject Property (as such term is defined in
Section 8.14 hereof) acquired by the Company and its Subsidiaries during
the most recently ended fiscal quarter;
(l) immediately, but in any event no later than five days after the
Company knows that any Applicable Bank Regulatory Authority's specification
by regulation of capital levels results in First Security Thrift being
designated an "undercapitalized," "significantly undercapitalized" or
"critically undercapitalized" institution pursuant to 12 U.S.C. 1831o, a
notice identifying such designation and describing in reasonable detail the
computations necessary to determine such designation;
(m) promptly after the Company knows or has reason to believe that
any Default has occurred, a notice of such Default describing the same in
reasonable detail and, together with such notice or as soon thereafter as
possible, a description of the action that the Company has taken or
proposes to take with respect thereto;
Credit Agreement
----------------
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(n) from time to time such other information regarding the financial
condition, operations, business or prospects of the Company or any of its
Subsidiaries (including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed under ERISA) as
any Lender or the Agent may reasonably request; and
(o) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
The Company will furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
senior financial officer of the Company (i) to the effect that no Default has
occurred and is continuing (or, if any Default has occurred and is continuing,
describing the same in reasonable detail and describing the action that the
Company has taken or proposes to take with respect thereto) and (ii) setting
forth in reasonable detail the computations necessary to determine (x) Deferred
Revenues (but only to the extent not already reflected as a discrete item in the
set of financial statements furnished with such certificate) and (y) whether the
Company is in compliance with Sections 8.08, 8.09, and 8.10 hereof, as of the
end of the respective quarterly fiscal period or fiscal year.
8.02 Litigation. The Company will promptly give to each Lender
----------
notice of all legal or arbitral proceedings, and of all proceedings by or before
any governmental or regulatory authority or agency, and any material development
in respect of such legal or other proceedings, affecting the Company or any of
its Subsidiaries, except proceedings which, if adversely determined, would not
have a Material Adverse Effect. Without limiting the generality of the
foregoing, the Company will give to each Lender notice of the assertion of any
Environmental Claim by any Person against, or with respect to the activities of,
the Company or any of its Subsidiaries and notice of any alleged violation of or
non-compliance with any Environmental Laws or any permits, licenses or
authorizations, other than any Environmental Claim or alleged violation which,
if adversely determined, would not have a Material Adverse Effect.
8.03 Existence, Etc. (a) The Company will, and will cause each of
--------------
its Material Subsidiaries to:
(i) preserve and maintain its legal existence and all of its material
rights, privileges, licenses and franchises; and
(ii) maintain all of its Properties used or useful (in the good faith
opinion of the Company) in its business in good working order and
condition, ordinary wear and tear excepted.
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(b) The Company will, and will cause each of its Subsidiaries to:
(i) comply with the requirements of all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if failure
to comply with such requirements could have a Material Adverse Effect;
(ii) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of
its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves (as required by generally accepted accounting principles
or statutory accounting practices, as the case may be) are being
maintained;
(iii) keep adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting
principles or statutory accounting practices, as the case may be,
consistently applied; and
(iv) permit representatives of any Lender or the Agent, during normal
business hours under guidance from officers of the Company or its
Subsidiaries, to examine, copy and make extracts from its books and
records, to inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by such
Lender or the Agent (as the case may be).
8.04 Insurance. The Company will, and will cause each of its
---------
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations.
8.05 Fundamental Changes. The Company will not, and will not permit
-------------------
any Subsidiary to, merge into or consolidate with any other Person, or permit
any other Person to merge into or consolidate with it, or sell, transfer, lease
or otherwise dispose of (in one transaction or in a series of transactions) all
or substantially all its assets, or all or substantially all of the stock of any
of its Subsidiaries (in each case, whether now owned or hereafter acquired), or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any
Subsidiary may merge into the Company in a transaction in which the Company is
the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in
a transaction in which the surviving entity is a Subsidiary, (iii) any
Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the
Company or to another Subsidiary and (iv) any Subsidiary may liquidate or
dissolve if the Company determines in good faith that such liquidation or
dissolution is in the best
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interests of the Company and is not materially disadvantageous to the Lenders;
provided that any such merger involving a Subsidiary shall not be permitted
- --------
unless the Company or another Subsidiary shall have owned not less than 90% of
the voting stock of such Subsidiary immediately prior to such merger.
8.06 Limitation on Liens. The Company will not, nor will it permit
-------------------
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens created pursuant to the Pledge Agreement;
(b) Liens in existence on the date hereof;
(c) Liens imposed by any governmental authority for taxes,
assessments or charges not yet due or which are being contested in good
faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or the affected
Subsidiaries, as the case may be, in accordance with generally accepted
accounting principles (or, in the case of an Insurance Company, statutory
accounting practices);
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings and Liens securing judgments
but only to the extent for an amount and for a period not resulting in an
Event of Default under clause (h) of Section 9 hereof;
(e) pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation;
(f) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds, casualty insurance policies of the type
usually carried by corporations engaged in businesses or activities that
are the same as or similar to those of the Company and its Subsidiaries and
other obligations of a like nature incurred in the ordinary course of
business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the
use of Property or minor imperfections in title thereto which, in the
aggregate, are not material in amount, and
Credit Agreement
----------------
<PAGE>
-49-
which do not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business of
the Company or any of its Subsidiaries;
(h) Liens upon Property of any corporation which becomes a Subsidiary
of the Company after the date hereof, provided that such Liens are in
--------
existence at the time such corporation becomes a Subsidiary of the Company
and were not created in anticipation thereof;
(i) Liens upon tangible personal Property used primarily in the
ordinary course of the business of the Company and its Subsidiaries and
acquired after the date hereof;
(j) Liens upon real Property used to secure Indebtedness permitted by
Section 8.07(i) hereof;
(k) Liens upon the Property of First American Trust and First
American Title & Trust Company which are created in the ordinary course of
their respective financial services businesses as such businesses are
conducted as of the date hereof;
(l) Liens upon Property of the Company or any Subsidiary which are
created pursuant to real estate exchange transactions (benefitting from the
tax treatment of Section 1031 of the Code) in the ordinary course of their
respective financial services businesses as such businesses are conducted
as of the date hereof;
(m) Liens upon Property of any Subsidiary of the Company securing
Indebtedness of such Subsidiary to the Company or another Subsidiary of the
Company that is the direct or indirect parent entity of such Subsidiary
permitted by Section 8.07 hereof;
(n) Liens upon Property of the Company or any of its Subsidiaries
securing Arbitrage Loans; provided that no such Lien shall extend to or
--------
cover any such Property other than the securities and/or other investments
in which the proceeds of such Arbitrage Loans have been invested; and
(o) any extension, renewal or replacement of the foregoing, provided
--------
however, that the Liens permitted hereunder shall not be spread to cover
any additional Indebtedness or Property (other than a substitution of like
Property).
8.07 Indebtedness. The Company will not permit any of its
------------
Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness
except:
Credit Agreement
----------------
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-50-
(a) Indebtedness outstanding on the date hereof;
(b) Indebtedness of Subsidiaries secured by Liens permitted under
Section 8.06(h) hereof up to but not exceeding $50,000,000 at any one time
outstanding;
(c) Indebtedness of the Company to any Subsidiary of the Company, or
Indebtedness of any Subsidiary of the Company to the Company or to any
other Subsidiary of the Company;
(d) Arbitrage Loans;
(e) Indebtedness of FATICO, First American Title Guaranty Holding
Company and First American Home Buyers Protection Corporation with respect
to Minority Stockholders Put Obligations;
(f) Indebtedness of FAREISI and FATICO to the Company representing
intercompany loans made by the Company from net proceeds received by the
Company from its Equity Issuances;
(g) additional Indebtedness of the Insurance Companies in respect of
letters of credit (or similar instruments) and Guarantees issued in the
ordinary course of the title insurance business in connection with
settlement of title insurance claims, so long as the aggregate amount of
all such Indebtedness does not exceed $10,000,000 at any one time
outstanding;
(h) Indebtedness of Subsidiaries in respect of letters of credit (or
similar instruments) and guarantees issued in connection with settlement or
administration of claims made against any of its Subsidiary under insurance
policies of the type usually carried by corporations engaged in businesses
or activities that are the same as or similar to those of the Company and
its Subsidiaries;
(i) Indebtedness incurred by any Subsidiary used to acquire real
Property to be occupied by such Subsidiary, so long as the aggregate amount
of any such Indebtedness does not exceed 80% of the book value of such real
property;
(j) additional Indebtedness of Subsidiaries not exceeding 20% of
Total Stockholder's Equity;
(k) Obligations under Sale/Leaseback Transactions permitted by
Section 8.16 hereof; and
Credit Agreement
----------------
<PAGE>
-51-
(l) any extension, renewal or refinancing of the foregoing.
8.08 Total Stockholders' Equity. The Company will not permit Total
--------------------------
Stockholders' Equity to be less than $285,000,000 at any time.
8.09 Total Debt to Total Capitalization. The Company will not permit
----------------------------------
Total Debt at any time to exceed 40% of Total Capitalization.
8.10 Minimum Combined Earnings. The Company will not permit Combined
-------------------------
Earnings for any period of eight consecutive rolling fiscal quarters to be less
than $70,000,000 at any time.
8.11 Lines of Business. The Company will not permit, nor will it
-----------------
permit any of its Subsidiaries to, (a) engage to any substantial extent in any
line or lines of business activity other than the businesses it was engaged in
on the date hereof or (b) expand into any new markets or product lines
substantially different from those in which it was engaged as of the date
hereof.
8.12 Transactions with Affiliates. The Company will not, and will
----------------------------
not permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Company or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties, and (b)
transactions between or among the Company and its Wholly Owned Subsidiaries not
involving any other Affiliate.
8.13 Use of Proceeds, Etc. The proceeds of the Loans will be used
--------------------
for general corporate purposes. No part of the proceeds of any Loan will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board of Governors of the Federal Reserve
System, including Regulations G, U and X.
8.14 Foreclosure; Etc. The Company will not, nor will it permit any
----------------
of its Subsidiaries to, acquire ownership or control of any commercial real
property with a fair market value of $1,000,000 or more and which is used for
commercial purposes by means of the exercise of any right of foreclosure, power
of sale or similar remedy it may avail itself of by way of any indenture of
mortgage or similar instrument relating to such commercial real property (the
"Subject Property"), or accept a deed to the Subject Property in lieu of
- -----------------
foreclosure or in settlement of any title insurance claim against it, unless the
Company shall have theretofore caused a Phase I Environmental Review (as defined
below) with respect to the Subject Property to be conducted. As used herein,
the term "Phase I Environmental Review"
----------------------------
Credit Agreement
----------------
<PAGE>
-52-
shall mean an environmental survey and assessment prepared by an independent
engineer selected by the Company expert in the identification and analysis of
environmental risks (such engineer and his agents being referred to as the
"Environmental Consultant"), such survey and assessment to (a) estimate current
------------------------
liabilities and assess potential sources of future liabilities of any owner or
operator of, or any other Person having control of, the Subject Property arising
under the Comprehensive Response, Compensation and Liability Act, the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, in each case as amended, and any other act or regulation of any
Federal, state or local environmental authority having authority in respect of
the Subject Property and (b) be based upon (i) a physical on-site inspection by
the Environmental Consultant of the Subject Property (without any excavation of
the Subject Property), (ii) interviews by the Environmental Consultant of
individuals who have direct managerial responsibility for operations on the
Subject Property, (iii) a review by the Environmental Consultant of records
relating to current and historical operations conducted at the Subject Property
and (iv) as deemed appropriate by the Environmental Consultant, interviews by
the Environmental Consultant of individuals in the area in which the Subject
Property is located who may have knowledge of current and historical operations
conducted at the Subject Property. The Company agrees to provide to any Lender a
copy of such Environmental Review within 60 days of any request by such Lender
therefor.
8.15 Communication with Accountants. The Company agrees to permit
------------------------------
the Agent (on behalf of the Lenders) to communicate through a financial officer
of the Company with its independent certified public accountants (if no Event of
Default has occurred and is continuing), after the Agent obtains the prior
consent of the Company (which consent may be oral or written) and further agrees
to authorize such accountants on a case by case basis to disclose to the Lenders
through the Agent any and all financial statements and other supporting
financial documents and schedules, including copies of any management letter
with respect to the business, financial condition, and other affairs of the
Company and any of its Subsidiaries which may be reasonably requested; provided
--------
however, that, after the occurrence and during the continuance of any Event of
- -------
Default, the Agent shall not be required to obtain the consent of the Company in
order to engage in any direct discussions with such accountants, but the Agent
shall be required to provide the Company with the opportunity to participate in
such meetings.
8.16 Sale/Leaseback Transactions. The Company will not nor will it
---------------------------
permit any of its Subsidiaries to enter into any arrangement with any Person
whereby the Company or any of its Subsidiaries shall sell or otherwise transfer
any of its Property and thereafter rent or lease such Property or similar
Property for substantially the same use or uses as the Property sold or
transferred (each such arrangement, a "Sale/Leaseback Transaction") if, as a
--------------------------
result thereof, the aggregate amount of rent and lease payments payable in any
fiscal year by the Company and its Subsidiaries under all such arrangements
would exceed $25,000,000.
Credit Agreement
----------------
<PAGE>
-53-
Section 9. Events of Default. If one or more of the following events
-----------------
(herein called "Events of Default") shall occur and be continuing:
-----------------
(a) The Company shall default in the payment when due (whether at
stated maturity or upon mandatory or optional prepayment) of any principal
of any Loan; or the Company shall default in the payment when due of any
interest on any Loan or any fee or any other amount payable by it hereunder
or under any other Basic Document and such default shall continue
unremedied for three Business Days; or
(b) The Company or any of its Subsidiaries shall default in the
payment when due (beyond any applicable period of grace expressly set forth
in the governing documents) of any principal of or interest on any of its
other Indebtedness aggregating $10,000,000 or more, or in the payment when
due of any amount under any Interest Rate Protection Agreement; or any
event specified in any note, agreement, indenture or other document
evidencing or relating to any such Indebtedness or any event specified in
any Interest Rate Protection Agreement shall occur if the effect of such
event is to cause, or (with the giving of any notice or the lapse of time
or both) to permit the holder or holders of such Indebtedness (or a trustee
or agent on behalf of such holder or holders) to cause, such Indebtedness
to become due, or to be prepaid in full (whether by redemption, purchase,
offer to purchase or otherwise), prior to its stated maturity or to have
the interest rate thereon reset to a level so that securities evidencing
such Indebtedness trade at a level specified in relation to the par value
thereof or, in the case of an Interest Rate Protection Agreement, to permit
the payments owing under such Interest Rate Protection Agreement to be
liquidated; or
(c) Any representation, warranty or certification made or deemed made
herein or in any other Basic Document (or in any modification or supplement
hereto or thereto) by the Company, or any certificate furnished to any
Lender or the Administrative Agent pursuant to the provisions hereof or
thereof, shall prove to have been false or misleading as of the time made
or furnished in any material respect; or
(d) The Company shall default in the performance of any of its
obligations under any of Sections 8.01(l), 8.05, 8.06, 8.07, 8.08, 8.09,
8.10, 8.12, or 8.14 hereof; or the Company shall default in the performance
of any of its obligations under Section 4.02 of the Pledge Agreement; or
the Company shall default in the performance of any of its other
obligations in this Agreement or any other Basic Document and such default
shall continue unremedied for a period of thirty days after notice thereof
to the Company by the Administrative Agent or any Lender (through the
Administrative Agent); or
Credit Agreement
----------------
<PAGE>
-54-
(e) The Company or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become
due; or
(f) The Company or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its Property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an involuntary
case under the Bankruptcy Code or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Company or any of its Subsidiaries, in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment
of its debts, (ii) the appointment of a receiver, custodian, trustee,
examiner, liquidator or the like of the Company or such Subsidiary or of
all or any substantial part of its Property, or (iii) similar relief in
respect of the Company or such Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of
the foregoing shall be entered and continue unstayed and in effect, for a
period of 60 or more days; or an order for relief against the Company or
such Subsidiary shall be entered in an involuntary case under the
Bankruptcy Code; or
(h) A final judgment or judgments for the payment of money in excess
of $5,000,000 in the aggregate (exclusive of judgment amounts fully covered
by insurance where the insurer has admitted liability in respect of such
judgment) or in excess of $20,000,000 in the aggregate (regardless of
insurance coverage) shall be rendered by one or more courts, administrative
tribunals or other bodies having jurisdiction against the Company or any of
its Subsidiaries and the same shall not be discharged (or provision shall
not be made for such discharge), or a stay of execution thereof shall not
be procured, within 30 days from the date of entry thereof and the Company
or the relevant Subsidiary shall not, within said period of 30 days, or
such longer period during which execution of the same shall have been
stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
Credit Agreement
----------------
<PAGE>
-55-
(i) Any ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to have a Material Adverse Effect;
or
(j) A reasonable basis shall exist for the assertion against the
Company or any of its Subsidiaries of (or there shall have been asserted
against the Company or any of its Subsidiaries) claims or liabilities,
whether accrued, absolute or contingent, based on or arising from the
generation, storage, transport, handling or disposal of Hazardous Materials
by the Company or any of its Subsidiaries or Affiliates, or any predecessor
in interest of the Company or any of its Subsidiaries or Affiliates, or
relating to any site or facility owned, operated or leased by the Company
or any of its Subsidiaries or Affiliates, which claims or liabilities
(insofar as they are payable by the Company or any of its Subsidiaries but
after deducting any portion thereof which is reasonably expected to be paid
by other creditworthy Persons jointly and severally liable therefor), in
the judgment of the Majority Lenders are reasonably likely to be determined
adversely to the Company or any of its Subsidiaries, and the amount thereof
is, singly or in the aggregate, reasonably likely to have a Material
Adverse Effect; or
(k) During any period of 25 consecutive calendar months, a majority
of the Board of Directors of the Company shall no longer be composed of
individuals (i) who were members of said Board on the first day of such
period, (ii) whose election or nomination to said Board was approved by
individuals referred to in clause (i) above constituting at the time of
such election or nomination at least a majority of said Board or (iii)
whose election or nomination to said Board was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such
election or nomination at least a majority of said Board; or
(l) Except for expiration in accordance with its terms, the Pledge
Agreement shall be terminated or shall cease to be in full force and
effect, for whatever reason; or
(m) The Company or any of its Subsidiaries shall be required by any
Applicable Bank Regulatory Authority, any Applicable Insurance Regulatory
Authority or any other similar governmental regulatory authority to enter
into, after the date hereof, any indenture, agreement, instrument or other
arrangement (including, without limitation, any capital maintenance
agreement) that, directly or indirectly, prohibits or restrains, or has the
effect of prohibiting or restraining, or imposes materially adverse
conditions upon, the incurrence or payment of Indebtedness, the granting of
Liens, the declaration or payment of dividends, the making of loans,
advances or Investments or the sale, assignment, transfer or other
disposition of Property or requires the making of capital contributions to,
or other Investments in, any such Subsidiary in an aggregate amount
exceeding $5,000,000;
Credit Agreement
----------------
<PAGE>
-56-
THEREUPON: (1) in the case of an Event of Default other than one referred to in
clause (f) or (g) of this Section 9 with respect to the Company, the
Administrative Agent may and, upon request of the Majority Lenders, shall, by
notice to the Company, terminate the Revolving Credit Commitments and/or declare
the principal amount then outstanding of, and the accrued interest on, the Loans
and, in the case of the Fixed Rate Loan, to the extent lawful, the applicable
Make-Whole Amount and all other amounts payable by the Company hereunder and
under the Notes (including, without limitation, any amounts payable under
Section 5.05 hereof) to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Company; and (2) in the case of the occurrence of an Event of Default referred
to in clause (f) or (g) of this Section 9 with respect to the Company, the
Revolving Credit Commitments shall automatically be terminated and the principal
amount then outstanding of, and the accrued interest on, the Loans and, in the
case of the Fixed Rate Loan, to the extent lawful, the applicable Make-Whole
Amount and all other amounts payable by the Company hereunder and under the
Notes (including without limitation, any amounts payable under Section 5.05
hereof) shall automatically become immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company.
Section 10. The Administrative Agent.
------------------------
10.01 Appointment, Powers and Immunities. Each Lender hereby
----------------------------------
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Basic Documents with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and of the other Basic Documents, together with such other powers as
are reasonably incidental thereto. The Administrative Agent (which term as used
in this sentence and in Section 10.05 and the first sentence of Section 10.06
hereof shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement and in the
other Basic Documents, and shall not by reason of this Agreement or any other
Basic Document be a trustee for any Lender; (b) shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or in any other Basic Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Basic Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
Note or any other Basic Document or any other document referred to or provided
for herein or therein or for any failure by the Company or any other Person to
perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Basic Document; and (d) shall not be responsible
for any action taken or omitted to be taken by it hereunder or under any other
Basic Document or under any other document or instrument referred to or provided
for herein
Credit Agreement
----------------
<PAGE>
-57-
or therein or in connection herewith or therewith, except for its own gross
negligence or willful misconduct. The Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it in good faith. The
Administrative Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a notice of the assignment or
transfer thereof shall have been filed with the Administrative Agent, together
with the consent of the Company to such assignment or transfer (to the extent
provided in Section 11.06(b) hereof).
10.02 Reliance by Administrative Agent. The Administrative Agent
--------------------------------
shall be entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Administrative Agent. As to any matters not expressly provided
for by this Agreement or any other Basic Document, the Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder or thereunder in accordance with instructions given by the Majority
Lenders, and such instructions of the Majority Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
10.03 Defaults. The Administrative Agent shall not be deemed to have
--------
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on Loans or of commitment fees) unless the
Administrative Agent has received notice from a Lender or the Company specifying
such Default and stating that such notice is a "Notice of Default". In the
event that the Administrative Agent receives such a notice of the occurrence of
a Default, the Administrative Agent shall give prompt notice thereof to the
Lenders (and shall give each Lender prompt notice of each such non-payment).
The Administrative Agent shall (subject to Section 10.07 hereof) take such
action with respect to such Default as shall be directed by the Majority
Lenders, provided that, unless and until the Administrative Agent shall have
--------
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall deem advisable in the best interest of the Lenders
except to the extent that this Agreement expressly requires that such action be
taken, or not be taken, only with the consent or upon the authorization of the
Majority Lenders or all of the Lenders.
10.04 Rights as a Lender. With respect to its Commitment and the
------------------
Loans made by it, Chase (and any successor acting as Administrative Agent) in
its capacity as a Lender hereunder shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. Chase (and any successor acting as Administrative Agent)
and
Credit Agreement
----------------
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its affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Company (and any of its
Subsidiaries or Affiliates) as if it were not acting as the Administrative
Agent, and Chase and its affiliates may accept fees and other consideration from
the Company for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
10.05 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent (to the extent not reimbursed under Section 11.03 hereof,
but without limiting the obligations of the Company under said Section 11.03,
ratably in accordance with the aggregate principal amount of the Fixed Rate
Loans, Revolving Credit Loans, and unused Revolving Credit Commitments held by
the Lenders, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever that may be imposed on, incurred by or asserted
against the Administrative Agent (including by any Lender) arising out of or by
reason of any investigation in or in any way relating to or arising out of this
Agreement or any other Basic Document or any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses that the Company is
obligated to pay under Section 11.03 hereof, but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement of any of the
terms hereof or thereof or of any such other documents, provided that no Lender
--------
shall be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
10.06 Non-Reliance on Administrative Agent and Other Lenders. Each
------------------------------------------------------
Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Company and its Subsidiaries and decision to enter into this Agreement and that
it will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Administrative Agent
shall not be required to keep itself informed as to the performance or
observance by the Company of this Agreement or any of the other Basic Documents
or any other document referred to or provided for herein or therein or to
inspect the Properties or books of the Company or any of its Subsidiaries.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Administrative Agent hereunder,
the Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Company or any of its Subsidiaries (or
any of
Credit Agreement
----------------
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-59-
their affiliates) that may come into the possession of the Administrative Agent
or any of its affiliates.
10.07 Failure to Act. Except for action expressly required of the
--------------
Administrative Agent hereunder and under the other Basic Documents, the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder and thereunder unless it shall receive further
assurances to its satisfaction from the Lenders of their indemnification
obligations under Section 10.05 hereof against any and all liability and expense
that may be incurred by it by reason of taking or continuing to take any such
action.
10.08 Resignation or Removal of Administrative Agent. Subject to the
----------------------------------------------
appointment and acceptance of a successor Administrative Agent as provided
below, the Administrative Agent may resign at any time by giving notice thereof
to the Lenders and the Company, and the Administrative Agent may be removed at
any time with or without cause by the Majority Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Majority Lenders' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, that shall be a bank
which has an office in New York, New York with a combined capital and surplus of
at least $1,000,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Section 10
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent.
10.09 Consents under Basic Documents. The Administrative Agent may,
------------------------------
with the prior consent of the Majority Lenders (but not otherwise), consent to
any modification, supplement or waiver under any of the Basic Documents (other
than this Agreement), provided that, without the prior consent of each Lender,
--------
the Administrative Agent shall not (except as provided herein or in the Pledge
Agreement) release any collateral or otherwise terminate any Lien under the
Pledge Agreement, or agree to additional obligations being secured by such
collateral security (unless the Lien for such additional obligations shall be
junior to the Lien in favor of the other obligations secured by the Pledge
Agreement), except that no such consent shall be required, and the
Administrative Agent is hereby authorized, to release any Lien covering Property
which is the subject of a disposition of Property permitted hereunder or to
which the Majority Lenders have consented.
Credit Agreement
----------------
<PAGE>
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Section 11. Miscellaneous.
-------------
11.01 Waiver. No failure on the part of the Administrative Agent or
------
any Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement or any Note preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
11.02 Notices. All notices, requests and other communications
-------
provided for herein and under the Pledge Agreement (including, without
limitation, any modifications of, or waivers or consents under, this Agreement)
shall be given or made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof; or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
11.03 Expenses, Etc. The Company agrees to pay or reimburse each of
-------------
the Lenders and the Administrative Agent for paying: (a) all reasonable out-of-
pocket costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement and the other Basic
Documents and the making of the Loans hereunder and (ii) any modification,
supplement or waiver of any of the terms of this Agreement or any of the other
Basic Documents; (b) all reasonable costs and expenses of the Lenders and the
Administrative Agent (including, without limitation, reasonable counsels' fees)
in connection with (i) any Default and any enforcement or collection proceedings
resulting therefrom or in connection with the negotiation of any restructuring
or "work-out" (whether or not consummated), or the obligations of the Company
hereunder and (ii) the enforcement of this Section 11.03; and (c) all transfer,
stamp, documentary or other similar taxes (other than income taxes), assessments
or charges levied by any governmental or revenue authority in respect of this
Agreement or any of the other Basic Documents or any other document referred to
herein or therein and all costs, expenses, taxes (other than income taxes),
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated by
any Basic Document or any other document referred to therein.
The Company hereby agrees (i) to indemnify the Administrative Agent
and each Lender and their respective directors, officers, employees, attorneys
and agents from, and hold
Credit Agreement
----------------
<PAGE>
-61-
each of them harmless against, any and all losses, liabilities, claims, damages
or expenses incurred by any of them (including, without limitation, any and all
losses, liabilities, claims, damages or expenses incurred by the Administrative
Agent to any Lender, whether or not the Administrative Agent or any Lender is a
party thereto) arising out of or by reason of any investigation or litigation or
other proceedings (including any threatened investigation or litigation or other
proceedings) relating to the extensions of credit hereunder or any actual or
proposed use by the Company or any of its Subsidiaries of the proceeds of any of
the extensions of credit hereunder, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) and (ii) not
to assert any claim against the Administrative Agent, any Lender, any of their
affiliates, or any of their respective directors, officers, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to any of the transactions
contemplated herein or in any other Basic Document. Without limiting the
generality of the foregoing, the Company will indemnify the Administrative Agent
and each Lender from, and hold the Administrative Agent and each Lender harmless
against, any losses, liabilities, claims, damages or expenses described in the
preceding sentence (but excluding, as provided in the preceding sentence, any
loss, liability, claim, damage or expense incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified) arising under
any Environmental Law as a result of the past, present or future operations of
the Company or any of its Subsidiaries (or any predecessor in interest to the
Company or any of its Subsidiaries), or the past, present or future condition of
any site or facility owned, operated or leased by the Company or any of its
Subsidiaries (or any such predecessor in interest), or any Release or threatened
Release of any Hazardous Materials from any such site or facility, including any
such Release or threatened Release which shall occur during any period when the
Administrative Agent or any Lender shall be in possession of any such site or
facility following the exercise by the Administrative Agent or any Lender of any
of its rights and remedies hereunder or under the Pledge Agreement unless such
Release or threatened Release is caused by the Administrative Agent or such
Lender.
11.04 Amendments, Etc. Except as otherwise expressly provided in
---------------
this Agreement, any provision of this Agreement may be modified or supplemented
only by an instrument in writing signed by the Company, the Administrative Agent
and the Majority Lenders, or by the Company and the Administrative Agent acting
with the consent of the Majority Lenders, and any provision of this Agreement
may be waived by the Majority Lenders or by the Administrative Agent acting with
the consent of the Majority Lenders; provided that: in addition to the
--------
foregoing, (a) no modification, supplement or waiver shall, unless by an
instrument signed by all of the Lenders or by the Administrative Agent acting
with the consent of all of the Lenders: (i) extend the date fixed for the
payment of any fee
Credit Agreement
----------------
<PAGE>
-62-
hereunder, (ii) reduce the rate at which any fee is payable hereunder, (iii)
alter the terms of this Section 11.04, (iv) modify the definition of the term
"Majority Lenders" or modify in any other manner the number or percentage of the
Lenders required to make any determinations or waive any rights hereunder or to
modify any provision hereof, or (v) waive any of the conditions precedent set
forth in Section 6 hereof; (b) no modification, supplement or waiver shall,
unless by an instrument signed by all of the Revolving Credit Lenders or by the
Administrative Agent acting with the consent of all of the Revolving Credit
Lenders (i) extend the date fixed for the payment of principal of or interest on
any Revolving Credit Loan (ii) reduce the amount of any such payment of
principal, (iii) reduce the rate at which interest is payable thereon, (iv)
alter the rights or obligations of the Company to prepay Revolving Credit Loans,
or (v) modify the definition of the term "Majority Revolving Credit Lenders";
(c) no modification, supplement or waiver shall, unless by an instrument also
signed by the Fixed Rate Lender (i) extend the date fixed for the payment of
principal of or interest on the Fixed Rate Loan (ii) reduce the amount of any
such payment of principal, (iii) reduce the rate at which interest is payable
thereon, (iv) alter the rights or obligations of the Company to prepay the Fixed
Rate Loan; and (d) any modification or supplement of Section 10 hereof shall
require the consent of the Administrative Agent.
11.05 Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
11.06 Assignments and Participations.
------------------------------
(a) The Company may not assign any of its rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders and
the Administrative Agent.
(b) Each Lender may assign any of its Loans and its Note; provided
--------
that (i) no partial assignment of the Fixed Rate Loan (together with the Fixed
Rate Note) shall be permitted hereunder; (ii) any such partial assignment (not
otherwise prohibited by clause (i) above) shall be in an amount at least equal
to $5,000,000; (iii) each such assignment by a Revolving Credit Lender of its
Revolving Credit Loans or Revolving Credit Note shall be made in such manner so
that the same portion of its Revolving Credit Loans and Revolving Credit Note is
assigned to the respective assignee; and (iv) each assignment by a Revolving
Credit Lender of its Revolving Credit Loans or Revolving Credit Commitment shall
be made in such a manner so that the same portion of its Revolving Credit Loans
and Revolving Credit Commitment is assigned to the assignee. Upon execution and
delivery by the assignee to the Company and the Administrative Agent of an
instrument in writing pursuant to which such assignee agrees to become a
"Lender" hereunder (if not already a Lender) having the Loans specified in such
instrument, the assignee shall have, to the extent of such assignment, the
obligations, rights and benefits of a Lender hereunder holding the Loans (or
portions thereof) assigned to it (in addition to the Loans theretofore held by
such assignee). Upon each such
Credit Agreement
----------------
<PAGE>
-63-
assignment the assigning Lender shall pay the Administrative Agent an assignment
fee of $2,000.
(c) A Lender may sell or agree to sell to one or more other Persons a
participation in all or any part of its Loans, in which event each purchaser of
a participation (a "Participant") which, except as otherwise provided in Section
-----------
4.07(c) hereof, shall not have any other rights or benefits under this Agreement
or any Note or any other Basic Document (the Participant's rights against such
Lender in respect of such participation to be those set forth in the agreements
executed by such Lender in favor of the Participant). All amounts payable by
the Company to any Lender under Section 5 hereof in respect of its Loans shall
be determined as if such Lender had not sold or agreed to sell any
participations in such Loans, and as if such Lender were funding each of such
Loan in the same way that it is funding the portion of such Loan in which no
participations have been sold. In no event shall a Lender that sells a
participation agree with the Participant to take or refrain from taking any
action hereunder or under any other Basic Document except that such Lender may
agree with the Participant that it will not, without the consent of the
Participant, agree to (i) extend the date fixed for the payment of principal of
or interest on the related Loan or Loans or any portion of any fee hereunder
payable to the Participant, (ii) reduce the amount of any such payment of
principal, (iii) reduce the rate at which interest is payable thereon, or any
fee hereunder payable to the Participant, to a level below the rate at which the
Participant is entitled to receive such interest or fee, (iv) alter the rights
or obligations of the Company to prepay the related Loans or (v) consent to any
modification, supplement or waiver hereof or of any of the other Basic Documents
to the extent that the same, under Section 10.09 or 11.04 hereof, requires the
consent of each Lender.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section 11.06, any Lender may assign and pledge
all or any portion of its Loan and its Note to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(e) Subject to Section 11.12 hereof, a Lender may furnish any
information concerning the Company or any of its Subsidiaries in the possession
of such Lender from time to time to assignees and participants (including
prospective assignees and participants).
(f) Anything in this Section 11.06 to the contrary notwithstanding,
no Lender may assign or participate any interest in any Loan held by it
hereunder to the Company or any of its Affiliates or Subsidiaries without the
prior written consent of each Lender.
11.07 Survival. The obligations of the Company under Sections 5.01,
--------
5.05, 5.06 and 11.03 hereof, the obligations of the Lenders under Section 10.05
hereof and, to the
Credit Agreement
----------------
<PAGE>
-64-
extent set forth in Section 5.10 of the Pledge Agreement, the provisions of
Section 10 hereof shall survive the repayment of the Loans and the termination
of the Revolving Credit Commitments. In addition, each representation and
warranty made, or deemed to be made by the notice of borrowing, herein or
pursuant hereto shall survive the making of such representation and warranty,
and no Lender shall be deemed to have waived, by reason of making its Loan, any
Default which may arise by reason of such representation or warranty proving to
have been false or misleading, notwithstanding that such Lender or the
Administrative Agent may have had notice or knowledge or reason to believe that
such representation or warranty was false or misleading at the time such Loan
was made.
11.08 Captions. The table of contents and captions and section
--------
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
11.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
11.10 Governing Law; Submission to Jurisdiction. This Agreement and
-----------------------------------------
the Notes shall be governed by, and construed in accordance with, the law of the
State of New York. The Company hereby submits to the nonexclusive jurisdiction
of the United States District Court for the Southern District of New York and of
any New York state court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have to
the laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.
11.11 Waiver of Jury Trial. EACH OF THE COMPANY, THE ADMINISTRATIVE
--------------------
AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
11.12 Treatment of Certain Information; Confidentiality.
-------------------------------------------------
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Lender or by one or more subsidiaries or
affiliates of such Lender and the Company hereby authorizes each
Credit Agreement
----------------
<PAGE>
-65-
Lender to share any information delivered to such Lender by the Company and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such subsidiary or affiliate,
it being understood that any such subsidiary or affiliate receiving such
information shall be bound by the provisions of clause (b) below as if it were a
Lender hereunder.
(b) Each Lender and the Administrative Agent agrees (on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of this nature and in accordance with safe and sound banking practices, any non-
public information supplied to it by the Company pursuant to this Agreement
which is identified by the Company as being confidential at the time the same is
delivered to the Lenders or the Administrative Agent, provided that nothing
--------
herein shall limit the disclosure of any such information (i) to the extent
required by statute, rule, regulation or judicial process, (ii) to counsel for
any of the Lenders or the Administrative Agent, (iii) to bank examiners,
auditors or accountants, (iv) to the Administrative Agent or any other Lender
(or to Chase Securities Inc.), (v) in connection with any litigation to which
any one or more of the Lenders or the Administrative Agent is a party, (vi) to a
subsidiary or affiliate of such Lender as provided in clause (a) above or (vii)
to any assignee or participant (or prospective assignee or participant) so long
as such assignee or participant (or prospective assignee or participant) first
executes and delivers to the respective Lender a Confidentiality Agreement
substantially in the form of Exhibit C hereto; provided, further, that in no
-------- -------
event shall any Lender or the Administrative Agent be obligated or required to
return any materials furnished by the Company. The obligations of each Lender
under this Section 11.12 shall supersede and replace the obligations of such
Lender under the confidentiality letter in respect of this financing signed and
delivered by such Lender to the Company prior to April 21, 1992.
11.13 Amendment Fees. Anything in this Agreement to the contrary
--------------
notwithstanding, the Company, the Administrative Agent and each Lender hereby
agrees that any payment of fees after the date hereof by the Company to the
Lenders in connection with effecting any amendment hereto (other than an
amendment of the type described in Section 11.04(b) or (c) hereof) shall be made
for account of all of the Lenders who execute and deliver such amendment in
accordance with the respective unpaid principal amounts of the Loans held by
them, provided however, that in no event (i) shall the amendment fee payable to
--------
the Fixed Rate Lender (for its execution and delivery of any amendment) pursuant
to the foregoing provision be less than the greatest amount of any such
amendment fee payable to any Revolving Credit Lender and (ii) shall the
foregoing provision apply to any payment of any fee to the Administrative Agent.
11.14 Pledge Agreement.
----------------
Credit Agreement
----------------
<PAGE>
-66-
(a) Amendment to Pledge Agreement. By its signature below, each of
-----------------------------
the parties hereto agrees that references to the "Credit Agreement" in the
Pledge Agreement shall be deemed to references to this Amended and Restated
Credit Agreement.
(b) Termination of Pledge Agreement. By its signature below, each of
-------------------------------
the parties hereto agrees that upon the repayment of the Fixed Rate Loan and all
other amounts owing to the Fixed Rate Lender hereunder (including, without
limitation, interest and fees), and upon notice in writing from the Fixed Rate
Lender to the Administrative Agent to such effect, the Pledge Agreement shall
terminate and no longer be in force and effect.
Credit Agreement
----------------
<PAGE>
-67-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By /s/ THOMAS A. KLEMENS
------------------------------------------
Title: Executive Vice President and Chief
Financial Officer
By /s/ MARK R. ARNESEN
------------------------------------------
Title: V.P./Secretary
Address for Notices:
The First American Financial
Corporation
114 East Fifth Street
Santa Ana, California 92701-4642
Attention: Parker S. Kennedy
President
Telecopier No.: (714) 647-4427
Telephone No.: (714) 558-3211
Credit Agreement
----------------
<PAGE>
-68-
LENDERS
-------
Revolving Credit THE CHASE MANHATTAN BANK
Commitment
- ----------------
$18,750,000
By /s/ DEBORAH VAN ZIJL
--------------------------
Title: Vice President
Lending Office for all Loans:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York 10081
Address for Notices:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: Laura Rebecca
New York Agency
Telecopier No.: (212) 552-7490
Telephone No.: (212) 552-7253
Credit Agreement
----------------
<PAGE>
-69-
Revolving Credit SANWA BANK CALIFORNIA
Commitment
- ----------------
$18,750,000
By /s/ RITA RAYCHAUDHURI
---------------------
Title: Vice President
Lending Office:
Sanwa Bank California
15165 Ventura Blvd.
Suite 445
Sherman Oaks, CA 91403
Address for Notices:
Sanwa Bank California
15165 Ventura Blvd.
Suite 445
Sherman Oaks, CA 91403
Attention: Rita Ray Chaydhuri
Telecopier No.: (818) 905-1002
Telephone No.: (818) 905-0853
Credit Agreement
----------------
<PAGE>
-70-
Revolving Credit UNION BANK OF CALIFORNIA, N.A.
Commitment
- ----------------
$18,750,000
By /s/ D S LAMBELL
----------------------------
Title: Vice President
Lending Office:
Union Bank of California, N.A.
Commercial Portfolio Administration
500 S. Main Street, Suite 201
Orange, California 92868
Address for Notices:
Union Bank of California, N.A.
Commercial Portfolio Administration
500 S. Main Street, Suite 201
Orange, California 92868
Attention: Douglas S. Lambell
Vice President
Telecopier No.: (714) 565-5770
Telephone No.: (714) 565-5716
Credit Agreement
----------------
<PAGE>
-71-
Revolving Credit COMERICA BANK
Commitment
- ----------------
$18,750,000
By /s/ EMMANUEL SKIVOFILAX
--------------------------------
Title: Corporate Banking Officer
Lending Office:
Comerica Bank
500 Woodward Avenue
Detroit, MI 48226
Address for Notices:
Comerica Bank
1920 Main Street, Suite 1150
Irvine, CA 92714
Attention: Emmanuel M. Skevofilax
Telecopier No.: (714) 476-1222
Telephone No.: (714) 476-1933
Credit Agreement
----------------
<PAGE>
-72-
Revolving Credit WELLS FARGO BANK, N.A.
Commitment
- ----------------
$ 0
By /s/ SANDRA MARTIN
---------------------
Title: Vice President
Address for Notices:
Wells Fargo Bank, N.A.
2030 Main Street
Suite 900
Irvine, CA 92714
Attention: Sandra Martin
Telecopier No.: (714) 261-1830
Telephone No.: (714) 251-4156
Credit Agreement
----------------
<PAGE>
-73-
Revolving Credit NBD BANK, N.A.
Commitment (formerly National Bank of Detroit)
- ----------------
$ 0
By /s/ DEBORAH A. PYNE
---------------------------
Title: First Vice President
Address for Notices:
NBD First Chicago
777 S. Figueroa Street
4th Floor
Los Angeles, CA 90017-5800
Attention: Thomas C. Williams
Managing Director
Telecopier No.: (213) 683-6407
Telephone No.: (213) 683-4944
Credit Agreement
----------------
<PAGE>
-74-
Principal Amount of the THE CANADA LIFE ASSURANCE COMPANY
Fixed Rate Loan as of
the Effective Date
- -----------------------
$6,140,000 CHASE MANHATTAN BANK, AS NOMINEE FOR
THE CANADA LIFE ASSURANCE COMPANY
By /s/ KENNETH PETERS
----------------------------
Title: Vice President
Lending Office:
The Canada Life Assurance Company
330 University Avenue, U-6
Toronto, Ontario
Canada M5G 1R8
Attention: U.S. Private
Placements
Address for Notices:
The Canada Life Assurance Company
330 University Avenue
Toronto, Ontario
Canada M5G 1R8
Attention: Supervisor,
Securities Accounting
Telecopier No.: (416) 597-2609
Telephone No.: (416) 597-1456
Credit Agreement
----------------
<PAGE>
-75-
THE CHASE MANHATTAN BANK,
as Administrative Agent
By /s/ DEBORAH VAN ZIJL
---------------------
Title: Vice President
Address for Notices to
Chase as Administrative Agent:
The Chase Manhattan Bank
1 Chase Manhattan Plaza
8th Floor
New York, New York 10081
Attention: Laura Rebecca
New York Agency
Telecopier No.: (212) 552-7490
Telephone No.: (212) 552-7253
<PAGE>
Schedule I
The First American Financial Corporation and Subsidiary Companies
Environmental Matters
- -None-
<PAGE>
Schedule II
The First American Financial Corporation and Subsidiary Companies
Liens Securing Indebtedness Greater Than or Equal to $5,000,000
-None-
<PAGE>
Schedule III
The First American Financial Corporation and Subsidiary Companies
Indebtedness Greater Than or Equal to $5,000,000
<TABLE>
<CAPTION>
Description Rate Balance
- ------------------------ --------- ------------
<S> <C> <C>
Capital Securities (Liquidation Amount $1,000 per 8.50% $100,000,000
Capital Security) issued by First American Capital
Trust 1 (the "Trust") pursuant to the Amended and
Restated Declaration of Trust dated as of April 22, 1997,
among The First American Financial Corporation (the
"Company"), as sponsor, Thomas A. Klemens and
Parker S. Kennedy, as regular trustees of the Trust, and
Wilmington Trust Company, as Delaware trustee and
property trustee of the Trust, which Capital Securities,
together with the Common Securities of the Trust
(collectively, the "Trust Securities"), represent undivided
beneficial ownership interests in the $103,093,000 aggregate
principal amount of 8.50% Junior Subordinated Debentures
due April 15, 2012, issued by the Company pursuant to the
Junior Subordinated Indenture dated as of April 22, 1997,
between the Company and Wilmington Trust Company, as
trustee, and acquired by the Trust. The Company has guaranteed
certain payments in respect of the Trust Securities pursuant
to the Guarantee Agreement, dated as of April 22, 1997, made by
the Company in favor of Wilmington Trust Company, as guarantee
trustee for the benefit of the holders of the Trust Securities.
Sale/leaseback of furniture, fixtures and equipment 10.34% $16,960,000
pursuant to Master Lease Agreement dated as of
December 12, 1994, between the Company and
General Electric Capital Corporation, for
itself and as agent for certain participants.
</TABLE>
<PAGE>
EXHIBIT A
REVOLVING CREDIT NOTE
$18,750,000 July 29, 1997
New York, New York
FOR VALUE RECEIVED, THE FIRST AMERICAN FINANCIAL CORPORATION, a
California corporation (the "Company"), hereby promises to pay to SANWA BANK
-------
CALIFORNIA (the "Lender"), for account of the Lender's respective Applicable
------
Lending Offices provided for by the Credit Agreement (as such term is defined
below), at the principal office of The Chase Manhattan Bank in New York, New
York, the principal sum of Eighteen Million Seven Hundred Fifty Thousand Dollars
(or such lesser amount as shall equal the unpaid principal amount of the
Revolving Credit Loans made to the Company under the Credit Agreement and held
by the Lender), in lawful money of the United States of America and in
immediately available funds, in installments on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on the unpaid
principal amount of each such Loan, at such office, in like money and funds, for
the period commencing on the date of such Loan until such Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
The date, amount, Type, interest rate and duration of Interest Period
(if applicable) of each of the Revolving Credit Loans made by the Lender to the
Company, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof, provided that the failure of the Lender to make any such recordation or
--------
endorsement shall not affect the obligations of the Company to make a payment
when due of any amount owing under the Credit Agreement or hereunder in respect
of such Loans.
This Note is one of the Revolving Credit Notes referred to in the
Amendment and Restatement dated as of July 29, 1997 of the Amendment and
Restatement dated as of April 28, 1993 of the Credit Agreement dated as of April
21, 1992 (as amended and supplemented from time to time, the "Credit Agreement")
----------------
between the Company, the lenders named therein and The Chase Manhattan Bank, as
Administrative Agent, and evidences Revolving Credit Loans made thereunder and
held by the Lender and is entitled to the benefits of certain security as
further described therein. Terms used but not defined in this Note have the
respective meanings assigned to them in the Credit Agreement.
<PAGE>
-2-
The Credit Agreement provides for the acceleration of the maturity of
this Note upon the occurrence of certain events and for prepayments of the Loans
evidenced hereby upon the terms and conditions specified therein.
Except as permitted by Section 11.06(b) of the Credit Agreement, this
Note may not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance with, the
law of the State of New York.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By_________________________
Title:
By_________________________
Title:
<PAGE>
SCHEDULE OF REVOLVING CREDIT LOANS
This Note evidences Revolving Credit Loans made, Continued or
Converted under the within-described Credit Agreement, on the dates, in the
principal amounts, of the Types, bearing interest at the rates and having
Interest Periods (if applicable) of the durations set forth below, subject to
the payments, Continuations, Conversions and prepayments of principal set forth
below:
<TABLE>
<CAPTION>
Date
Loan Made, Amount
Paid, Pre- Duration Paid, Pre- Unpaid
paid, Con- Principal Type of paid, Con- Prin-
tinued or Amount of of Interest Interest tinued or cipal Notation
Converted Loan Loan Rate Period Converted Amount Made by
- ---------- --------- ---- -------- -------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B
[Form of Opinion of Counsel to the Company]
___________, 1997
To the Lenders party to the
Credit Agreement referred to
below and The Chase Manhattan
Bank, as Administrative Agent
Re: Amended and Restated Credit Agreement
Ladies and Gentlemen:
I am corporate counsel of The First American Financial Corporation, a
California corporation (the "Company"), and have acted in such capacity in
-------
connection with the Amendment and Restatement dated as of __________, 1997 to
the Amendment and Restatement dated as of April 28, 1993, of the Credit
Agreement dated as of April 21, 1992, among the Company, the lenders party
thereto and The Chase Manhattan Bank, as Administrative Agent (the "Credit
------
Agreement"). Unless otherwise defined herein, capitalized terms shall have the
- ---------
meanings given thereto in the Credit Agreement.
In rendering the opinions expressed below, I have examined the Credit
Agreement and the Notes issued in connection therewith (collectively, the
"Credit Documents"), and the originals or conformed copies of such resolutions,
- -----------------
corporate records, agreements and instruments of the Company and its
Subsidiaries, certificates of public officials and of officers of the Company
and its Subsidiaries, and such other documents and records, and such matters of
law, as I have deemed appropriate as a basis for the opinions hereinafter
expressed. In such examination and investigation, I have assumed the
genuineness of all signatures (other than those of officers of the Company), the
legal capacity of natural persons, the authenticity of all documents submitted
as originals and the conformity to original documents of documents submitted as
certified or photostatic copies. I have also assumed that each of the Credit
Documents has been or will be duly authorized, executed and delivered by the
parties thereto other than the Company and constitutes or will constitute a
valid, legal and binding obligation of all such other parties.
In rending this opinion, I do not express any opinion concerning any law
other than the law of the State of California and the federal law of the United
States.
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth below, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of California and has the necessary
corporate power to
<PAGE>
-2-
make and perform the Credit Agreement and the Notes and to borrow under the
Credit Agreement.
2. The execution, delivery and performance by the Company of the Credit
Documents and the borrowing by the Company under the Credit Agreement have been
duly authorized by all necessary corporate action, and do not and will not
violate any provision of law or regulation or any provision of the Company's
charter or bylaws or result in the breach of, or constitute a default or require
any consent (other than consents which have been obtained) under, or (except for
the Liens created pursuant to the Pledge Agreement) result in the creation of
any Lien upon any of the Properties, revenues or assets of the Company pursuant
to, any indenture or other agreement or instrument of which I have knowledge
(after due inquiry) to which the Company is a party or by which the Company or
its Properties may be bound.
3. The Credit Agreement constitutes, and each of the Notes, when executed
and delivered for value, will constitute, legal, valid and binding obligations
of the Company enforceable against it in accordance with their respective terms,
except (a) as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, (b) that the enforceability of such Credit Documents is
subject to the application of general principles of equity (regardless of
whether considered in a proceeding in equity or at law), including, without
limitation, (i) the possible unavailability of specific performance, injunctive
relief or any other equitable remedy and (ii) concepts of materiality,
reasonableness, good faith and fair dealing.
4. Except as disclosed to the Lenders prior to the date hereof, there are
no legal or arbitral proceedings, and no proceedings by or before any
governmental or regulatory authority or agency, pending or (to my knowledge
after due inquiry) threatened against or affecting the Company, or any
Properties or rights of the Company, which, if adversely determined, would have
a Material Adverse Effect.
5. Except for the filing by the Company of the Relevant 8-K Report and
copies of the Credit Agreement with the Securities and Exchange Commission and
the New York Stock Exchange, Inc., no authorizations, consents, approvals,
licenses, filings or registrations with, any governmental or regulatory
authority or agency are required in connection with the execution, delivery or
performance by the Company for the Credit Documents.
6. Neither the Company nor any of its Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
7. The foregoing opinions are also subject to the following additional
limitations, qualifications, exceptions and assumptions:
<PAGE>
-3-
a. In rending my opinion in paragraph 3 above, I have assumed that
the Credit Documents are governed by the laws of the State of
California.
b. I express no opinion as to whether or not the execution, delivery
or performance by the Company of the Credit Documents will conflict with
or result in a breach of, or constitute a default under, any covenant,
restriction or provision with respect to financial ratios or tests or
any aspect of the financial condition or results of operation of the
Company (other than covenants or restrictions that relate to the
incurrence of indebtedness and the incurrence of liens) under any
indenture or other agreement or instrument.
c. I express no opinion as to whether a federal or state court would
give effect to the choice of New York law provided for in the Credit
Documents.
d. In rendering my opinion set forth in paragraph 4, I advise you
that I have not conducted any search of any court docket.
e. I express no opinion as to (i) Section 4.07(c) of the Credit
Agreement, (ii) the second sentence of Section 11.10 of the Credit
Agreement insofar as such sentence relates to the subject matter
jurisdiction of the United State District Court for the Southern
District of New York to adjudicate any controversy related to any of the
Credit Documents or (iii) the waiver of inconvenient forum set forth in
Section 11.10 of the Credit Agreement with respect to proceedings in the
United States District Court for the Southern District of New York.
f. I express no opinion as to whether a court would grant specific
performance or any other suitable remedy with respect to any Credit
Document. However, the Credit Documents contain, in my opinion,
adequate remedial provisions for the practical realization of the rights
and benefits purported to be afforded thereby.
g. The enforceability of Section 11.03 of the Credit Agreement may be
limited by laws rendering unenforceable indemnification contrary to
federal or state securities laws and the public policy underlying such
laws.
h. The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
i. I express no opinion as to the effect of the laws of any
jurisdiction in which any Lender is located (other than any California)
that limits the interest, fees or other charges it may impose.
<PAGE>
-4-
j. To the extent that my opinions set forth above involve factual
determinations as to what may, or may not, constitute a Material Adverse
Effect, I have relied with your approval upon certifications of the
Company.
k. I am a member of the Bar of the State of California and do not
hold myself out as being conversant with, and express no opinion as to,
the laws of any jurisdiction other than those of the United States of
America and the State of California.
The opinions expressed herein are solely for your benefit (and for the
benefit of your successors and assigns) and may not be relied upon in any manner
for any purpose by any other person without my prior written consent in each
instance.
Very truly yours,
<PAGE>
EXHIBIT C
[Form of Confidentiality Agreement]
CONFIDENTIALITY AGREEMENT
[Date]
[Insert Name and
Address of Prospective
Participant or Assignee]
Re: Amended and Restated Credit Agreement dated as of ___________, 1997
(the "Credit Agreement"), between The First American Financial
----------------
Corporation (the "Company"), the lenders named therein and The Chase
-------
Manhattan Bank, as Administrative Agent.
Dear Ladies and Gentlemen:
As a Lender party to the Credit Agreement, we have agreed with the Company
pursuant to Section 11.12 of the Credit Agreement to use reasonable precautions
to keep confidential, except as otherwise provided therein, all non-public
information identified by the Company as being confidential at the time the same
is delivered to us pursuant to the Credit Agreement.
As provided in said Section 11.12, we are permitted to provide you, as a
prospective [holder of a participation in the Loans (as defined in the Credit
Agreement)][assignee Lender], with certain of such non-public information
subject to the execution and delivery by you, prior to receiving such non-public
information, of a Confidentiality Agreement in this form. Such information will
not be made available to you until your execution and return to us of this
Confidentiality Agreement.
Accordingly, in consideration of the foregoing, you agree (on behalf of
yourself and each of your affiliates, directors, officers, employees and
representatives) that (A) such information will not be used by you except in
connection with the proposed [participation][assignment] mentioned above and (B)
you shall use reasonable precautions, in accordance with your customary
procedures for handling confidential information and in accordance with safe and
sound banking practices, to keep such information confidential, provided that
--------
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to your
counsel or to counsel for any of the Lenders or the Administrative Agent, (iii)
to bank examiners, auditors or accountants, (iv) to the Administrative Agent or
any other Lender (or to Chase Securities Inc.),
<PAGE>
-2-
(v) in connection with any litigation to which you or any one or more of the
Lenders or the Agent are a party, (vi) to a subsidiary or affiliate of yours as
provided in Section 11.12(a) of the Credit Agreement or (vii) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant (or prospective assignee or participant) first executes and delivers
to you a Confidentiality Agreement substantially in the form hereof; provided,
--------
further, that in no event shall you be obligated to return any materials
- -------
furnished to you pursuant to this Confidentiality Agreement.
Please indicate your agreement to the foregoing by signing as provided
below the enclosed copy of this Confidentiality Agreement and returning the same
to us.
Very truly yours,
[INSERT NAME OF LENDER]
By_________________________
The foregoing is agreed to
as of the date of this letter.
[INSERT NAME OF PROSPECTIVE
PARTICIPANT OR ASSIGNEE]
By___________________________
<PAGE>
EXHIBIT 10.1
Composite Conformed Copy
FIRST AMERICAN CAPITAL TRUST I
8.50% Capital Securities (liquidation amount $1,000 per Capital Security)
guaranteed by The First American Financial Corporation
REGISTRATION RIGHTS AGREEMENT
-----------------------------
April 22, 1997
CHASE SECURITIES INC.
UBS SECURITIES LLC
270 Park Avenue, 8th Floor
New York, New York 10017-2070
Dear Sirs:
First American Capital Trust I (the "Issuer"), a statutory business
trust formed under the Business Trust Act of the State of Delaware (Chapter 38,
Title 12, of the Delaware Code, 12 Del. C. Section 3801 et seq.), proposes to
-- ---
issue and sell to Chase Securities Inc. ("CSI") and UBS Securities LLC ("UBS")
(together with CSI, the "Initial Purchasers"), upon the terms and subject to the
conditions set forth in a purchase agreement dated April 17, 1997 (the "Purchase
Agreement"), an aggregate of 100,000 8.50% Capital Securities, liquidation
amount $1,000 per Capital Security (the "Capital Securities"). The Capital
Securities will be guaranteed by The First American Financial Corporation (the
"Company"), to the extent set forth in the Offering Memorandum (as defined
below), with respect to distributions and amounts payable upon liquidation or
redemption (the "Guarantee"), pursuant to the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of the Closing Date (as defined below),
executed and delivered by the Company and Wilmington Trust Company, not in its
individual capacity but solely as trustee (the "Guarantee Trustee"), a Delaware
banking corporation for the benefit of the holders from time to time of the
Capital Securities. The proceeds from the sale of the Capital Securities to the
Initial Purchasers will be aggregated with the entire proceeds from the sale by
the Issuer to the Company of the 8.50% Common Securities, liquidation amount
$1,000 per Common Security (the "Common Securities"), of the Issuer and will be
used by the Issuer to purchase the 8.50% Junior Subordinated Deferrable Interest
Debentures due 2012 (the "Debentures") issued by the Company. The Capital
Securities and the Common Securities will be issued pursuant to the Amended and
Restated Declaration of Trust of the Issuer, to be dated as of the Closing Date
(the "Trust Agreement"), among the Company, as Sponsor, the trustees named
therein (the "Trustees") and the holders
<PAGE>
2
from time to time of the Capital Securities and the Common Securities, which
represent undivided beneficial ownership interests in the assets of the Issuer.
The Debentures will be issued pursuant to a Junior Subordinated Indenture, to be
dated as of the Closing Date (the "Indenture"), between the Company and
Wilmington Trust Company, as trustee (the "Indenture Trustee"). The Capital
Securities, the Guarantee and the Debentures are collectively referred to herein
as the "Securities". Capitalized terms used herein without definition have the
respective meanings specified in the Purchase Agreement.
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Issuer and the Company agree with you, (i) for the
benefit of the Initial Purchasers and (ii) for the benefit of the holders from
time to time of the Securities, including the Initial Purchasers and the
Exchange Securities (as defined herein) (each of the foregoing, a "Holder" and,
collectively, the "Holders"), as follows:
1. Registered Exchange Offer. The Issuer and the Company shall (i)
-------------------------
prepare and, not later than 150 days following the Closing Date (as hereinafter
defined), file with the Commission a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act with
respect to a proposed offer (the "Registered Exchange Offer") to the Holders of
the Capital Securities to issue and deliver to such Holders, in exchange for the
Capital Securities, a like aggregate liquidation amount of new Capital
Securities (the "Exchange Capital Securities"), which Securities shall (a)
represent undivided beneficial ownership interests in the assets of the Issuer,
which assets shall be a new series of junior subordinated debentures issued by
the Company in exchange for the Debentures (the "Exchange Debentures") and (b)
be guaranteed on a junior subordinated basis by the Company (the "Exchange
Guarantee" and, together with the Exchange Capital Securities and the Exchange
Debentures, the "Exchange Securities") to the same extent that the Guarantee
guaranteed the Capital Securities, that are identical in all material respects
to the Securities, except for the deletion of certain transfer restrictions
relating to the Securities, (ii) use their respective reasonable best efforts to
cause the Exchange Offer Registration Statement to become effective under the
Securities Act no later than 180 days after the Closing Date and (iii) commence
the Registered Exchange Offer and use their respective reasonable best efforts
to issue, on or prior to 30 business days after the date on which the Registered
Exchange Offer was declared effective by the Commission (such period being
called the "Exchange Offer Registration Period"), Exchange Securities for
Securities. The Exchange Capital Securities will be issued pursuant to the
Trust Agreement, the Exchange Debentures will be issued pursuant to the
Indenture and the Exchange Guarantee will be issued pursuant to the Guarantee
Agreement.
Upon the effectiveness of the Exchange Offer Registration Statement,
the Company and the Issuer shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable each
Holder electing to exchange Securities for Exchange Securities (assuming that
such Holder (a) is not (i) an affiliate of the Company or the Issuer within the
meaning of the Securities Act or (ii) an Exchanging Dealer
<PAGE>
3
(as defined herein) not complying with the requirements of the next sentence,
(b) acquires the Exchange Securities in the ordinary course of such Holder's
business and (c) has no arrangements or understandings with any person to
participate in the distribution of the Exchange Securities) and to trade such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and without material restrictions under
the securities laws of the several states of the United States. The Company, the
Issuer, the Initial Purchasers and each Exchanging Dealer (as defined below)
acknowledge that, pursuant to current interpretations by the Commission's staff
of Section 5 of the Securities Act, each Holder which is a broker-dealer
electing to exchange Securities, acquired for its own account as a result of
market making activities or other trading activities, for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of such
prospectus in connection with a sale of any such Exchange Securities received by
such Exchanging Dealer pursuant to the Registered Exchange Offer.
In connection with the Registered Exchange Offer, the Company and the
Issuer shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
after the date notice of the Registered Exchange Offer is mailed to the
Holders (or longer, if required by applicable law);
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(d) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply in all respects with all laws applicable to the
Registered Exchange Offer.
As soon as practicable after the close of the Registered Exchange
Offer, the Company and the Issuer shall:
(a) accept for exchange all Capital Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer;
<PAGE>
4
(b) deliver to the Property Trustee for cancellation all Capital
Securities so accepted for exchange;
(c) cause Debentures in aggregate principal amount equal to the
aggregate liquidation amount of Capital Securities so accepted for exchange
to be exchanged for Exchange Debentures
(d) cause the Guarantee to be exchanged for the Exchange Guarantee;
and
(e) cause the Property Trustee and the Indenture Trustee promptly to
authenticate and deliver to each holder of Capital Securities, Exchange
Capital Securities, Debentures and Exchange Debentures, as the case may be,
equal in principal amount or liquidation amount, as the case may be, to the
Securities of such holder so accepted for exchange.
The Company and the Issuer shall use their respective reasonable best
efforts to keep the Exchange Offer Registration Statement effective and to amend
and supplement the prospectus contained therein in order to permit such
prospectus to be used by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such persons must
comply with such requirements in order to resell the Exchange Securities;
provided that (i) in the case where such prospectus and any amendment or
- --------
supplement thereto must be delivered by an Exchanging Dealer, such period shall
be the lesser of 180 days and the date on which all Exchanging Dealers have sold
all Exchange Securities held by them and (ii) the Company and the Issuer shall
make such prospectus and any amendment or supplement thereto available to any
broker-dealer for use in connection with any resale of any Exchange Securities
for a period of not less than 90 days after the consummation of the Registered
Exchange Offer.
The Indenture and the Trust Agreement shall provide that the
Securities and the Exchange Securities shall vote and consent together on all
matters as one class and that none of the Securities or the Exchange Securities
will have the right to vote or consent as a separate class on any matter.
Interest on each Exchange Debenture issued pursuant to the Registered
Exchange Offer will accrue from the last interest payment date on which interest
was paid on the Debentures surrendered in exchange therefor or, if no interest
has been paid on the Debentures, from the date of original issue of the
Debentures.
Each Holder participating in the Registered Exchange Offer shall be
required to represent to the Company and the Issuer that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act and (iii) such Holder is not an
affiliate of the Company or the
<PAGE>
5
Issuer within the meaning of the Securities Act, or if it is an affiliate, it
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Notwithstanding any other provisions hereof, the Company and the
Issuer will ensure that (i) any Exchange Offer Registration Statement and any
amendment thereto and any prospectus forming part thereof and any supplement
thereto complies in all material respects with the Securities Act and the rules
and regulations thereunder, (ii) any Exchange Offer Registration Statement and
any amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of any Exchange Offer Registration Statement,
and any supplement to such prospectus, does not include, as of the consummation
of the Registered Exchange Offer, an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
2. Shelf Registration. If (i) the Company and the Issuer are not
------------------
required to file the Exchange Offer Registration Statement or permitted to
consummate the Registered Exchange Offer because the Registered Exchange Offer
is not permitted by applicable law or Commission policy, (ii) the Company has
received an opinion of counsel, rendered by a law firm having a recognized
national tax practice, to the effect that, as a result of the consummation of
the Exchange Offer, there is more than an insubstantial risk that (x) the Issuer
would be subject to United States federal income tax with respect to income
received or accrued on the Debentures or Exchange Debentures, (y) interest
payable by the Company on such Debentures or Exchange Debentures would not be
deductible by the Company, in whole or in part, for United States federal income
tax purposes, or (z) the Issuer would be subject to more than a de minimis
amount of other taxes, duties or other governmental charges, (iii) any holder of
Transfer Restricted Securities notifies the Company and the Issuer on or before
the 20th business day following the consummation of the Registered Exchange
Offer that (A) it is prohibited by law or Commission policy from participating
in the Registered Exchange Offer, (B) it may not resell the Exchange Securities
acquired by it in the Registered Exchange Offer to the public without delivering
a prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) it is a
broker-dealer and owns Securities acquired directly from the Issuer or an
affiliate of the Issuer, then the following provisions shall apply:
(a) The Company and the Issuer shall use their reasonable best efforts
to file as promptly as practicable (but in no event more than 150 days after so
required or requested pursuant to this Section 2) with the Commission and
thereafter shall use their reasonable best efforts to cause to be declared
effective (but in no event more than 180 days after so required or requested
pursuant to this Section 2), a shelf registration statement on an appropriate
form under the Securities Act relating to the offer and sale of the Transfer
Restricted Securities (as defined below) by the Holders thereof from time to
time in accordance with the methods of
<PAGE>
6
distribution set forth in such registration statement (hereafter, a "Shelf
Registration Statement" and, together with any Exchange Offer Registration
Statement, a "Registration Statement");
(b) The Company and the Issuer each shall use their respective
reasonable best efforts to keep the Shelf Registration Statement continuously
effective in order to permit the prospectus forming part thereof to be used by
Holders of Transfer Restricted Securities for a period of two years from the
Issue Date or such shorter period that will terminate when all the Transfer
Restricted Securities covered by the Shelf Registration Statement have been sold
pursuant thereto (in any such case, such period being called the "Shelf
Registration Period"). The Company and the Issuer each shall be deemed not to
have used their reasonable best efforts to keep the Shelf Registration Statement
effective during the requisite period if any of them voluntarily takes any
action that would result in Holders of Transfer Restricted Securities covered
thereby not being able to offer and sell such Securities or Exchange Securities
during that period, unless such action is required by applicable law; and
(c) Notwithstanding any other provisions hereof, the Company and the
Issuer will ensure that (i) any Shelf Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Shelf Registration Statement
and any amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with written
information furnished to the Company or the Issuer by or on behalf of any Holder
specifically for use therein (the "Holders' Information")) does not, when it
--------------------
becomes effective, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any prospectus forming part of any
Shelf Registration Statement, and any supplement to such prospectus (in either
case, other than with respect to Holders' Information), does not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
3. Additional Interest. (a) If (i) the applicable Registration
-------------------
Statement is not filed with the Commission on or before the date specified for
such filing, (ii) such Registration Statement is not declared effective by the
Commission on or prior to the date specified in Section 1 (in the case of the
Exchange Offer Registration Statement) or Section 2 (in the case of the Shelf
Registration Statement) (such date the "Effectiveness Target Date"), (iii) the
Company and the Issuer fail to consummate the Exchange Offer within 30 business
days of the Effectiveness Target Date with respect to the Registered Exchange
Offer or (iv) the Shelf Registration Statement or the Exchange Offer
Registration Statement is filed and declared effective but thereafter ceases to
be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) or to be usable in connection with resales of Transfer
Restricted Securities without being succeeded within 60 days by an additional
Registration Statement filed and declared effective that cures such failure
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), the Company will be obligated to pay additional interest in respect
of the Debentures (including in respect of amounts accruing
<PAGE>
7
during any Extension Period (as defined in the Indenture)) ("Additional
Interest") and corresponding additional distributions ("Additional
Distributions") will become payable on the Capital Securities, with respect to
the first 30-day period immediately following such Registration Default, in an
amount equal to .25% per week per $1,000 liquidation amount of the Capital
Securities held by such holder. The amount of Additional Interest (and
corresponding Additional Distributions) will increase by an additional .25% per
week per $1,000 liquidation amount of Capital Securities with respect to each
subsequent 30-day period until all Registration Defaults have been cured, up to
a maximum amount of Additional Interest (and corresponding Additional
Distributions) of .50% per week per $1,000 of liquidation amount of Capital
Securities. Following the cure of all Registration Defaults, the accrual of
Additional Interest will cease.
"Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been exchanged by a person other than a broker-
dealer for an Exchange Security in the Registered Exchange Offer, (ii) following
the exchange by a broker-dealer in the Registered Exchange Offer of a Security,
the date on which such Security is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Security has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (iv) the date
on which such Security is distributed to the public pursuant to Rule 144 under
the Act. Notwithstanding anything to the contrary in this Section 3(a), the
Company and the Issuer shall not be required to pay Additional Interest to the
Holder of Transfer Restricted Securities if such Holder: (a) failed to comply
with its obligations to make the representations in the second to last paragraph
of Section 1 or (b) failed to provide the information required to be provided by
it, if any, pursuant to Section 4(n).
(b) The Company and the Issuer shall notify the Indenture Trustee and
the paying agent under the Indenture immediately upon the happening of each and
every Registration Default. The Company and the Issuer shall pay the Additional
Interest due on the Transfer Restricted Securities by depositing with the paying
agent (which may not be the Company for these purposes), in trust, for the
benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on the
next interest payment date specified by the Indenture and the Securities, sums
sufficient to pay the Additional Interest then due. The Additional Interest due
shall be payable on each interest payment date specified by the Indenture to the
record holder entitled to receive the interest payment to be made on such date.
Each obligation to pay Additional Interest shall be deemed to accrue from and
including the applicable Registration Default.
4. Registration Procedures. In connection with any Registration
-----------------------
Statement, the following provisions shall apply:
(a) The Company and the Issuer shall (i) furnish to each Initial
Purchaser, prior to the filing thereof with the Commission, a copy of the
Registration Statement and each
<PAGE>
8
amendment thereof and each supplement, if any, to the prospectus included
therein and use their reasonable best efforts to reflect in each such document,
when so filed with the Commission, such comments as CSI may reasonably and
timely propose; (ii) if requested by any Initial Purchaser, include the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and (iii) if requested by
any Initial Purchaser, include the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in the prospectus
forming a part of the Exchange Offer Registration Statement.
(b) The Company and the Issuer shall advise each Initial Purchaser,
each Exchanging Dealer and the Holders (if applicable), and, if requested by any
such person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(vi) hereof shall be accompanied by an instruction to suspend the use of
the prospectus until the requisite changes have been made):
(i) when any Registration Statement and any amendment thereto has
been filed with the Commission and when such Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements
to any Registration Statement or the prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company and the Issuer of any
notification with respect to the suspension of the qualification of the
Securities or the Exchange Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;
(v) of the happening of any event that requires the making of any
changes in any Registration Statement so that such Registration Statement,
as of its effective date, does not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(vi) of the happening of any event that requires the making of any
changes in any prospectus so that, as of the date of such prospectus, the
statements therein do not include an untrue statement of a material fact or
omit to state a material fact necessary
<PAGE>
9
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) The Company and the Issuer will make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
(d) The Company and the Issuer will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if any such Holder so requests in
writing, all exhibits thereto (including those incorporated by reference).
(e) The Company and the Issuer will, during the Shelf Registration
Period, promptly deliver to each Holder of Transfer Restricted Securities
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the prospectus (including each preliminary prospectus)
included in such Shelf Registration Statement and any amendment or supplement
thereto as such Holder may reasonably request; and the Company and the Issuer
each consents to the use of the prospectus or any amendment or supplement
thereto by each of the selling Holders of Transfer Restricted Securities in
connection with the offer and sale of the Transfer Restricted Securities covered
by the prospectus or any amendment or supplement thereto.
(f) The Company and the Issuer will furnish to each Initial Purchaser
and each Exchanging Dealer and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules, and, if any Initial Purchaser or Exchanging Dealer or any such Holder
so requests in writing, all exhibits (including those incorporated by
reference).
(g) The Company and the Issuer will, during the Exchange Offer
Registration Period or the Shelf Registration Period, as the case may be,
promptly deliver to each Initial Purchaser, each Exchanging Dealer and such
other persons that are required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus included
within the coverage of the Exchange Offer Registration Statement or the Shelf
Registration Statement and any amendment or supplement thereto as such
Exchanging Dealer, Initial Purchaser or other person may reasonably request; and
the Company and the Issuer each consents to the use of such prospectus or any
amendment or supplement thereto that complies in all material respects with the
Securities Act and the rules and regulations thereunder by any such Exchanging
Dealer, Initial Purchaser or other person as aforesaid.
<PAGE>
10
(h) Prior to any public offering of Securities or Exchange Securities
pursuant to any Registration Statement, the Company and the Issuer each will use
its respective reasonable best efforts to register or qualify or cooperate with
the Holders of Securities or Exchange Securities included therein and their
respective counsel in connection with the registration or qualification of such
Securities or Exchange Securities for offer and sale under the securities or
blue sky laws of such jurisdictions within the United States as any such Holder
reasonably requests in writing and do any and all other acts or things necessary
or advisable to enable the offer and sale in such jurisdictions of the
Securities or Exchange Securities covered by such Registration Statement;
provided, however, that neither the Company nor the Issuer will be required (1)
- -------- -------
to qualify generally to do business in any jurisdiction where it is not then so
qualified or (2) to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so subject.
(i) The Company and the Issuer each will cooperate with the Holders of
Securities or Exchange Securities to facilitate the timely preparation and
delivery of certificates representing Securities or Exchange Securities to be
sold pursuant to any Registration Statement free of any restrictive legends and
in such denominations and registered in such names as Holders may request in
writing a reasonable period of time prior to sales of Securities or Exchange
Securities pursuant to such Registration Statement.
(j) If (i) any event contemplated by paragraphs (b)(ii) through (vi)
above occurs during the period for which the Company and the Issuer are required
to maintain an effective Registration Statement, the Company and the Issuer will
promptly prepare and file with the Commission a post-effective amendment to the
Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Securities or Exchange Securities from a Holder, the prospectus will not include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(k) Not later than the effective date of the applicable Registration
Statement, the Company will provide a CUSIP number for the Securities or
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or Exchange Securities, as the case may
be, in a form eligible for deposit with The Depository Trust Company.
(l) The Company and the Issuer each will comply with all applicable
rules and regulations of the Commission and will make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act.
(m) The Company and the Issuer will cause the Indenture, the Trust
Agreement and the Guarantee Agreement to be qualified under the Trust Indenture
Act as required by applicable law in a timely manner.
<PAGE>
11
(n) The Company and the Issuer may require each Holder of Transfer
Restricted Securities to be registered pursuant to any Shelf Registration
Statement to furnish to the Company and the Issuer such information regarding
the Holder and the distribution of such Transfer Restricted Securities as the
Company may from time to time reasonably require for inclusion in such Shelf
Registration Statement, and the Company and the Issuer may exclude from such
registration the Transfer Restricted Securities of any Holder that unreasonably
fails to furnish such information within a reasonable time after receiving such
request.
(o) In the case of a Shelf Registration Statement, each Holder of
Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (vi) hereof, such
Holder will discontinue disposition of such Transfer Restricted Securities until
such Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) hereof or until advised in writing (the "Advice")
by the Company that the use of the applicable prospectus may be resumed. If the
Company and the Trust shall give any notice under Section 4(b)(ii) through (vi)
during the period that the Company and the Issuer is required to maintain an
effective Registration Statement (the "Effectiveness Period"), such
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Transfer Restricted Securities covered by such
Registration Statement shall have received (x) the copies of the supplemental or
amended prospectus contemplated by Section 4(j) (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
(p) In the case of a Shelf Registration Statement, the Company and the
Issuer shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action, if
any, as Holders of at least a majority in aggregate liquidation amount of the
Securities and Exchange Securities being sold or the managing underwriters (if
any) shall reasonably request in order to facilitate any disposition of
Securities or Exchange Securities pursuant to such Shelf Registration Statement,
provided that the Company and the Issuer shall not be required to enter into any
such agreement more than once with respect to all Securities.
(q) In the case of a Shelf Registration Statement, the Company and the
Issuer shall (i) make reasonably available for inspection by a representative
of, and Special Counsel (as defined below) acting for, Holders of at least a
majority in aggregate liquidation amount of the Securities and Exchange
Securities being sold and any underwriter participating in any disposition of
Securities or Exchange Securities pursuant to such Shelf Registration Statement,
all relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries and (ii) use its reasonable best
efforts to have its officers, directors, employees, accountants and counsel
supply all relevant information reasonably requested by such representative,
Special Counsel or any such underwriter (an "Inspector") in connection with such
---------
Shelf Registration Statement.
<PAGE>
12
(r) In the case of a Shelf Registration Statement, the Company and the
Issuer shall, if requested by Holders of at least a majority in aggregate
liquidation amount of the Securities and Exchange Securities being sold, their
Special Counsel or the managing underwriters (if any) in connection with such
Shelf Registration Statement, use their respective reasonable best efforts to
cause (i) their respective counsel to deliver an opinion relating to the Shelf
Registration Statement and the Securities or Exchange Securities, as applicable,
in customary form, (ii) their respective officers or trustees to execute and
deliver all customary documents and certificates requested by Holders of at
least a majority in aggregate liquidation amount of the Securities and Exchange
Securities being sold, their Special Counsel or the managing underwriters (if
any) and (iii) the Company's independent public accountants to provide a comfort
letter in customary form, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards No. 72.
5. Registration Expenses. The Company will bear all expenses
---------------------
incurred in connection with the performance of the obligations of the Company
and the Issuer under Sections 1, 2, 3 and 4 hereof and the Company will
reimburse the Initial Purchasers and the Holders for the reasonable fees and
disbursements of one firm of attorneys (in addition to local counsel, if any)
chosen by the Holders of at least a majority in aggregate liquidation amount of
the Securities and the Exchange Securities to be sold pursuant to each
Registration Statement (the "Special Counsel") acting for the Initial Purchasers
or Holders in connection therewith.
6. Indemnification. (a) In the event of the effectiveness of a
---------------
Shelf Registration Statement or in connection with any prospectus delivery
pursuant to an Exchange Offer Registration Statement by an Initial Purchaser or
Exchanging Dealer, as applicable, the Company and the Issuer shall, jointly and
severally, indemnify and hold harmless each Holder (including, without
limitation, any Initial Purchaser or Exchanging Dealer), its affiliates, their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls such Holder within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section
6(a) and Section 7 as a "Holder") from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of Securities or Exchange Securities), to which that Holder
may become subject, whether commenced or threatened, under the Securities Act,
the Exchange Act, any other federal or state statutory law or regulation, at
common law or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any such Registration Statement
or any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse each Holder promptly upon demand for any legal
or other expenses reasonably incurred by that Holder in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that neither the
-------- -------
Company nor the Issuer shall be liable in any such case to the extent
<PAGE>
13
that any such loss, claim, damage, liability or action arises out of, or is
based upon, (i) an untrue statement or alleged untrue statement in or omission
or alleged omission from any of such documents in reliance upon and in
conformity with any Holders' Information or (ii) a defect in a Exchange Offer
Registration Statement or prospectus contained therein delivered to the person
asserting such loss, claim, damage, liability or action after the Exchange Offer
Registration Period; and provided, further, that with respect to any such untrue
-------- -------
statement in or omission from any related preliminary prospectus, the indemnity
agreement contained in this Section 6(a) shall not inure to the benefit of any
Holder from whom the person asserting any such loss, claim, damage, liability or
action received Securities or Exchange Securities to the extent that such loss,
claim, damage, liability or action of or with respect to such Holder results
from the fact that both (A) a copy of the final prospectus was not sent or given
to such person at or prior to the written confirmation of the sale of such
Securities or Exchange Securities to such person and (B) the untrue statement in
or omission from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final prospectus
was a result of non-compliance by the Company or the Issuer with Section 4(d),
4(e), 4(f) or 4(g).
(b) In the event of the effectiveness of a Shelf Registration
Statement, each Holder shall indemnify and hold harmless the Company, the
Issuer, their respective affiliates, their respective officers, trustees,
directors, employees, representatives and agents, and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 6(b) and Section 7 as
the "Company"), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company may become
subject, whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any such Registration Statement or any prospectus
forming part thereof or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, but in
each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with any Holders' Information furnished to the Company by such
Holder, and shall reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that no such Holder shall be liable
-------- -------
for any indemnity claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Securities or Exchange Securities
pursuant to such Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b),
<PAGE>
14
notify the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the indemnifying
-------- -------
party shall not relieve it from any liability which it may have under this
Section 6 except to the extent that it has been materially prejudiced (through
the forfeiture of substantive rights or defenses) by such failure; and provided,
--------
further, that the failure to notify the indemnifying party shall not relieve it
- -------
from any liability which it may have to an indemnified party otherwise than
under this Section 6. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than the
reasonable costs of investigation; provided, however, that an indemnified party
-------- -------
shall have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel for the indemnified party will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has reasonably concluded (based upon advice of counsel
to the indemnified party) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict exists
(based upon advice of counsel to the indemnified party) between the indemnified
party and the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the indemnified
party) or (4) the indemnifying party has not in fact employed counsel reasonably
satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such
<PAGE>
15
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
7. Contribution. If the indemnification provided for in Section 6
------------
is unavailable or insufficient to hold harmless an indemnified party under
Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company from the offering and sale
of the Securities, on the one hand, and a Holder with respect to the sale by
such Holder of Securities or Exchange Securities, on the other, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and such Holder on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and a Holder on the
other with respect to such offering and such sale shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Securities
(before deducting expenses) received by or on behalf of the Company as set forth
in the table on the cover of the Offering Memorandum, on the one hand, bear to
the total proceeds received by such Holder with respect to its sale of
Securities or Exchange Securities, on the other. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to the Company or information supplied by the Company on
the one hand or to any Holders' Information supplied by such Holder on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 7 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7 shall be deemed
to include, for purposes of this Section 7, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 7, an indemnifying party that is a Holder of
Securities or Exchange Securities shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities or
Exchange Securities sold by such indemnifying party to any purchaser exceeds the
amount of any damages which such indemnifying party has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
<PAGE>
16
8. Rules 144 and 144A. The Company shall use its reasonable best
------------------
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. The Company covenants that it will take such further action as
any Holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including, without
limitation, the requirements of Rule 144A(d)(4)). Upon the written request of
any Holder of Transfer Restricted Securities, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Company or Issuer to register any of its securities pursuant to the
Exchange Act.
9. Underwritten Registrations. If any of the Transfer Restricted
--------------------------
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate liquidation amount of such Transfer Restricted
Securities included in such offering, subject to the consent of the Company
(which shall not be unreasonably withheld or delayed), and such Holders shall be
responsible for all underwriting commissions and discounts in connection
therewith.
No Holder may participate in any underwritten registration hereunder
unless such Holder (i) agrees to sell such Holder's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions of
------------- ----------------------
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company and the Issuer have obtained the written consent of Holders of a
majority in aggregate liquidation amount of the Securities and the Exchange
Securities, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities or Exchange
Securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate liquidation amount of the Securities and the
Exchange Securities being sold by such Holders pursuant to such Registration
Statement.
<PAGE>
17
(b) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(b),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Trust Agreement, with a
copy in like manner to Chase Securities Inc. and UBS Securities Inc.;
(2) if to an Initial Purchaser, initially at its address set forth in
the Purchase Agreement; and
(3) if to the Company or the Issuer, initially at the address of the
Company or the Issuer set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) Successors And Assigns. This Agreement shall be binding upon the
----------------------
Company and its successors and assigns.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a) the term
-------------------
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities Act.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
<PAGE>
18
(h) Remedies. In the event of a breach by the Company, the Issuer or
--------
by any Holder of any of their obligations under this Agreement, each Holder or
the Company or the Issuer, as the case may be, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company, the Issuer and each Holder agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agree that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(i) No Inconsistent Agreements. Each of the Company and the Issuer
--------------------------
represents, warrants and agrees that (i) it has not entered into, shall not, on
or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof, (ii) it has not previously
entered into any agreement which remains in effect granting any registration
rights with respect to any of its debt securities to any person and (iii)
without limiting the generality of the foregoing, without the written consent of
the Holders of a majority in aggregate principal amount of the then outstanding
Transfer Restricted Securities, it shall not grant to any person the right to
request the Company or the Issuer to register any junior subordinated debt
securities of the Company or any securities of any financing subsidiary of the
Company under the Securities Act unless the rights so granted are not in
conflict or inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company, the Issuer
-----------------------------
nor any of their respective security holders (other than the Holders of Transfer
Restricted Securities in such capacity) shall have the right to include any
securities of the Company or the Issuer in any Shelf Registration or Registered
Exchange Offer other than Transfer Restricted Securities.
(k) Severability. The remedies provided herein are cumulative and not
------------
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
<PAGE>
19
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Issuer and you.
Very truly yours,
THE FIRST AMERICAN FINANCIAL
CORPORATION
----------------------------------------------
By: Thomas A. Klemens
Title: Executive Vice President and Chief
Financial Officer
FIRST AMERICAN CAPITAL TRUST I
----------------------------------------------
By: Thomas A. Klemens
Title: Regular Trustee
Accepted in New York, New York
CHASE SECURITIES INC.
By:____________________________
Title:
UBS SECURITIES LLC
By:____________________________
Title:
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
The Letter of Transmittal states that by so acknowledging 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. 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 Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. Each of the Company
and the Issuer has agreed that, for a period of 180 days after the Expiration
Date (as defined herein), it will make this Prospectus available to any broker-
dealer for use in connection with any such resale. See "Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange 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 Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. Each of the
Company and the Issuer 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, until _______________, 199__, all dealers effecting transactions in
the Exchange Securities may be required to deliver a prospectus./1/
Neither the Company nor the Issuer will receive any proceeds from any
sale of Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered 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 Exchange 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 Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to the
Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange 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
Issuer 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 Issuer have jointly
and severally agreed to pay all expenses incident to the Registered Exchange
Offer (including the expenses of one counsel for the Holders of the Securities)
other than commissions or concessions of any broker-dealers and will indemnify
the Holders of the Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
- -----------
/1/ In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
<PAGE>
ANNEX D
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:_______________________________________
Address:____________________________________
____________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
<PAGE>
EXHIBIT 10.2
Composite Conformed Copy
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
Between
THE FIRST AMERICAN FINANCIAL CORPORATION
(as Guarantor)
and
WILMINGTON TRUST COMPANY
(as Trustee)
dated as of
April 22, 1997
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
<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)
</TABLE>
- ----------------
* 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.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I. DEFINITIONS........................................................... 1
Section 1.1. Definitions.................................................. 1
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............................. 4
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..................................... 5
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.......................... 7
Section 3.3. Indemnity.................................................... 9
ARTICLE IV. GUARANTEE TRUSTEE..................................................... 9
Section 4.1. Guarantee Trustee: Eligibility............................... 9
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.................................................. 12
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....................................... 13
Section 7.1. Termination.................................................. 13
Section 7.2. Indemnification.............................................. 13
.............................................................................. 13
ARTICLE VIII. MISCELLANEOUS......................................................... 14
Section 8.1. Successors and Assigns....................................... 14
Section 8.2. Amendments................................................... 14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 8.3. Notices...................................................... 14
Section 8.4. Benefit...................................................... 15
Section 8.5. Interpretation............................................... 16
Section 8.6. Governing Law................................................ 16
</TABLE>
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of April 22, 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 Capital Securities and
Common Securities (each as defined herein and together, the "Securities") of
First American Capital Trust I, a Delaware statutory business trust (the
"Trust").
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 is issuing
$100,000,000 aggregate liquidation amount of its 8.50% Capital Securities
(liquidation amount $1,000 per Capital Security) (the "Capital Securities")
representing undivided beneficial ownership interests in the assets of the Trust
and having the terms set forth in the Declaration;
WHEREAS, the Capital Securities will be issued by the Trust and the
proceeds thereof, together with the proceeds from the issuance of the Trust's
Common Securities (as defined herein), will be used to purchase the Debentures
(as defined in the Declaration) of the Guarantor which will be deposited with
Wilmington Trust Company, as Property Trustee under the Declaration, as trust
assets; and
WHEREAS, as incentive for the Holders to purchase 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. 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.
<PAGE>
2
"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.
<PAGE>
3
"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.
"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.
<PAGE>
4
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
(a) At such time, if any, as this Guarantee Agreement is qualified under
the Trust Indenture Act, this Guarantee Agreement will be 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) At such time, if any, as this Guarantee Agreement is qualified under
the Trust Indenture Act, 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 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).
<PAGE>
5
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, 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.
<PAGE>
6
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:
<PAGE>
7
(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
(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.
<PAGE>
8
(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.
(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.
<PAGE>
9
(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
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
<PAGE>
10
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.
<PAGE>
11
ARTICLE V. GUARANTEE
Section 5.1. Guarantee.
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,
<PAGE>
12
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 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
<PAGE>
13
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
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.
<PAGE>
14
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>
15
The First American Financial Corporation
114 East Fifth Street
Santa Ana, California 90271
Facsimile No.: (714)-836-1841
Attention: Mark R Amesen
(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 Amesen
with a copy to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington Delaware 19890-0001
Attention: Corporate Trust Administration
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.
<PAGE>
16
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
(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.
<PAGE>
17
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: /s/ THOMAS A. KLEMENS
-------------------------------------
Name: Thomas A. Klemens
Title: Executive Vice President and
Chief Financial Officer
Wilmington Trust Company
as Guarantee Trustee
By: /s/ EMMETT R. HARMON
-------------------------------------
Name: Emmett R. Harmon
Title: Vice President
<PAGE>
EXHIBIT 10.3
Composite Conformed Copy
===============================================================================
FIRST AMERICAN CAPITAL TRUST I
------------------
8.50% Capital Securities
guaranteed by
THE FIRST AMERICAN FINANCIAL CORPORATION
PURCHASE AGREEMENT
------------------
Dated April 17, 1997
- -------------------------------------------------------------------------------
<PAGE>
FIRST AMERICAN CAPITAL TRUST I
----------------
8.50% Capital Securities
PURCHASE AGREEMENT
------------------
April 17, 1997
CHASE SECURITIES INC.
UBS SECURITIES LLC
c/o Chase Securities Inc.
270 Park Avenue, 8th Floor
New York, New York 10017-2070
Ladies and Gentlemen:
First American Capital Trust I (the "Issuer"), a statutory business trust
formed under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801 et
--
seq.), proposes to issue and sell an aggregate of $100,000,000 8.50% Capital
- ---
Securities, Liquidation Amount $1,000 per Capital Security (the "Capital
Securities"). The First American Financial Corporation (the "Company") hereby
confirms its agreement with Chase Securities Inc. ("CSI") and UBS Securities LLC
("UBS") (together with CSI, the "Initial Purchasers") concerning the purchase of
the Capital Securities from the Issuer by the several Initial Purchasers.
The Capital Securities will be guaranteed by the Company, to the extent set
forth in the Offering Memorandum (as defined below), with respect to
distributions and amounts payable upon liquidation or redemption (the
"Guarantee"), pursuant to the Guarantee Agreement (the "Guarantee Agreement"),
to be dated as of the Closing Date (as defined below), executed and delivered by
the Company and Wilmington Trust Company, a Delaware banking corporation, not in
its individual capacity but solely as trustee (the "Guarantee Trustee") for the
benefit of the holders from time to time of the Capital Securities. The proceeds
from the sale of the Capital Securities to the Initial Purchasers will be
aggregated with the entire proceeds from the sale by the Issuer to the Company
of all of the Issuer's common securities, liquidation amount $1,000 per common
security (the "Common Securities") and will be used by the Issuer to purchase
the 8.50% Junior Subordinated Deferrable Interest Debentures due 2012 (the
"Debentures") issued by the Company. The Capital Securities and the Common
Securities will be issued pursuant to the Amended and Restated Declaration of
Trust of the Issuer, to be dated as of the Closing Date (the "Trust Agreement"),
among the Company, as Sponsor, the trustees named therein (the "Trustees") and
the holders from time to time of the Capital Securities and the Common
Securities, which
<PAGE>
2
represent undivided beneficial interests in the assets of the
Issuer. The Debentures will be issued pursuant to a Junior Subordinated
Indenture, to be dated as of the Closing Date (the "Indenture"), between the
Company and Wilmington Trust Company. as trustee (the "Indenture Trustee" and a
Company Order (as defined in the Indenture), dated as of the Closing Date. The
Capital Securities, the Guarantee and the Debentures are collectively referred
to herein as the "Securities". This Agreement, the Indenture, the Trust
Agreement, the Guarantee Agreement and the Registration Rights Agreement (as
defined below) are referred to collectively as the "Transaction Documents".
Capitalized terms used herein without definition have the respective meanings
specified in the Offering Memorandum.
The Capital Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from the registration
requirements of the Securities Act. In connection with the sale of the Capital
Securities, the Issuer and the Company have prepared a preliminary offering
memorandum dated April 11, 1997 (the "Preliminary Offering Memorandum") and will
prepare an offering memorandum dated the date hereof (the "Offering
Memorandum"), each setting forth information concerning the Issuer, the Company,
the Transaction Documents and the Securities. Copies of the Preliminary Offering
Memorandum have been, and copies of the Offering Memorandum will be, delivered
by the Company to the Initial Purchasers pursuant to the terms of this
Agreement. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, unless otherwise noted and shall be deemed to include the filing of any
document under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that is, or is deemed to be, incorporated by reference in the Offering
Memorandum. The Issuer and the Company hereby confirm that they have authorized
the use of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and resale of the Capital Securities by the Initial
Purchasers.
The Issuer and the Company understand that the Initial Purchasers propose
to make an offering of the Capital Securities only on the terms, subject to the
conditions and in the manner set forth in the Offering Memorandum and Section 3
hereof, as soon as the Initial Purchasers deem advisable after this Agreement
has been executed and delivered.
Holders of the Capital Securities (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, substantially in the form attached hereto as
Annex A (the "Registration Rights Agreement"), pursuant to which the Issuer and
the Company will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of capital
securities of the Issuer and related junior subordinated deferrable interest
debentures and guarantees of the Company (collectively, the "Exchange
Securities") which are identical in all material respects to the Securities
(except that the Exchange Securities will not contain terms with respect to
transfer restrictions) and (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement").
<PAGE>
3
All references in this Agreement to financial statements and schedules and
other information that is "contained", "included", "deemed included" or "stated"
in the Offering Memorandum (and all other references of like import) shall be
deemed to include all such financial statements and schedules and other
information that are, or are deemed to be, incorporated by reference in the
Offering Memorandum.
Section 1. Representations and Warranties. The Issuer and the Company,
------------------------------
jointly and severally, represent and warrant to and agree with the Initial
Purchasers that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the Closing Date the
Offering Memorandum will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that no representation or warranty
-------- -------
is made as to information contained in or omitted from the Preliminary
Offering Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial Purchasers
furnished to the Company by or on behalf of any Initial Purchaser
specifically for use therein (the "Initial Purchasers' Information"). The
documents incorporated by reference or deemed to be incorporated by
reference in the Offering Memorandum (the "Exchange Act Reports"), when
they became effective or were last amended or filed with the Commission, as
the case may be, conformed in all material respects to the requirements of
the Securities Act and the Exchange Act as applicable, and the rules and
regulations promulgated under the Securities Act and Exchange Act (the
"Rules and Regulations") of the Commission, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and any further documents so filed and incorporated
by reference or deemed to be incorporated by reference in the Offering
Memorandum, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Securities Act and the Exchange Act and the Rules
and Regulations, as applicable, and shall not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) Each of the Capital Securities, the Guarantee and the Debentures
satisfy the eligibility requirements of Rule 144A(d)(3) of the Rules and
Regulations.
(c) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, contains all of the information
that, if requested by a prospective purchaser of the Capital Securities,
would be required to be provided to such prospective purchaser pursuant to
Rule 144A(d)(4) of the Rules and Regulations.
<PAGE>
4
(d) None of the Issuer, the Company, any of their respective affiliates
(as such term is defined in Rule 501(b) of Regulation D of the Rules and
Regulations ("Regulation D")), or any person acting on behalf of the
foregoing (other than an Initial Purchaser) has, directly or indirectly,
made or will, directly or indirectly, make offers or sales of any security,
or solicited offers to buy any security, under circumstances that would
require the registration of any of the Securities under the Securities Act.
(e) None of the Issuer, the Company or any of their respective
affiliates (as such term is defined in Rule 501(b) of Regulation D) or any
person (other than an Initial Purchaser) acting on the behalf of the
foregoing has engaged or will engage, in connection with the offering of
the Securities or any security of the same class or series as any of the
Securities, in any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D. The Company and the
Issuer have not entered and will not enter into any contractual arrangement
with respect to the distribution of any of the Securities except for the
Transaction Documents.
(f) Assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 3 hereof and their compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Capital Securities to the Initial Purchasers, and
the offer, resale and delivery of the Capital Securities by the Initial
Purchasers in the manner contemplated by this Agreement and the Offering
Memorandum, to register any of the Securities under the Securities Act or
to qualify the Indenture, the Guarantee or the Trust Agreement under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
(g) The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of California with the power
and authority to own, lease and operate its properties, to conduct its
business and to execute, deliver and perform its obligations under each of
the Transaction Documents. Each subsidiary of the Company that is listed on
Schedule B hereto (such subsidiaries collectively called the "Material
Subsidiaries") is a corporation duly incorporated or organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization with power and authority to own, lease and
operate its properties and conduct its business.
(h) The Issuer has been duly formed and is validly existing in good
standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business.
(i) The Company and the Material Subsidiaries are duly qualified in or
licensed to transact business by, and are in good standing as foreign
corporations in, each jurisdiction in which they own or lease real
property, maintain an office or conduct their respective businesses and in
which the failure, individually or in the aggregate with all other failures
to be so licensed or qualified or to be in good
<PAGE>
5
standing, would reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), results of operations or business
of the Company and its subsidiaries taken as a whole (a "Material Adverse
Effect").
(j) As of December 31, 1996, the Company had a duly authorized, issued
and outstanding capitalization as set forth in the Offering Memorandum
under the caption "Capitalization".
(k) All of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and nonassessable. All of the outstanding shares of capital stock of each
Material Subsidiary (other than First American Title Guaranty Holding
Company and First American Home Buyers Protection Corporation) have been
duly and validly authorized and issued, are fully paid and nonassessable
and are owned, directly or indirectly, by the Company free and clear of any
pledge, lien, security interest, charge, claim, restriction on voting or
transfer or encumbrance of any kind, except that (i) all of the issued and
outstanding shares of First American Title Insurance Company, First
American Trust Company and First American Real Estate Information Services,
Inc. have been pledged to secure the Company's indebtedness under the
Credit Facility (as such term is defined in the Offering Memorandum) and
(ii) the transfer of ownership of the capital stock of First American Title
Insurance Company is subject to the prior approval of the California
Department of Insurance. The Company owns 80% of the issued and outstanding
shares of the capital stock of First American Title Guaranty Holding
Company ("FATGHC"). The Company owns 79% of the issued and outstanding
shares of the capital stock of First American Home Buyers Protection
Corporation ("FAHBPC"). The outstanding shares of the capital stock of
FATGHC and FAHBPC that are owned by the Company have been duly and validly
authorized and issued, are fully paid and are nonassessable, and are owned,
indirectly, by the Company free and clear of any pledge, lien, security
interest, charge, claim, restriction on voting or transfer or encumbrance
of any kind, except that the holders of the minority interests in FATGHC
and FAHBPC have the right to "put" their minority interests to First
American Title Insurance Company.
(l) Each of the Company and the Issuer has full right, power and
authority to execute and deliver each of the Transaction Documents to which
it is a party and to perform its obligations thereunder; and all action
required to be taken by the Company or the Issuer for the due and proper
authorization, execution and delivery of each Transaction Document to which
it is a party and the consummation of the transactions contemplated thereby
have been duly and validly taken.
(m) This Agreement has been duly authorized, executed and delivered by
each of the Company and the Issuer and is a legal, valid and binding
agreement of each of the Company and the Issuer enforceable against each of
the Issuer and the Company in accordance with its terms, except to the
extent that such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally
<PAGE>
6
and by general equitable principles (whether considered in a proceeding in
equity or at law) (the "Enforceability Exceptions").
(n) The Registration Rights Agreement has been duly authorized by each
of the Company and the Issuer and, on the Closing Date, will have been
executed and delivered by each of the Issuer and the Company and upon such
execution by each of the Issuer and the Company (assuming the due
authorization, execution and delivery thereof by the other parties thereto)
the Registration Rights Agreement will constitute a valid and legally
binding obligation of each of the Issuer and the Company enforceable
against each of the Issuer and the Company, except as enforcement thereof
may be limited by the Enforceability Exceptions.
(o) The Trust Agreement has been duly authorized by the Company and, on
the Closing Date, will have been executed and delivered by the Company and
the Regular Trustees (as defined in the Trust Agreement), and assuming the
due authorization, execution and delivery of the Trust Agreement by the
Delaware Trustee and the Property Trustee (each as defined in the Trust
Agreement), the Trust Agreement will constitute a valid and legally binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except as enforcement thereof may be limited by the
Enforceability Exceptions.
(p) The Guarantee Agreement has been duly authorized by the Company and,
on the Closing Date, will have been duly executed and delivered by the
Company, and assuming due authorization, execution and delivery thereof by
the Guarantee Trustee, not in its individual capacity but solely as
trustee, will constitute a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by the Enforceability
Exceptions.
(q) The Capital Securities have been duly authorized by the Issuer and,
when executed, authenticated, issued and delivered in the manner provided
for in the Trust Agreement and paid for pursuant to this Agreement, will be
validly issued, fully paid and nonassessable undivided beneficial interests
in the assets of the Issuer and will be entitled to the benefits of the
Trust Agreement (and to the extent set forth therein, the Indenture); the
issuance of the Capital Securities is not subject to preemptive or other
similar rights; and holders of Capital Securities will be entitled to the
same limitation of personal liability extended to stockholders of private
corporations for profit incorporated under the General Corporation Law of
the State of Delaware.
(r) The Common Securities have been duly authorized by the Issuer and,
when executed, issued and delivered by the Issuer to the Company against
payment therefor as described in the Offering Memorandum, will be validly
issued, fully paid and nonassessable undivided beneficial interests in the
assets of the Issuer and will be entitled to the benefits of the Trust
Agreement; the issuance of the Common Securities is not subject to
preemptive or other similar rights; and on the Closing Date, all of the
<PAGE>
7
issued and outstanding Common Securities of the Issuer will be directly
owned by the Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(s) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been duly executed and delivered by the Company in
accordance with its terms, and assuming due authorization, execution and
delivery thereof by the Indenture Trustee, will constitute a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited by
the Enforceability Exceptions. On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture
Act and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
(t) The Debentures have been duly authorized by the Company and, when
duly executed, authenticated, issued and delivered as provided in the
Indenture, and the Company Order, dated as of the Closing Date, will be
duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms, except as enforcement thereof may be limited by the Enforceability
Exceptions.
(u) Except as disclosed in the Offering Memorandum, upon payment by the
Issuer of the purchase price therefor, the Property Trustee will, on the
Closing Date, have good and valid title to all such Debentures, free from
liens, encumbrances and defects that would materially affect the value
thereof or materially interfere with the use made or to be made thereof by
the Issuer.
(v) Each Transaction Document conforms in all material respects to the
description thereof contained in the Offering Memorandum.
(w) Price Waterhouse LLP, who is reporting upon the financial statements
incorporated or deemed incorporated by reference in the Offering
Memorandum, are and were independent public accountants as required by the
Securities Act and the Rules and Regulations during the periods covered by
the financial statements which are incorporated or deemed incorporated in
the Offering Memorandum.
(x) The consolidated financial statements of the Company incorporated or
deemed incorporated by reference in the Offering Memorandum fairly present
in all material respects the financial condition of the Company and its
consolidated subsidiaries as of the respective dates indicated and the
consolidated results of operations and changes in stockholders' equity of
the Company and its consolidated subsidiaries for the periods specified.
The consolidated financial statements of the Company incorporated or deemed
incorporated by reference in the Offering Memorandum have been prepared in
all material respects in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
<PAGE>
8
periods involved (except as indicated in the notes thereto), and the
supporting schedules, if any, incorporated or deemed incorporated by
reference in the Offering Memorandum present fairly in accordance with GAAP
the information required to be stated therein. The summary historical
consolidated financial data of the Company included in the Offering
Memorandum fairly present in all material respects the information shown
therein and have been compiled on a basis consistent with that of the
consolidated audited financial statements of the Company incorporated or
deemed incorporated by reference in the Offering Memorandum.
(y) The execution, delivery and performance by the Company and the
Issuer of each of the Transaction Documents, the issuance, authentication,
sale and delivery of the Capital Securities and compliance by the Company
and the Issuer with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not conflict
with or result in a breach or violation of any of the material terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries or the Issuer pursuant to, any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of its
subsidiaries or the Issuer is a party or by which the Company or any of its
subsidiaries or the Issuer is bound or to which any of the property or
assets of the Company or any of its subsidiaries or the Issuer is subject,
nor will such actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its Material Subsidiaries, the
Trust Agreement or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body having
jurisdiction over the Company or any of its Material Subsidiaries or the
Issuer or any of their properties or assets; and no consent, approval,
authorization or order of, or filing or registration with, any such court
or arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the execution,
delivery and performance by the Company and the Issuer of each of the
Transaction Documents, the issuance, authentication, sale and delivery of
the Capital Securities and compliance by the Company and the Issuer with
the terms thereof and the consummation of the transactions contemplated by
the Transaction Documents, except for such consents, approvals,
authorizations, orders, filings, registrations or qualifications (i) which
shall have been obtained or made prior to the Closing Date and (ii) as may
be required to be obtained or made under the Securities Act and applicable
state securities laws as provided in the Registration Rights Agreement.
(z) Since the respective dates as of which information is given in the
Offering Memorandum, except as may be otherwise stated therein (i) there
has been no material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs, management or business
prospects of the Company, whether or not arising in the ordinary course of
business, (ii) the Company has not incurred any material liability or
obligation, direct or contingent, other than in the ordinary course of
business, (iii) the Company has not entered into any material transaction
other than in
<PAGE>
9
the ordinary course of business and (iv) except for the issuance of 57,105
shares of the Company's common stock pursuant to its stock bonus plans,
there has not been any change in the capital stock or long-term debt of the
Company, or any dividend or distribution of any kind declared, paid or made
by the Company on any class of its capital stock.
(aa) There are no legal or governmental proceedings pending to which the
Company, any of its subsidiaries or the Issuer is a party or of which any
property or assets of the Company, any of subsidiaries or the Issuer is the
subject which, singularly or in the aggregate, if determined adversely to
the Company, any of its subsidiaries or the Issuer, could reasonably be
expected to have a Material Adverse Effect; and to the best knowledge of
the Company, no such proceedings are, to the best knowledge of the Company,
threatened or contemplated by governmental authorities or threatened by
others.
(ab) No action has been taken and no statute, rule, regulation or order
has been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Capital Securities or suspends the sale
of the Capital Securities in any jurisdiction; no injunction, restraining
order or order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to the Company, any of its
subsidiaries or the Issuer which would prevent or suspend the issuance or
sale of the Capital Securities or the use of the Preliminary Offering
Memorandum or the Offering Memorandum in any jurisdiction; no action, suit
or proceeding is pending against or, to the best knowledge of the Company,
threatened against or affecting the Company, any of its subsidiaries or the
Issuer before any court or arbitrator or any governmental agency, body or
official, domestic or foreign, which could reasonably be expected to
interfere with or adversely affect the issuance of the Capital Securities
or in any manner draw into question the validity or enforceability of any
of the Transaction Documents or any action taken or to be taken pursuant
thereto; and the Company and the Issuer have complied with any and all
requests by any securities authority in any jurisdiction for additional
information to be included in the Preliminary Offering Memorandum and the
Offering Memorandum.
(ac) Neither the Company nor any of its Material Subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any material term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or
to which any of its property or assets is subject or (iii) in violation in
any material respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its property or assets may be subject.
(ad) The Company and each of its subsidiaries holds such licenses,
certificates, consents, orders, approvals, permits and other authorizations
from governmental authorities (including, without limitation, insurance
licenses from the
<PAGE>
10
insurance regulatory agencies of the various states where it conducts
business ("Insurance Licenses")) which are necessary to own or lease, as
the case may be, and to operate their respective properties and to carry on
their respective business as presently conducted, except for such licenses,
certificates, consents, orders, approvals, permits or other authorizations
the failure to hold which could not reasonably be expected to have a
Material Adverse Effect; the Company and each of its subsidiaries has
fulfilled and performed all obligations necessary to maintain such
licenses, certificates, consents, orders, approvals, permits and other
authorizations (including, without limitation, the Insurance Licenses),
except where the failure to so fulfill or perform such obligations could
not reasonably be expected to have a Material Adverse Effect. There is no
pending, or to the best knowledge of the Company threatened, action, suit,
proceeding or investigation (and, to the best knowledge of the Company, no
facts exist which the Company believes could reasonably be the basis for
any such action, suit, proceeding or investigation) that may reasonably be
expected to lead to the revocation, termination or suspension of any such
license, certificate, consent, order, approval, permit or other
authorization (including, without limitation, the Insurance Licenses),
except where such revocation, termination or suspension could not
reasonably be expected to have a Material Adverse Effect; and no insurance
regulatory agency or body has issued any order or decree restricting or
prohibiting the payment of dividends by the Company's insurance company
subsidiaries to the Company.
(ae) All ceded reinsurance and retrocessional agreements to which the
Company's insurance company subsidiaries are a party are in full force and
effect. Neither the Company nor any of such subsidiaries has received any
notice from any of the other parties to such agreements that such other
party intends not to perform in any material respect such agreement and
none of the Company and such subsidiaries has any reason to believe that
any of the other parties to such agreements will be unable to perform such
agreements, except to the extent that (i) the Company or such subsidiary
has established appropriate reserves on its financial statements or (ii)
such nonperformance could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect; and each of the Company
and its insurance company subsidiaries is entitled to give effect in its
underwriting results in its most recently filed statutory financial
statements in conformity with the insurance department of the state of
domicile of each such subsidiary in effect at such time of preparation for
reinsurance ceded pursuant to such agreements.
(af) Neither the Issuer nor the Company is, or after giving effect to the
consummation of the transactions contemplated herein, will be, and neither
the Company nor the Issuer is directly or indirectly controlled by, or
acting on behalf of any person which is, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
(ag) Other than pursuant to this Agreement or as disclosed in the
Offering Memorandum under the caption "Plan of Distribution", there are no
contracts, agreements or understandings between either the Issuer or the
Company and any
<PAGE>
11
person that give rise to a valid claim against the Issuer, the Company or
any Initial Purchaser for a brokerage commission, finder's fee or other
like payment.
(ah) Except as set forth in the Registration Rights Agreement or as
described in the Offering Memorandum and except for common share piggyback
registration rights granted to John B. Ward in respect of the 137,143
shares of the Company's common stock received by him as partial
consideration for the sale of Nationwide Field Services-Ward Associates,
Inc. to the Company, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities to be covered by the Exchange Offer Registration Statement or
the Shelf Registration Statement.
Section 2. Sale and Delivery to the Initial Purchasers; Closing. (a) On
----------------------------------------------------
the basis of the representations, warranties and agreements herein
contained, and subject to the terms and conditions herein set forth, the
Issuer agrees to issue and sell to each Initial Purchaser, severally and
not jointly, and each Initial Purchaser agrees, severally and not jointly,
to purchase from the Issuer, at the purchase price of $ 1,000 per Capital
Security, an aggregate of $100,000,000 Capital Securities (except as
otherwise provided in this Agreement, to be allocated to the Initial
Purchasers in the number of Capital Securities set forth opposite the name
of each Initial Purchaser in Schedule 1 hereto). The Issuer shall not be
obligated to deliver any of the Capital Securities except upon payment for
all of the Capital Securities to be purchased as provided herein.
(b) As compensation to the Initial Purchasers for their commitments
hereunder and in view of the fact that the proceeds of the sale of the
Capital Securities and the Common Securities will be used to purchase the
Debentures, the Company hereby agrees to pay on the Closing Date to CSI,
for the accounts of the Initial Purchasers, a commission of $ 10.00 per
Capital Security purchased by the Initial Purchasers by wire transfer of
immediately available funds to a bank account designated in writing to the
Company by CSI at least one business day prior to the Closing Date.
(c) Payment of the purchase price for, and delivery of certificates for,
the Capital Securities shall be made at the offices of Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017, at 10:00 A.M.,
New York City time, on April 22, 1997 or such later date and time not more
than seven full business days thereafter as you, the Company and the Issuer
shall mutually determine (such date and time of payment and delivery being
herein called the "Closing Date"). On the Closing Date, payment of the
purchase price for the Capital Securities shall be made to the Issuer by
wire or book-entry transfer of same-day funds to such account or accounts
as the Issuer shall specify prior to the Closing Date or by such other
means as the parties hereto shall agree prior to the Closing Date against
delivery to the Property Trustee as custodian for The Depository Trust
Company ("DTC") of the certificates evidencing the Capital Securities. Time
shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition
<PAGE>
12
of the obligations of the Initial Purchasers hereunder. Upon delivery, the
Capital Securities sold to Qualified Institutional Buyers shall be in
global form and Capital Securities sold to Accredited Investors (as defined
in Section 3) shall be in certificated form, in each case registered in
such names and in such denominations as CSI on behalf of the Initial
Purchasers shall have requested in writing not less than two full business
days prior to the Closing Date. The Company agrees to make one or more
global certificates evidencing the Capital Securities available for
inspection by CSI on behalf of the Initial Purchasers in New York, New York
at least 24 hours prior to the Closing Date.
(d) It is understood that each Initial Purchaser has authorized CSI, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Capital Securities that it has agreed to purchase.
You may (but shall not be obligated to) make payment of the purchase price
for the Capital Securities to be purchased by any Initial Purchaser whose
funds shall not have been received by the Closing Date, but such payment
shall not relieve such Initial Purchaser from its obligations hereunder.
Section 3. Resale of the Securities. (a) The Initial Purchasers have
------------------------
advised the Company and the Issuer that they propose to offer the Capital
Securities for resale upon the terms and subject to the conditions set
forth herein and in the Offering Memorandum. Each Initial Purchaser,
severally and not jointly, represents and warrants to, and agrees with, the
Company and the Issuer that (i) it is purchasing the Capital Securities
pursuant to a private sale exempt from registration under the Securities
Act, (ii) it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Capital Securities by means of
any form of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act and (iii) it has
solicited and will solicit offers for the Capital Securities only from, and
has offered or sold and will offer, sell or deliver the Capital Securities,
as part of its initial offering, only to (A) persons whom it reasonably
believes to be qualified institutional buyers ("Qualified Institutional
Buyers") as defined in Rule 144A under the Securities Act, or if any such
person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has
represented to it that each such account is a Qualified Institutional Buyer
to whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A and in each case, in transactions in accordance with
Rule 144A and (B) a limited number of other accredited investors
("Accredited Investors") as defined in Rule 501(a)(1), (2), (3) or (7)
under Regulation D that are institutional investors in private sales exempt
from registration under the Securities Act. Each Initial Purchaser,
severally and not jointly, agrees that, prior to or simultaneously with the
confirmation of sale by such Initial Purchaser to any purchaser of any of
the Capital Securities purchased by such Initial Purchaser from the Issuer
pursuant hereto, such Initial Purchaser shall furnish to that purchaser a
copy of the Offering Memorandum (and any amendment or supplement thereto
that the Company shall have furnished to such Initial Purchaser prior to
the date of such confirmation of sale). In addition to the foregoing, each
Initial Purchaser acknowledges and agrees that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (h), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations
and warranties of the Initial Purchasers and their compliance with their
<PAGE>
13
agreements contained in this Section 3, and each Initial Purchaser hereby
consents to such reliance.
(b) The Company acknowledges and agrees that the Initial Purchasers may
sell Capital Securities to any affiliate of an Initial Purchaser and that
any such affiliate may sell Capital Securities purchased by it to an
Initial Purchaser, in each case in accordance with the terms of this
Agreement.
Section 4. Certain Covenants of the Issuer and the Company. The Issuer
-----------------------------------------------
and the Company covenant with each Initial Purchaser as follows:
(a) The Issuer and the Company will promptly deliver to each Initial
Purchaser and counsel for the Initial Purchasers, without charge, as many
copies of the Preliminary Offering Memorandum, the Offering Memorandum, any
amendments or supplements thereto, the documents incorporated or deemed
incorporated by reference in the Offering Memorandum and the Transaction
Documents as such Initial Purchaser and their counsel may reasonably
request.
(b) Prior to making any amendment or supplement to the Offering
Memorandum, the Company will furnish a copy thereof to each of the Initial
Purchasers and counsel of the Initial Purchasers and will not effect such
amendment or supplement to which the Initial Purchasers shall reasonably
object by notice to the Company after a reasonable period of review.
(c) If at any time prior to completion of the distribution of the
Capital Securities by the Initial Purchasers any event shall occur or
condition exist as a result of which it is necessary, in the reasonable
opinion of the Initial Purchasers, counsel for the Initial Purchasers or
counsel for the Company, to amend or supplement the Offering Memorandum in
order that the Offering Memorandum will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the
time it is delivered to a purchaser, not misleading or if, in the
reasonable opinion of the Initial Purchasers, counsel to the Initial
Purchasers or counsel to the Company, such amendment or supplement is
necessary to comply with applicable law, the Issuer and the Company will,
subject to paragraph (b) of this Section 4, promptly prepare such amendment
or supplement as may be necessary to correct such untrue statement or
omission or to effect such compliance (in form and substance reasonably
agreed upon by counsel to the Initial Purchasers), so that as so amended or
supplemented, the statements in the Offering Memorandum will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading or so that such Offering Memorandum as so amended or
supplemented will comply with applicable law, as the case may be, and
furnish to the Initial Purchasers such number of copies of such amendment
or supplement as the Initial Purchasers may reasonably request. The Issuer
and the Company agree to notify the Initial Purchasers in writing to
suspend use of the Offering Memorandum as
<PAGE>
14
promptly as practicable after the occurrence of an event specified in this
paragraph (c), and the Initial Purchasers hereby agree upon receipt of such
notice from the Issuer and the Company to suspend use of the Offering
Memorandum until the Issuer and the Company have amended or supplemented
the Offering Memorandum to correct such misstatement or omission or to
effect such compliance.
(d) Except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may
be, the Company and the Issuer will not, and will cause their affiliates
not to, and will not authorize or knowingly permit any person acting on
their behalf to, solicit any offer to buy or offer to sell any of the
Securities by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act;
and the Company and the Issuer will not offer, sell, contract to sell or
otherwise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, contract or disposition would cause
the exemption afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Securities as contemplated by
this Agreement and the Offering Memorandum;
(e) So long as any of the Securities are outstanding and "restricted
securities" within the meaning of Rule 144(a)(3) of the Rules and
Regulations, the Company will, during any period in which it is not subject
to and in compliance with Section 13 or 15(d) of the Exchange Act, provide
to each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted securities,
upon the request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) of the Rules and Regulations.
This covenant is intended to be for the benefit of the holders, and the
prospective purchasers designated by such holders, from time to time of
such restricted securities.
For so long as the Securities are outstanding and so long as the Initial
Purchasers are making a market for the Capital Securities, the Company will
furnish to the Initial Purchasers copies of any annual reports, quarterly
reports and current reports filed by the Company with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated
by the Commission, and such other documents, reports and information as
shall be furnished by the Company to the Indenture Trustee or the Property
Trustee or to the holders of the Debentures or the Capital Securities
pursuant to the Trust Agreement or the Indenture or the Exchange Act or any
Rule or Regulation.
(f) For so long as the Securities are outstanding, the Company agrees to
file with the Commission, in a timely manner, all forms and reports
required to be filed by it under the Exchange Act.
(g) Each Capital Security (and each Debenture distributed to holders of
Capital Securities pursuant to the terms of the Trust Agreement) will bear
a legend (and with respect to the Debentures a similar legend)
substantially in the following form until
<PAGE>
15
such legend shall no longer be necessary or advisable because the Capital
Securities (and the Debentures) are no longer subject to the restrictions
on transfer described herein:
"THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT:
(I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE
TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS TWO YEARS
AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF SUCH RESTRICTED
SECURITIES (OR ANY PREDECESSOR) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE
JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS
SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO
THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS
SECURITY AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION
ACCEPTABLE TO THEM IN FORM AND SUBSTANCE."
(h) The Company will, or will cause the Issuer to, arrange for the
registration and qualification of the Capital Securities for offering and
sale under the applicable securities or "blue sky" laws of such states and
other U.S. jurisdictions as the Initial Purchasers may reasonably designate
in connection with the resale of Capital Securities as contemplated by this
Agreement and the Offering Memorandum and will
<PAGE>
16
continue such qualifications in effect for as long as may be reasonably
required to complete the distribution of the Capital Securities; provided
--------
that the Company shall not be required to qualify as a foreign corporation
or consent to the service of process under the laws of any such state
(except service of process with respect to the offering and sale of the
Capital Securities). The Company shall, or shall cause the Issuer to,
promptly advise the Initial Purchasers of the receipt by the Company or the
Issuer, as the case may be, of any order preventing or suspending the use
of the Preliminary Offering Memorandum or the Offering Memorandum or any
notification with respect to the suspension of the qualification or
exemption from qualification of the Capital Securities for offering or sale
in any jurisdiction or the institution of any proceeding for such purpose
and shall use its best efforts to prevent the issuance of any such order
preventing or suspending the use of the Preliminary Offering Memorandum or
the Offering Memorandum or suspending any such qualification and, if any
such suspension is issued, to obtain the lifting thereof at the earliest
possible time
(i) Neither the Issuer nor the Company shall, directly or indirectly, for
a period commencing on the date hereof and ending on the 30th day after the
Closing Date, except with the prior written consent of CSI, offer to sell,
pledge, sell, grant any option, warrant or other right to purchase, or
otherwise transfer or dispose of (or agree to do any of the foregoing) (a)
any trust certificates or other securities of the Issuer or any similar
trust, (b) any preferred stock or any other security of the Company that is
substantially similar to the Capital Securities or (c) any other securities
which are convertible into, or exercisable or exchangeable for, any of the
securities described in (a) and (b) above. The foregoing sentence shall not
apply to (i) the issuance of the Common Securities to the Company by the
Issuer, (ii) the issuance of the Capital Securities being sold hereunder
and the sale thereof pursuant hereto, (iii) the issuance of the Debentures
to the Issuer by the Company or (iv) the issuance of the Exchange
Securities.
(j) The Company and the Issuer agree that no future offer and sale of
securities of the Company or the Issuer of any class will be made if, as a
result of the doctrine of "integration" referred to in Rule 502 of
Regulation D, such offer and sale could reasonably have been expected, at
the time of such sale, based upon public laws, Commission releases and
Commission no-action letters available at such time, to render invalid the
exemption from the registration requirements of the Securities Act relied
upon in connection with the transactions contemplated by this Agreement.
(k) In connection with the original distribution of the Capital
Securities, the Company agrees that, prior to any offer or resale of the
Capital Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right to make, and
promptly receive from the Company adequate information with respect to,
reasonable inquiries into the business of the Company and its subsidiaries.
<PAGE>
17
(l) In connection with the offering of the Capital Securities, the
Company and the Issuer agree to make their officers, trustees, independent
accountants and legal counsel reasonably available upon request by the
Initial Purchasers.
(m) During the period from the Closing Date until two years after the
Closing Date, without the prior written consent of the Initial Purchasers,
neither the Company nor the Issuer, will, and will not permit any of its
affiliates (as defined in Rule 144 under the Securities Act) to, resell any
of the Capital Securities that have been reacquired by them, except for
Securities purchased by the Company or any of its affiliates and resold in
a transaction registered under the Securities Act.
(n) The Company and the Issuer will do and perform all things required
to be done and performed by it under this Agreement that are within their
control prior to or after the Closing Date, and to use their reasonable
best efforts to satisfy all conditions precedent on their part to the
delivery of the Capital Securities.
(p) Prior to the Closing Date, not to issue any press release or other
communication directly or indirectly or hold any press conference with
respect to the Company, its condition, financial or otherwise, or earnings,
business affairs or business prospects (except for routine oral marketing
communications in the ordinary course of business and consistent with the
past practices of the Company and of which the Initial Purchasers are
notified), without the prior written consent of the Initial Purchasers,
unless in the judgment of the Company and its counsel, and after
notification to the Initial Purchasers, such press release or communication
is required by law.
Section 5. Conditions of Initial Purchasers' Obligation. The respective
--------------------------------------------
obligations of the several Initial Purchasers hereunder are subject to the
accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Issuer contained
herein, to the accuracy of the statements of the Company and the Issuer and
their respective officers or trustees made in any certificates delivered
pursuant hereto, to the performance by the Company and the Issuer of their
respective obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements thereto)
shall have been printed and copies distributed to the Initial Purchasers as
promptly as practicable on or following the date of this Agreement or at
such other date and time as to which the Initial Purchasers may agree; and
no stop order suspending the sale of the Capital Securities in any
jurisdiction shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have discovered and disclosed
to the Company on or prior to the Closing Date that the Offering Memorandum
or any amendment or supplement thereto contains an untrue statement of a
fact which, in the opinion of counsel for the Initial Purchasers, is
material or omits to state any fact
<PAGE>
18
which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of the Transaction Documents and
the Offering Memorandum, and all other legal matters relating to the
Transaction Documents and the transactions contemplated thereby, shall be
satisfactory in all material respects to the Initial Purchasers, and the
Company shall have furnished to the Initial Purchasers all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(d) White & Case shall have furnished to the Initial Purchasers their
written opinion, as counsel to the Company, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, substantially to the effect set
forth in Annex B hereto.
(e) Craig I. DeRoy shall have furnished to the Initial Purchasers his
written opinion, as General Counsel to the Company, addressed to the
Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially in the
form of Annex C hereto.
(f) Morris James Hitchens & Williams shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Issuer, the Indenture
Trustee, the Property Trustee, the Delaware Trustee and the Guarantee
Trustee, addressed to the Initial Purchasers and dated the Closing Date, in
form and substance reasonably satisfactory to the Initial Purchasers and to
the effect that the Delaware Trustee is a Delaware banking corporation, has
been duly incorporated and is validly existing in good standing as a
banking corporation under the laws of the State of Delaware and has the
corporate power to act as trustee of a Delaware business trust under the
laws of the State of Delaware, 12 Del. (S) 3801 et seq, and substantially
--- -- ---
to the effect set forth in Annex D hereto.
(g) The Initial Purchasers shall have received from Simpson Thacher &
Bartlett, counsel for the Initial Purchasers, such opinion or opinions,
dated the Closing Date, with respect to such matters as the Initial
Purchasers may reasonably require, and the Company and the Issuer shall
have furnished to such counsel such documents and information as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(h) The Company shall have furnished to the Initial Purchasers a letter
(the "Initial Letter") of Price Waterhouse LLP, addressed to the Initial
Purchasers and dated the date hereof, in form and substance satisfactory to
the Initial Purchasers, substantially to the effect set forth in Annex E
hereto.
<PAGE>
19
(i) The Company shall have furnished to the Initial Purchasers a letter
(the "Bring-Down Letter") of Price Waterhouse LLP, addressed to the Initial
Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the American Institute of Certified Public Accountants ("AICPA")
and its interpretations and rulings thereunder, (ii) stating, as of the
date of the Bring-Down Letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Offering Memorandum, as of a date not
more than five business days prior to the date of the Bring-Down Letter),
that the conclusions and findings of such accountants with respect to the
financial information and other matters covered by the Initial Letter are
accurate and (iii) confirming in all material respects the conclusions and
findings set forth in the Initial Letter. In addition, the Company shall
have received letters from such accountants consenting to the use, in
connection with the offering of the Capital Securities, of the audited
financial statements of the Company prepared by such accountants and
incorporated by reference in the Offering Memorandum.
(j) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its president and its chief
financial officer stating that (A) such officers have carefully examined
the Offering Memorandum, (B) in their opinion, the Offering Memorandum, as
of its date, did not include any untrue statement of a material fact and
did not omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and since the date of the Offering Memorandum, no
event has occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum so that the Offering Memorandum (as so
amended or supplemented) would not include any untrue statement of a
material fact and would not omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (C) as of the Closing Date,
the representations and warranties of the Company in this Agreement are
true and correct in all material respects, the Company has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder on or prior to the Closing Date, and subsequent to the
date of the most recent financial statements contained or incorporated by
reference in the Offering Memorandum, there has been no material adverse
change in the financial position or results of operation of the Company or
any of its subsidiaries, or any change, or any development including a
prospective change, in or affecting the condition (financial or otherwise),
results of operations or business of the Company and its subsidiaries taken
as a whole, except as set forth in the Offering Memorandum.
(k) The Issuer shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its Regular Trustees stating that
(A) such trustees have carefully examined the Offering Memorandum, (B) in
their opinion, the Offering Memorandum, as of its date, did not include any
untrue statement of a material fact and did not omit to state a material
fact necessary in order to make the statements therein, in the light
<PAGE>
20
of the circumstances under which they were made, not misleading, and since
the date of the Offering Memorandum, no event has occurred which should
have been set forth in a supplement or amendment to the Offering Memorandum
so that the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to state
a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading and
(C) as of the Closing Date, the representations and warranties of the
Issuer in this Agreement are true and correct in all material respects, the
Issuer has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder on or prior to the Closing
Date.
(l) The Initial Purchasers shall have received a counterpart of the
Registration Rights Agreement which shall have been executed and delivered
by a duly authorized officer of the Company and the Issuer.
(m) Each of the Transaction Documents shall have been duly executed and
delivered by the parties thereto, and the Capital Securities and the
Debentures shall have been duly executed and delivered by the Issuer and
the Company and duly authenticated by the Property Trustee and the
Indenture Trustee, respectively.
(n) If any event shall have occurred that requires the Company under
Section 4(c) to prepare an amendment or supplement to the Offering
Memorandum, such amendment or supplement shall have been prepared, the
Initial Purchasers shall have consented to its use, and copies thereof
shall have been delivered to the Initial Purchasers reasonably in advance
of the Closing Date.
(o) There shall not have occurred any invalidation of Rule 144A under
the Securities Act by any court or any withdrawal or proposed withdrawal of
any of the rules and regulations by the Commission or any amendment or
proposed amendment thereof by the Commission which in the judgment of the
Initial Purchasers would materially impair the ability of the Initial
Purchasers to purchase, hold or effect resales of the Capital Securities as
contemplated hereby.
(p) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Offering
Memorandum (exclusive of any amendment or supplement thereto), there shall
not have been any change in the capital stock or long-term debt or any
change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, business or
prospects of the Company and its subsidiaries taken as a whole, the effect
of which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Capital Securities
on the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
<PAGE>
21
(q) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency
or body which would, as of the Closing Date, prevent the issuance or sale
of the Capital Securities; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would prevent the
issuance or sale of the Capital Securities.
(r) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Capital
Securities or any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization", as such term
is defined by the Commission for purposes of Rule 436(g)(2) of the Rules
and Regulations and (ii) no such organization shall have publicly announced
that it has under surveillance or review (other than an announcement with
positive implications of a possible upgrading), its rating of the Capital
Securities or any of the Company's debt securities or preferred stock.
(s) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or
the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on any such exchange or market
by the Commission, by any such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in any securities of
the Company on any exchange or in the over-the-counter market shall have
been suspended or (ii) any moratorium on commercial banking activities
shall have been declared by federal or New York state authorities or (iii)
an outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv), is, in
the judgment of the Initial Purchasers, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or the delivery of
the Capital Securities on the terms and in the manner contemplated by this
Agreement and in the Offering Memorandum (exclusive of any amendment or
supplement thereto).
6. Termination. The obligations of the Initial Purchasers hereunder may
-----------
be terminated by the Initial Purchasers, in their absolute discretion, by
notice given to and received by the Company prior to delivery of and
payment for the Capital Securities if, prior to that time, any of the
events described in Section 5(p), (q), (r), (s) or (t) shall have occurred
and be continuing.
7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any
-----------------------------
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the non-defaulting Initial Purchasers may make arrangements for
the purchase of the Capital Securities which such defaulting Purchaser
agreed but failed to purchase by other persons satisfactory to the Company
and the non-defaulting Initial Purchasers, but if no such arrangements are
made within 36 hours after such default, this Agreement shall terminate
without liability on the part
<PAGE>
22
of the non-defaulting Initial Purchasers, the Issuer or the Company, except
that the Company and the Issuer will continue to be liable for the payment
of expenses to the extent set forth in Sections 8 and 12 and except that
the provisions of Sections 9 and 10 shall not terminate and shall remain in
effect. As used in this Agreement, the term "Initial Purchasers" includes,
for all purposes of this Agreement unless the context otherwise requires,
any party not listed in Schedule 1 hereto that, pursuant to this Section 7,
purchases Capital Securities which a defaulting Initial Purchaser agreed
but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company, the Issuer or any
non-defaulting Initial Purchaser for damages caused by its default. If
other persons are obligated or agree to purchase the Capital Securities of
a defaulting Initial Purchaser, either the non-defaulting Initial
Purchasers or the Company may postpone the Closing Date for up to seven
full business days in order to effect any changes that in the opinion of
counsel for the Company or counsel for the Initial Purchasers may be
necessary in the Offering Memorandum or in any other document or
arrangement, and the Company and the Issuer agree to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any such
changes.
8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement
---------------------------------------------
shall have been terminated pursuant to Section 7, (b) the Company or the
Issuer shall fail to tender any of the Securities for delivery to the
Initial Purchasers for any reason permitted under this Agreement or (c) the
Initial Purchasers shall decline to purchase the Capital Securities for any
reason permitted under this Agreement, the Company and the Issuer shall
reimburse the Initial Purchasers for such out-of-pocket expenses (including
reasonable fees and disbursements of counsel) as shall have been reasonably
incurred by the Initial Purchasers in connection with this Agreement and
the proposed purchase and resale of the Capital Securities. If this
Agreement is terminated pursuant to Section 7 by reason of the default of
one or more of the Initial Purchasers, the Company and the Issuer shall not
be obligated to reimburse any defaulting Initial Purchaser on account of
such expenses.
9. Indemnification. (a) The Company and the Issuer shall, jointly and
---------------
severally, indemnify and hold harmless each Initial Purchaser, its
affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls any
Initial Purchaser within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 9(a) and Section
10 as an Initial Purchaser), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating
to purchases and sales of the Capital Securities), to which that Initial
Purchaser may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law
or regulation, at common law or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum or in any
amendment or supplement thereto or in any information provided by the
Company pursuant to Section 4(e) or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
<PAGE>
23
under which they were made, not misleading, and shall reimburse each
Initial Purchaser promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that
--------- -------
the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based
upon, an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information; and provided, further,
--------- -------
that with respect to any such untrue statement in or omission from the
Preliminary Offering Memorandum, the indemnity agreement contained in this
Section 9(a) shall not inure to the benefit of any such Initial Purchaser
to the extent that the sale to the person asserting any such loss, claim,
damage, liability or action was an initial resale by such Initial Purchaser
and any such loss, claim, damage, liability or action of or with respect to
such Initial Purchaser results from the fact that both (A) to the extent
required by applicable law, a copy of the Offering Memorandum was not sent
or given to such person at or prior to the written confirmation of the sale
of such Capital Securities to such person and (B) the untrue statement in
or omission from the Preliminary Offering Memorandum was corrected in the
Offering Memorandum unless, in either case, such failure to deliver the
Offering Memorandum was a result of non-compliance by the Company with
Section 4(a). For purposes of the last proviso to the immediately preceding
sentence, the term "Offering Memorandum" shall not be deemed to include the
documents incorporated therein by reference, and no Initial Purchaser shall
be obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Offering Memorandum or the
Offering Memorandum to any person.
(b) Each Initial Purchaser, severally and not jointly, shall indemnify
and hold harmless the Company, its affiliates, the Issuer, their respective
officers, trustees, directors, employees, representatives and agents, and
each person, if any, who controls the Company or the Issuer within the
meaning of the Securities Act or the Exchange Act (collectively referred to
for purposes of this Section 9(b) and Section 10 as the Company), from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any
other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with any Initial
Purchasers' Information provided by such Initial Purchaser and shall
reimburse the Company promptly upon demand for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred.
<PAGE>
24
(c) Promptly after receipt by an indemnified party under this Section 9
of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 9(a) or 9(b), notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
--------- -------
party shall not relieve it from any liability which it may have under this
Section 9 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure;
and, provided, further, that the failure to notify the indemnifying party
--------- -------
shall not relieve it from any liability which it may have to an indemnified
party otherwise than under this Section 9. If any such claim or action
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any
other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party shall
not be liable to the indemnified party under this Section 9 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that an indemnified party shall have the
--------- -------
right to employ its own counsel in any such action, but the fees, expenses
and other charges of such counsel for the indemnified party will be at the
expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying
party, (2) the indemnified party has reasonably concluded (based upon
advice of counsel to the indemnified party) that there may be legal
defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a
conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory
to the indemnified party to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action,
in each of which cases the reasonable fees, disbursements and other charges
of counsel will be at the expense of the indemnifying party or parties. It
is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm of attorneys (in addition to any
local counsel) at any one time for all such indemnified party or parties.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 9(a) and 9(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there
be a final judgment for the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought
<PAGE>
25
hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding and contains no
findings of fault or culpability or failure to act by or on behalf of the
Indemnified Party.
The obligations of the Company and the Initial Purchasers in this Section
9 and in Section 10 are in addition to any other liability that the Company
or the Initial Purchasers, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
10. Contribution. If the indemnification provided for in Section 9 is
------------
unavailable or insufficient to hold harmless an indemnified party under
Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage
or liability, or action in respect thereof, (i) in such proportion as shall
be appropriate to reflect the relative benefits received by the Company on
the one hand and the Initial Purchasers on the other from the offering of
the Capital Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and
the Initial Purchasers on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action
in respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the
offering of the Capital Securities purchased under this Agreement (before
deducting expenses) received by or on behalf of the Company, on the one
hand, and the total discounts and commissions received by the Initial
Purchasers with respect to the Capital Securities purchased under this
Agreement, on the other, bear to the total gross proceeds from the sale of
the Capital Securities under this Agreement, in each case as set forth in
the table on the cover page of the Offering Memorandum. The relative fault
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to the Company information
supplied by the Company on the one hand or to any Initial Purchasers'
Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Initial Purchasers agree
that it would not be just and equitable if contributions pursuant to this
Section 10 were to be determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 10 shall be
deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which
the total discounts and commissions received by such Initial Purchaser with
respect to the Capital Securities purchased by it under
<PAGE>
26
this Agreement exceeds the amount of any damages which such Initial
Purchaser has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Initial Purchasers' obligations to contribute as provided in this Section
10 are several in proportion to their respective purchase obligations and
not joint.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure
----------------------------------------
to the benefit of and be binding upon the Initial Purchasers, the Company,
the Issuer and their respective successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons,
except as provided in Sections 9 and 10 with respect to affiliates,
officers, trustees, directors, employees, representatives, agents and
controlling persons of the Company, the Issuer and the Initial Purchasers
and in Section 4(e) with respect to holders and prospective purchasers of
the Capital Securities. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this
Section 11, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
12. Expenses. The Company and the Issuer agree with the Initial
--------
Purchasers to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Securities and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and
distribution of the Preliminary Offering Memorandum, the Offering
Memorandum and any amendments or supplements thereto; (c) the costs of
reproducing and distributing each of the Transaction Documents; (d) the
costs incident to the preparation, printing and delivery of the
certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel and independent accountants; (f) the fees
and expenses of qualifying the Capital Securities under the securities laws
of the several jurisdictions as provided in Section 4(g) and of preparing,
printing and distributing Blue Sky Memoranda (including related reasonable
fees and expenses of counsel for the Initial Purchasers); (g) any fees
charged by rating agencies for rating the Capital Securities; (h) the fees
and expenses of the Trustees and any paying agent (including related fees
and expenses of any counsel to such parties); (i) the cost of qualifying
the Capital Securities with DTC and other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
which are not otherwise specifically provided for in this Section 12;
provided, however, that except as provided in this Section 12 and Section
--------- -------
8, the Initial Purchasers shall pay their own costs and expenses.
13. Survival. The respective indemnities, rights of contribution,
--------
representations, warranties and agreements of the Company, the Issuer and
the Initial Purchasers contained in this Agreement or made by or on behalf
of the Company, the Issuer or the Initial Purchasers pursuant to this
Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Capital Securities and shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any
<PAGE>
27
investigation made by or on behalf of any of them or any of their
respective affiliates, officers, directors, employees, representatives,
agents or controlling persons.
14. Notices, etc. All statements, requests, notices and agreements
------------
hereunder shall be in writing, and:
if to the Initial Purchasers, shall be delivered or sent by mail or
telecopy transmission to Chase Securities Inc., 270 Park Avenue, New York,
New York 10017, Attention: Mr. Louis DeCaro (telecopier no.: (212) 270-
----------------
6170); or
if to the Company or the Issuer, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Mark R Arnesen (telecopier no.: 714-836-
--------------
1841);
provided that any notice to an Initial Purchaser pursuant to Section 9(c)
--------
shall also be delivered or sent by mail to such Initial Purchaser at its
address set forth on the signature page hereof. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof. The Company and the Issuer shall be entitled to act and rely upon
any request, consent, notice or agreement given or made on behalf of the
Initial Purchasers by CSI.
15. Definition of Terms. For purposes of this Agreement, (a) the term
-------------------
"business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in
Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under
the Securities Act.
16. Initial Purchasers' Information. The parties hereto acknowledge and
-------------------------------
agree that the Initial Purchasers' Information consists solely of the
following information in the Preliminary Offering Memorandum and the
Offering Memorandum: (i) the last paragraph on the front cover page
concerning the terms of the offering by the Initial Purchasers; (ii) the
legend on the inside front cover page concerning stabilizing activities by
the Initial Purchasers; and (iii) the statements concerning the Initial
Purchasers contained in (i) the second sentence of the fifth paragraph and
(ii) paragraph seven and under the heading "Plan of Distribution".
17. Governing Law. This Agreement shall be governed by and construed in
-------------
with the laws of the State of New York.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
<PAGE>
28
19. Amendments. No amendment or waiver of any provision of this
----------
Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by
the parties hereto.
20. Headings. The headings herein are inserted for convenience of
--------
reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company, the Issuer and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
FIRST AMERICAN CAPITAL TRUST
By The First American Financial Corporation,
as Sponsor
By /s/ THOMAS A. KLEMENS
------------------------
Name: Thomas A. Klemens
Title: Regular Trustee
THE FIRST AMERICAN FINANCIAL CORPORATION
By /s/ THOMAS A. KLEMENS
-----------------------------------------
Name: Thomas A. Klemens
Title: Executive Vice President and Chief
Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ LOUIS DE CARO
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Mr. Louis DeCaro
Telecopier No: (212) 270-6710
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company, the Issuer and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
FIRST AMERICAN CAPITAL TRUST
By The First American Financial Corporation,
as Sponsor
By
------------------------
Name: Thomas A. Klemens
Title: Regular Trustee
THE FIRST AMERICAN FINANCIAL CORPORATION
By
-----------------------------------------
Name: Thomas A. Klemens
Title: Executive Vice President and Chief
Financial Officer
Accepted:
CHASE SECURITIES INC.
By /s/ LOUIS DE CARO
----------------------
Authorized Signatory
Address for notices pursuant to Section 9(c):
Chase Securities Inc.
270 Park Avenue
New York, New York 10017
Attention: Mr. Louis DeCaro
Telecopier No: (212) 270-6710
<PAGE>
UBS SECURITIES LLC
By RICHARD M MESSINA
---------------------
Authorized Signatory
RICHARD M. MESSINA
VICE PRESIDENT
Address for notices pursuant to Section 9(c):
UBS Securities LLC
299 Park Avenue
New York, New York 10022
Attention: Matthew Grayson
Telecopier No: (212) 821-4816
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
Principal Amount
Initial Purchasers of Capital Securities
------------------ ---------------------
<S> <C>
Chase Securities Inc. $ 50,000,000
UBS Securities LLC 50,000,000
------------
Total $100,000,000
</TABLE>
<PAGE>
SCHEDULE 2
Material Subsidiaries
---------------------
First American Trust Company
First American Title Insurance Company
First American Title Guaranty Holding Company
First American Home Buyers Protection Corporation
First American Title Insurance Company of New York
First American Flood Data Services, Inc.
First American Real Estate Information Services, Inc.
<PAGE>
Annex A
Form of Registration Rights Agreement
<PAGE>
ANNEX B
Form of White & Case Opinion
White & Case shall have furnished to the Initial Purchasers their written
opinion, as counsel to the Company, addressed to the Initial Purchasers and
dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially to the effect set forth below:
(a) The Company has full right, power and authority to execute and
deliver each of the Transaction Documents to which it is a party and to
perform its obligations thereunder; and all corporate action required to be
taken for the due and proper authorization, execution and delivery of each
of the Transaction Documents to which it is a party and the consummation of
the transactions contemplated thereby have been duly and validly taken.
(b) This Agreement has been duly authorized, executed and delivered by
the Company.
(c) Each of the Indenture, the Trust Agreement, the Guarantee
Agreement and the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company, and each of the Indenture, the Trust
Agreement, the Guarantee Agreement and the Registration Rights Agreement
constitutes a legal, valid and binding agreement of the Company,
enforceable against the Company and the Trustee in accordance with its
terms, subject to the Enforceability Exceptions.
(d) The Debentures have been duly authorized, executed, issued and
delivered by the Company and, when the Debentures have been duly
authenticated by the Indenture Trustee and paid for by the Issuer, will
constitute legal, valid and binding obligations of the Company, entitled to
the benefits of the Indenture and enforceable against the Company in
accordance with their terms, subject to the Enforceability Exceptions.
(e) Each Transaction Document conforms in all material respects to
the description thereof contained in the Offering Memorandum.
(f) The statements set forth in the Offering Memorandum under the
captions "Description of Capital Securities", "Description of Junior
Subordinated Debentures", "Description of Guarantee", "Relationship Among
the Securities, the Junior Subordinated Debentures and the Guarantee" and
"Benefit Plan Considerations" insofar as they purport to describe the
provisions of the law and documents referred to therein are accurate.
(g) Assuming the accuracy of the representations, warranties and
agreements of the Company and of the Initial Purchasers contained in this
Agreement, the issuance and sale of the Capital Securities and the offer,
resale and delivery of the
<PAGE>
2
Capital Securities in the manner contemplated by this Agreement and the
Offering Memorandum, are exempt from the registration requirements of the
Securities Act, and it is not necessary to qualify the Indenture under the
Trust Indenture Act.
(h) Neither the Issuer nor the Company nor any of its subsidiaries is
an "investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act and the rules and
regulations of the Commission thereunder, without taking account of any
exemption under the Investment Company Act arising out of the number of
holders of the Company's securities.
(i) Subject to the qualifications set forth therein, the statements
contained in the Offering Memorandum under the caption "Certain United
States Federal Income Tax Consequences," to the extent they constitute
matters of United States federal income tax law and legal conclusions with
respect thereto, are accurate in all material respects.
In addition, such counsel shall state that, although they have not
undertaken, except as otherwise indicated in their opinion, to determine
independently, and do not assume any responsibility for the accuracy or
completeness of the Statements in the Offering Memorandum, as counsel for
the Company, they reviewed the Offering Memorandum and the documents
incorporated or deemed incorporated by reference therein (the "Exchange Act
Documents"), participated in the preparation of the Offering Memorandum and
in discussions with the Initial Purchasers and representatives of the
Company and its independent public accountants and advised the Company as
to the requirements of the Securities Act and the applicable rules and
regulations thereunder. Such counsel shall also state that they reviewed
certificates of certain officers of the Company and the letter from the
Company's independent accountants. Such counsel shall state that nothing
that came to their attention that has caused them to believe that any part
of the Offering Memorandum (including the Exchange Act Documents) contained
any untrue statement of a material fact or omitted to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need not express an opinion with respect to
the financial statements and notes and schedules thereto or any other
statistical or financial data included in the Offering Memorandum).
<PAGE>
3
ANNEX C
[Form of Opinion of Craig I. DeRoy]
Craig I. DeRoy, shall have furnished to the Initial Purchasers his written
opinion, as general counsel to the Company, addressed to the Initial Purchasers
and dated the Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, substantially to the effect set forth below:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of California;
and the Company and each of its Material Subsidiaries is duly qualified or
licensed to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property, maintenance
of an office or the conduct of its businesses requires such qualification,
and has all power and authority necessary to own or hold its properties and
to conduct the businesses in which it is engaged (except where the failure
to so qualify or be licensed or have such power or authority would not,
singularly or in the aggregate, have a Material Adverse Effect).
(b) The Company has an authorized capitalization as set forth in the
Offering Memorandum.
(c) All of the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable and were not issued in violation of the preemptive
rights of any other stockholder of the Company; and all of the issued and
outstanding shares of capital stock of each of the Company's Material
Subsidiaries (other than First American Title Guaranty Holding Company and
First American Home Buyers Protection Corporation) are owned of record by
the Company or one or more of its subsidiaries, and all such shares of such
capital stock are duly and validly issued, fully paid and non-assessable,
except that (i) all of the issued and outstanding shares of First American
Title Insurance Company, First American Trust Company and First American
Real Estate Information Services, Inc. have been pledged to secure the
Company's indebtedness under the Credit Facility (as such term is defined
in the Offering Memorandum) and (ii) the transfer of ownership of the
capital stock of First America Title Insurance Company is subject to the
prior approval of the California Department of Insurance. The Company owns
80% of the issued and outstanding shares of the capital stock of First
American Title Guaranty Holding Company ("FATGHC"). The Company owns 79% of
the issued and outstanding shares of the capital stock of First American
Home Buyers Protection Corporation ("FAHBPC"). The outstanding shares of
the capital stock of FATGHC and FAHBPC that are owned by the Company have
been duly and validly authorized and issued, are fully paid and are
nonassessable, and are owned, indirectly, by the Company free and clear of
any pledge, lien, security interest, charge, claim, restriction on voting
or transfer or encumbrance of any kind, except that the holders of the
minority interests in FATGHC and FAHBPC have the right to "put" their
minority interests to First American Title Insurance Company.
<PAGE>
4
(d) The execution, delivery and performance by the Company and the
Issuer of each of the Transaction Documents, the issuance, authentication,
sale and delivery of the Capital Securities and compliance by the Company
and the Issuer with the material terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not conflict
with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries or the Issuer pursuant to, any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or any of its subsidiaries or
the Issuer is a party or by which the Company or any of its subsidiaries or
the Issuer is bound or to which any of the property or assets of the
Company or any of its subsidiaries or the Issuer is subject, nor will such
actions result in any violation of the provisions of the charter or by-laws
of the Company or any of its Material Subsidiaries, the Trust Agreement or
any statute or any judgment, order, decree, rule or regulation of any court
or arbitrator or governmental agency or body having jurisdiction over the
Company or any of its Material Subsidiaries or the Issuer or any of their
properties or assets; and no consent, approval, authorization or order of,
or filing or registration with, any such court or arbitrator or
governmental agency or body under any such statute, judgment, order,
decree, rule or regulation is required for the execution, delivery and
performance by the Company and the Issuer of each of the Transaction
Documents, the issuance, authentication, sale and delivery of the Capital
Securities and compliance by the Company and the Issuer with the terms
thereof and the consummation of the transactions contemplated by the
Transaction Documents, except for such consents, approvals, authorizations,
filings, registrations or qualifications (i) which have been obtained or
made prior to the Closing Date and (ii) as may be required to be obtained
or made under the Securities Act and applicable state securities laws.
(e) To the best knowledge of such counsel, there are no pending actions
or suits or judicial, arbitral, rule-making, administrative or other
proceedings to which the Company or any of its subsidiaries or the Issuer
is a party or of which any property or assets of the Company or any of its
subsidiaries or the Issuer is the subject which (A) singularly or in the
aggregate, if determined adversely to the Company or any of its
subsidiaries or the Issuer, could reasonably be expected to have a Material
Adverse Effect or (B) questions the validity or enforceability of any of
the Transaction Documents or any action taken or to be taken pursuant
thereto; and to the best knowledge of such counsel, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others.
(f) Neither the Company nor any of its Material Subsidiaries is (A) in
violation of its charter or by-laws, (B) in default in any material
respect, and no event has occurred which, with notice or lapse of time or
both, would constitute such a default, in the due performance or observance
of any material term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound or
to which any of its material property or assets is subject or (C) in
violation
<PAGE>
5
in any material respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its material property or assets
may be subject.
<PAGE>
ANNEX D
[Form of Morris James Hitchens & Williams Opinion]
Morris James Hitchens & Williams shall have furnished to the Initial
Purchasers their written opinion, as counsel to the Indenture Trustee, the
Property Trustee, the Guarantee Trustee and the Delaware Trustee, addressed to
the Initial Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, substantially to the effect
set forth below:
(a) Wilmington Trust Company is a banking corporation duly
incorporated and validly existing under the laws of the State of Delaware.
(b) The execution, delivery and performance by Wilmington Trust
Company, as property trustee (the "Property Trustee") of the Trust
Agreement, as Guarantee Trustee, of the Guarantee Agreement, as the
Indenture Trustee, of the Indenture have been duly authorized by all
necessary corporate action on the part of the Property Trustee, the
Guarantee Trustee and the Indenture Trustee, respectively. The Trust
Agreement, the Guarantee Agreement and the Indenture have been duly
executed and delivered by the Property Trustee, the Guarantee Trustee and
the Indenture Trustee, respectively.
(c) The execution, delivery and performance of the Trust Agreement,
the Guarantee Agreement and the Indenture by the Property Trustee, the
Guarantee Trustee and the Indenture Trustee, respectively, do not conflict
with or constitute a breach of the applicable organizational documents or
by-laws of the Property Trustee, the Guarantee Trustee or the Indenture
Trustee, respectively, or the terms of any indenture or other agreement or
instrument known to such counsel and to which the Property Trustee, the
Guarantee Trustee or the Indenture Trustee, respectively, is a party or is
bound or any judgment, order or decree known to such counsel to be
applicable to the Property Trustee, the Guarantee Trustee or the Indenture
Trustee, respectively, of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Property Trustee, the Guarantee Trustee or the Indenture Trustee,
respectively.
(d) No consent, approval or authorization of, or registration with or
notice to, any federal or Delaware banking authority is required for the
execution, delivery or performance by the Property Trustee, the Guarantee
Trustee or the Indenture Trustee of the Trust Agreement, the Guarantee
Agreement or the Indenture, respectively.
(e) The Issuer has been duly created and is validly existing in good
standing as a business trust under the Delaware Act, and all filings
required under the laws of the State of Delaware with respect to the
creation and valid existence of the Issuer as a business trust have been
made.
<PAGE>
2
(f) Under the Delaware Act and the Trust Agreement, the Issuer has the
trust power and authority to own its property and conduct its business, all
as described in the Offering Memorandum.
(g) The Trust Agreement constitutes a valid and binding obligation of
the Company and the Trustees, and is enforceable against the Company and
the Trustees in accordance with its terms, subject, as to enforcement, to
the effect upon the Trust Agreement of (i) bankruptcy, insolvency,
moratorium, receivership, reorganization, liquidation, fraudulent transfer
and other similar laws relating to the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.
(h) Under the Delaware Act and the Trust Agreement, the Issuer has the
trust power and authority (i) to execute and deliver, and to perform its
obligations under, this Agreement and the Registration Rights Agreement and
(ii) to issue and perform its obligations under the Capital Securities and
the Common Securities.
(i) Under the Delaware Act and the Trust Agreement, the execution and
delivery by the Issuer of this Agreement and the Registration Rights
Agreement, and the performance by the Issuer of its obligations hereunder
and thereunder, have been duly authorized by all necessary trust action on
the part of the Issuer.
(j) The Capital Securities have been duly authorized by the Trust
Agreement and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and nonassessable undivided
beneficial interests in the assets of the Issuer and are entitled to the
benefits of the Trust Agreement. The holders of the Capital Securities, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of
Delaware. Such counsel may note that the holders of Capital Securities may
be obligated, pursuant to the Trust Agreement, (i) to provide indemnity
and/or security in connection with and pay taxes or governmental charges
arising from transfers or exchanges of certificates for Capital Securities
and the issuance of replacement certificates for Capital Securities, and
(ii) to provide security or indemnity in connection with requests of or
directions to the Property Trustee to exercise its rights and powers under
the Trust Agreement.
(k) Under the Delaware Act and the Trust Agreement, the issuance of
the Capital Securities is not subject to preemptive rights.
(l) The issuance and sale by the Issuer of the Capital Securities, the
execution, delivery and performance by the Issuer of this Agreement and the
Registration Rights Agreement, the consummation by the Issuer of the
transactions contemplated hereby and thereby and compliance by the Issuer
with its obligations
<PAGE>
3
hereunder and thereunder, and the performance by the Company, as sponsor,
of its obligations under the Trust Agreement (A) do not violate (i) any of
the provisions of the certificate of trust of the Issuer or the Trust
Agreement or (ii) any applicable Delaware law or administrative regulation
(except that such counsel need express no opinion with respect to the
securities laws of the State of Delaware) and (B) do not require any
consent, approval, license, authorization or validation of, or filing or
registration with, any Delaware legislative, administrative or regulatory
body under the laws or administrative regulations of the State of Delaware
(except that such counsel need express no opinion with respect to the
securities laws of the state of Delaware).
(m) Assuming that the Issuer derives no income from or in connection
with sources within the State of Delaware and has no assets, activities
(other than maintaining the Delaware Trustee and the filing of documents
with the Secretary of State of the State of Delaware) or employees in the
State of Delaware, the holders of the Capital Securities (other than those
holders of Capital Securities who reside or are domiciled in the State of
Delaware) will have no liability for income taxes imposed by the State of
Delaware solely as a result of their participation in the Issuer, and the
Issuer will not be liable for any income tax imposed by the State of
Delaware.
<PAGE>
ANNEX E
[Form of Initial Comfort Letter]
The Company shall have furnished to the Initial Purchasers a letter of
Price Waterhouse LLP, addressed to the Initial Purchasers and dated the date of
the Purchase Agreement, in form and substance satisfactory to the Initial
Purchasers, substantially to the effect set forth below:
(a) they are independent certified public accountants with respect to
the Company within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings;
(b) in their opinion, the audited financial statements included or
incorporated by reference in the Offering Memorandum and reported on by
them comply in form in all material respects with the accounting
requirements of the Exchange Act and the related published rules and
regulations of the Commission thereunder that would apply to the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-3 under the Securities Act (except that
certain supporting schedules are omitted);
(c) based upon the procedures detailed in such letter with respect to
the period subsequent to the date of the last available balance sheet,
including reading of minutes and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters,
nothing has come to their attention that causes them to believe that (A) at
a specified date not more than three business days prior to the date of
such letter, there was any change in capital stock, increase in long-term
debt or decrease in net current assets as compared with the amounts shown
in the December 31, 1996 unaudited balance sheet included or incorporated
by reference in the Offering Memorandum or (B) for the period from
______________ __, 199_ to a specified date not more than five business
days prior to the date of such letter, there were any decreases, as
compared with the corresponding period in the preceding year, in net sales,
income from operations, EBITDA or net income, except in all instances for
changes, increases or decreases that the Offering Memorandum discloses have
occurred or which are set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed necessary by the
Initial Purchasers]; and
(e) they have performed certain other specified procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company) set forth in the Offering Memorandum agrees with the
accounting records of the Company, excluding any questions of legal
interpretation.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<DEBT-HELD-FOR-SALE> 138,647,000
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 10,366,000
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 210,916,000
<CASH> 165,429,000
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 24,472,000
<TOTAL-ASSETS> 1,095,445,000
<POLICY-LOSSES> 246,925,000
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 39,846,000
0
0
<COMMON> 11,562,000
<OTHER-SE> 359,032,000
<TOTAL-LIABILITY-AND-EQUITY> 1,095,445,000
819,872,000
<INVESTMENT-INCOME> 13,379,000
<INVESTMENT-GAINS> 3,389,000
<OTHER-INCOME> 0
<BENEFITS> 41,049,000
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 34,982,000
<INCOME-TAX> 13,600,000
<INCOME-CONTINUING> 21,382,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,382,000
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
