As filed with the Securities and Exchange Commission on March 31, 1998
Registration No. 333-47755
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT
NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE FIRST AMERICAN FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or Other Jurisdiction of Incorporation of Organization)
95-1068610
(I.R.S. Employer Identification Number)
114 EAST FIFTH STREET
SANTA ANA, CALIFORNIA 92701-4642
(800) 854-3643
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
MARK R ARNESEN, ESQ. (Copy to)
SECRETARY NEIL W. RUST, ESQ.
THE FIRST AMERICAN FINANCIAL CORPORATION WHITE & CASE LLP
114 EAST FIFTH STREET 633 WEST FIFTH STREET
SANTA ANA, CALIFORNIA 92701 LOS ANGELES, CALIFORNIA 90071
(714) 558-3211 (213) 620-7700
(Name, Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent For Service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. ( )
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, check the following box. ( )
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ( ) Registration No.__
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ( ) Registration No.__
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. ( )
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount Of
Title of Shares To Be Aggregate Price Aggregate Registration
To Be Registered Registered Per Unit Offering Price Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Debentures $100,000,000 100%(1) $100,000,000(1) $29,500(2)
===============================================================================================================================
<FN>
(1) ESTIMATED SOLELY FOR PURPOSE OF CALCULATING THE REGISTRATION FEE.
(2) PREVIOUSLY PAID.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
[INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.][RED HERRING TEXT FOR LEFT HAND MARGIN]
SUBJECT TO COMPLETION, DATED MARCH 31, 1998.
Prospectus
THE FIRST AMERICAN [Logo of The First American
FINANCIAL CORPORATION Financial Corporation]
$100,000,000
[__]% SENIOR DEBENTURES DUE 2028
The First American Financial Corporation (the "Company") is offering
$100,000,000 aggregate principal amount of its [__]% senior debentures due 2028
(the "Senior Debentures"). Interest on the Senior Debentures is payable on
[__________] and [__________] of each year, commencing [__________], 1998. The
Senior Debentures will mature on [__________], 2028 and may be redeemed at the
option of the Company in whole or in part at the Make Whole Amount (as defined
herein). See "Description of the Senior Debentures."
The Senior Debentures are general unsecured obligations of the Company and rank
senior to all existing or future indebtedness of the Company that is by its
terms expressly subordinated to the Senior Debentures and will rank pari passu
with all other existing or future indebtedness of the Company. The Senior
Debentures will be effectively subordinated to all existing and future
liabilities and obligations of the Company's subsidiaries and holders of the
Senior Debentures should look only to the assets of the Company for payments on
the Senior Debentures. As of December 31, 1997, the Company's subsidiaries had
liabilities and obligations of approximately $642.1 million net of intercompany
indebtedness. See "The First American Financial Corporation."
The Senior Debentures will initially be represented by a global security (a
"Global Security") registered in the name of The Depository Trust Company ("DTC"
or the "Depositary") or its nominee. Beneficial interests in the Global Security
will be shown on, and transfers thereof will be effected only through, records
maintained by DTC (with respect to participants' interests) and its
participants. Except as described herein, Senior Debentures in definitive form
will not be issued. Beneficial interests in the Senior Debentures may be
purchased in denominations of $1,000 or any integral multiple thereof. Payments
of the principal, premium if any, and interest on the Senior Debentures will be
made directly to DTC for subsequent disbursement to DTC participants, who are to
remit such payments to the beneficial owners of the Senior Debentures. See
"Description of the Senior Debentures--Book Entry System." Initial settlement
for the Senior Debentures will be made in immediately available funds. The
Senior Debentures will trade in DTC's Same-Day Funds Settlement System, and
secondary market trading activity in the Senior Debentures will therefore settle
in immediately available funds.
The Company does not intend to apply for listing of the Senior Debentures on any
securities exchange or authorization for quotation on the National Association
of Securities Dealers Inc. Automated Quotation System. No assurance can be given
as to whether an active trading market will develop for the Senior Debentures.
SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR CERTAIN INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNTS(2) COMPANY(1)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Senior Debenture .......... [_____]% [_____]% [_____]%
Total.......................... $[__________] $[__________] $[__________]
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest, if any, from [__________], 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(3) Before deducting expenses payable by the Company, estimated at $186,500.
</FN>
</TABLE>
The Senior Debentures are being offered by the Underwriters (as such term is
defined herein, see "Underwriting"), subject to prior sale, when, as and if
issued by the Company and delivered and accepted by the Underwriters and subject
to certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offers and to reject orders in whole or in part. It is
expected that delivery of the Senior Debentures will be made in book-entry form
through the facilities of the Depositary on or about [__________], 1998.
CHASE SECURITIES INC. FIRST CHICAGO CAPITAL MARKETS, INC.
THE DATE OF THIS PROSPECTUS IS [_____], 1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SENIOR DEBENTURES,
INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS AND SYNDICATE SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549; and at the following Regional Offices of the Commission: New York
Regional Office, Seven World Trade Center, 13th Floor, Suite 1300, New York, New
York 10048; and Chicago Regional Office, Citicorp Center, 500 West Madison
Street, 14th Floor, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. The Commission also maintains a site on the World Wide Web
(http://www.sec.gov) that contains reports, proxy statements and other
information regarding the Company. In addition, such reports, proxy statements
and other information can also be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, on which the Common
shares, $1.00 par value, of the Company are listed.
This Prospectus constitutes part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act. In accordance with the rules and regulations of the
Commission, this Prospectus does not contain all of the information contained in
the Registration Statement and the exhibits and schedules thereto. For further
information concerning the Company and the Senior Debentures offered hereby,
reference is hereby made to the Registration Statement and the exhibits and
schedules filed therewith which may be obtained at the Commission's offices
whose addresses are listed above. The Registration Statement has been filed
electronically and may be obtained at the Commission's Web site listed above.
Any statements contained herein concerning the provisions of any document are
not necessarily complete, and, in each instance, reference is made to the copy
of such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed in (1), (2), (3) and (4) below are incorporated by
reference in this Prospectus, and all documents filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of any
offering of securities made by this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be part hereof from the date
of filing of such documents. Any statement contained herein, or in a document
all or a portion of which is incorporated or deemed to be incorporated by
reference herein, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Report on Form 8-K dated January 23, 1998;
(3) The Company's Report on Form 8-K dated January 27, 1998; and
(4) The Company's Report on Form 8-K dated March 18, 1998.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
MARK R ARNESEN, VICE PRESIDENT AND SECRETARY, THE FIRST AMERICAN FINANCIAL
CORPORATION, 114 EAST FIFTH STREET, SANTA ANA, CALIFORNIA 92701-4642, TELEPHONE
NUMBER: (714) 558-3211. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY MARCH 30, 1998.
FORWARD-LOOKING STATEMENTS
Except for historical information contained in this Prospectus and in the
documents incorporated in this Prospectus by reference, the matters discussed
herein and therein contain forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
suggested in the forward-looking statements, including, without limitation, the
effect of economic conditions, interest rates, market demand, competition and
other risks detailed herein and in the Company's other filings with the
Commission.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in or incorporated by
reference in this Prospectus, which should be read in its entirety. See "Risk
Factors" for a description of certain factors that should be considered in
connection with an investment in the Senior Debentures.
THE COMPANY
The First American Financial Corporation (the "Company") was organized in
1894 as Orange County Title Company, succeeding to the business of two title
abstract companies founded in 1889 and operating in Southern California. In
1924, the Company commenced issuing title insurance policies. In 1986, the
Company began a diversification program by acquiring and developing financial
service businesses closely related to the real estate transfer and closing
process. The Company is a California corporation with executive offices located
in Santa Ana, California.
The Company, through its subsidiaries, is engaged in the business of
providing real estate-related financial and information services to real
property buyers and mortgage lenders. The Company's products and services
include title insurance; real estate tax monitoring; mortgage credit reporting;
mortgage loan servicing systems; property information; flood zone determination;
home warranty services; appraisal services and mortgage document preparation.
Although industry-wide data for 1997 is not currently available, the Company
believes that its wholly-owned subsidiary, First American Title Insurance
Company, was the largest title insurer in the United States, based on premiums
written, and its wholly-owned subsidiary, First American Real Estate Information
Services, Inc., was the nation's largest provider of flood zone determinations,
based on the number of flood zone determinations issued, the nation's largest
mortgage credit reporting service, based on the number of credit reports issued,
and the nation's second largest provider of tax monitoring services, based on
the number of loans under service. The Company also believes that its majority
owned subsidiary, First American Home Buyers Protection Corporation, was one of
the largest providers of home warranties in the United States, based on the
number of home protection contracts under service. The Company also provides
trust and limited banking services. The title insurance and real estate
information segments operate through networks of offices nationwide. The
Company, through its subsidiaries, transacts its title insurance business
through a network of more than 300 branch offices and over 4,000 independent
agents. The Company also offers its title services in Australia, the Bahama
Islands, Bermuda, Canada, Guam, Mexico, Puerto Rico, the U.S. Virgin Islands and
the United Kingdom. Home warranty services are available in certain counties of
Arizona, California, Nevada, North Carolina, South Carolina, Texas, Utah and
Washington. The trust, banking and thrift businesses operate in Southern
California only. See "The First American Financial Corporation."
<PAGE>
THE OFFERING
Securities Offered............ $100,000,000 aggregate principal amount of
[____]% Senior Debentures due 2028.
Maturity Date................. [__________], 2028.
Interest Payment Dates........ [__________] and [__________], commencing
[__________], 1998.
Optional Redemption........... The Senior Debentures are redeemable at the
option of the Company at any time and from time
to time, in whole or in part, at the Make
Whole Amount (as defined herein).
Ranking....................... The Senior Debentures are general unsecured
obligations of the Company and rank senior to
all existing or future indebtedness of the
Company that is by its terms expressly
subordinated to the Senior Debentures and will
rank pari passu in right of payment with all
other existing and future indebtedness of the
Company.
Same-Day Settlement........... Initial settlement for the Senior Debentures
will be made in immediately available funds.
While held in global form, the Senior Debentures
will settle in DTC's Same-Day Funds Settlement
System and settlement for any secondary market
trades and all payments of principal and
interest will be made in immediately available
funds.
Book-Entry System and Form
and Denomination of
Senior Debentures............. The Senior Debentures will be issued in
denominations of $1,000 and integral multiples
thereof. Payments of principal and interest on
Senior Debentures represented by a permanent
global Senior Debenture registered in the name
of, or held by, the Depositary or its nominee
will be made in immediately available funds to
the Depositary or its nominee as the registered
holder of the permanent global Senior Debenture.
Senior Debentures will not be issued in
definitive form except under the circumstances
described herein. See "Description of the Senior
Debentures - - Book-Entry System."
Principal Covenants........... The indenture under which the Senior Debentures
will be issued (the "Indenture") imposes certain
obligations and limitations on the Company and
its subsidiaries, including, but not limited to,
a limitation on the incurrence of certain liens
on the capital stock of the Company's Restricted
Subsidiaries (as such term is defined herein).
See "Description of the Securities -- Certain
Covenants of the Company."
Use of Proceeds............... The net proceeds from the sale of the Senior
Debentures will be used for general corporate
purposes, including, without limitation,
repayment of certain debt and the financing and
construction of new corporate facilities. See
"Use of Proceeds."
FOR ADDITIONAL INFORMATION REGARDING THE SENIOR DEBENTURES, INCLUDING
CERTAIN DEFINITIONS, SEE "DESCRIPTION OF THE SENIOR DEBENTURES."
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth summary historical consolidated financial
and other data for the Company for the five years ended December 31, 1997. The
summary is qualified in its entirety by reference to the financial statements
and other information contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, incorporated by reference herein.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA: (Dollars in thousands, except per share data)
Revenues:
Operating revenues $1,379,781 $1,356,946 $1,227,185 $1,571,168 $1,860,205
Investment and other
income 18,645 19,447 23,031 26,398 27,256
---------- ---------- ---------- ---------- ----------
1,398,426 1,376,393 1,250,216 1,597,566 1,887,461
---------- ---------- ---------- ---------- ----------
Expenses:
Salaries and other
personnel costs 397,902 423,328 431,984 531,250 647,750
Premiums retained by
agents 504,375 533,598 413,444 516,593 563,137
Other operating expenses 222,934 232,532 257,823 322,709 411,319
Provision for title losses
and other claims 125,588 110,230 90,387 86,487 90,323
Depreciation and
amortization 16,333 19,796 20,790 27,242 38,149
Interest 4,419 6,267 6,242 4,796 9,994
Minority interest 5,267 2,944 2,132 2,624 3,676
---------- ---------- ---------- ---------- ----------
1,276,818 1,328,695 1,222,802 1,491,701 1,764,348
---------- ---------- ---------- ---------- ----------
Income before premium and
income taxes 121,608 47,698 27,414 105,865 123,113
Premium taxes 17,617 15,453 13,627 16,676 16,904
---------- ---------- ---------- ---------- ----------
Income before income taxes 103,991 32,245 13,787 89,189 106,209
Income taxes 41,900 13,300 6,200 35,600 41,500
---------- ---------- ---------- ---------- ----------
Income before cumulative
effect of a change in
accounting for income taxes 62,091 18,945 7,587 53,589 64,709
Cumulative effect of a change
in accounting for income taxes 4,200 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income $66,291 $18,945 $7,587 $53,589 $64,709
========== ========== ========== ========== ==========
EARNINGS PER SHARE:*
Basic $3.89 $1.10 $.44 $3.12 $3.73
Diluted** $3.89 $1.11 $.45 $3.09 $3.64
========== ========== ========== ========== ==========
BALANCE SHEET DATA:
Cash and invested assets $359,127 $368,999 $340,089 $364,620 $411,014
Total assets $786,448 $828,649 $873,778 $979,794 $1,168,144
Notes and contracts $85,022 $89,600 $77,206 $71,257 $41,973
payable
Guaranteed preferred -- -- -- -- $100,000
beneficial interests in the
Company's junior
subordinated deferrable
interest debentures
Total stockholders' equity $283,718 $292,110 $302,767 $352,465 $411,412
========== ========== ========== ========== ==========
<PAGE>
OTHER DATA:
Loss ratio 9.1% 8.1% 7.4% 5.5% 4.9%
Ratio of debt to total
capitalization*** 21.5% 22.1% 19.1% 16.0% 7.3%
Cash flow from operations $105,720 $53,915 $38,482 $112,843 $111,155
EBITDA**** $142,360 $73,761 $54,446 $137,903 $171,256
Capital Expenditures $36,161 $34,562 $29,643 $48,785 $74,486
Ratio of EBITDA to 32.2 11.8 8.7 28.8 17.1
interest
Depreciation and amortization $16,333 $19,796 $20,790 $27,242 $38,149
========== ========== ========== ========== ==========
<FN>
---------------------------------
* Based upon the weighted average number of common shares outstanding. On
December 11, 1997, the Company declared a three-for-two stock split to
shareholders of record on January 1, 1998. The shares commenced trading on
a post-split basis on January 16, 1998. All per share data above reflects
such stock-split. See the Company's Report on Form 8-K dated January 23,
1998, which is incorporated by reference herein.
** After restatement for the adoption of statement of financial accounting
standards No. 128, "Earnings per Share."
*** Capitalization includes minority interests and junior subordinated
deferrable interest debentures.
**** "EBITDA" consists of operating income plus depreciation and amortization.
The Company believes that EBITDA provides additional information for
determining its ability to meet debt service requirements. EBITDA does not
represent and should not be considered as an alternative to net income or
cash flow from operations as determined by generally accepted accounting
principles, and EBITDA does not necessarily indicate whether cash flow will
be sufficient for cash requirements.
</FN>
</TABLE>
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus,
investors should consider carefully the following risk factors before making an
investment in the Senior Debentures. To the extent any of the information
contained or incorporated by reference in this Prospectus constitutes a
"forward-looking statement" as defined in Section 27A of the Securities Act, the
risk factors set forth below are cautionary statements identifying important
factors that could cause actual results to differ materially from those in the
forward-looking statement. See "Forward-Looking Statements."
STATUS OF COMPANY AS HOLDING COMPANY
As a holding company, the ability of the Company to make payments of
interest and principal on the Senior Debentures will be dependent primarily upon
the receipt of dividends and other distributions from its subsidiaries. First
American Title Insurance Company ("FATICO"), which is the Company's principal
subsidiary, is subject to regulatory restrictions on its ability to pay
dividends or make other payments to the Company. In 1998, the maximum amount of
dividends, loans and advances available to the Company from FATICO is $52.1
million. In addition, the right of the Company to participate in any
distribution of assets of any subsidiary, including FATICO, upon such
subsidiary's liquidation or reorganization or otherwise, will be subject to the
prior claims of creditors of that subsidiary, except to the extent that any
claims of the Company as a creditor of such subsidiary may be recognized as
such. Accordingly, the Senior Debentures will effectively be subordinated to all
existing and future liabilities and obligations of the Company's subsidiaries
and holders of the Senior Debentures should look only to the assets of the
Company for payments on the Senior Debentures. As of December 31, 1997, the
Company's subsidiaries had liabilities and obligations of approximately $642.1
million net of intercompany indebtedness. See "The First American Financial
Corporation."
ABSENCE OF PUBLIC MARKET
Prior to this offering there has been no public market for the Senior
Debentures, and there can be no assurance that such a market will develop. The
Company does not intend to apply for listing of the Senior Debentures on any
securities exchange or authorization for quotation on the National Association
of Securities Dealers Inc. Automated Quotation System. The Company has been
advised by the Underwriters that they intend to make a market in the Senior
Debentures, as permitted by applicable laws and regulations. However, the
Underwriters are not obligated to make a market in the Senior Debentures, and
any market-making activity with respect to the Senior Debentures may be
discontinued at any time without notice. Accordingly, no assurance can be given
that an active public or other market will develop for the Senior Debentures or
as to the liquidity of or the trading market for the Senior Debentures. If an
active public market does not develop, the market price and liquidity of the
Senior Debentures may be adversely affected.
CYCLICAL NATURE OF REAL ESTATE MARKET
Substantially all of the Company's title insurance, tax monitoring, credit
reporting, flood zone determination and property information business results
from resales and refinancings of real estate, including residential and
commercial properties, and from the construction and sale of new properties. The
Company's home warranty business results from residential resales and does not
benefit from refinancings or commercial transactions. Resales and refinancings
of residential properties constitute the major source of the Company's revenues.
Real estate activity is cyclical in nature and is affected greatly by the cost
and availability of long-term mortgage funds. Real estate activity and, in turn,
the Company's revenue base, can be adversely affected during periods of high
interest rates and/or limited money supply. However, this adverse effect is
mitigated in part by the continuing diversification of the Company's operations
into areas outside of its traditional title insurance business.
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
As a key component of its growth strategy, the Company has pursued and is
pursuing acquisitions in the real estate-related financial services industry.
Certain risks are inherent in an acquisition strategy, such as increasing
leverage and debt service requirements and combining disparate company cultures
and facilities, which could adversely affect the Company's financial position
and operating results. The success of any completed acquisition will depend in
part on the Company's ability to integrate effectively the acquired businesses
into the Company. This process may involve unforeseen difficulties and may
require a disproportionate amount of management's attention and the Company's
financial and other resources. No assurance can be given that additional
suitable acquisition candidates will be identified, financed and purchased on
acceptable terms, or that recent acquisitions or future acquisitions, if
completed, will be successful.
DEPENDENCE ON KEY PERSONNEL
The success of the Company is dependent upon the continued services of the
Company's senior management, particularly its President, Parker S. Kennedy, its
Chairman and Director, D.P. Kennedy, and its Executive Vice President and Chief
Financial Officer, Thomas A. Klemens. The loss of the services of any of these
individuals could have a material adverse effect on the Company's financial
position and results of operations. The Company's success also depends on its
ability to attract and retain other highly qualified managerial personnel.
YEAR 2000 COSTS
Currently, many computer systems and software products are coded to accept
only two digit entries in the date code field. These date code fields will need
to accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, many companies' software and computer systems may need to be
upgraded or replaced in order to comply with such "Year 2000" requirements. The
Company and third parties with which the Company does business rely on numerous
computer programs in their day to day operations. The Company is evaluating the
Year 2000 issue as it relates to the Company's internal computer systems and
third party computer systems with which the Company interacts. The Company
expects to incur internal staff costs as well as consulting and other expenses
related to these issues; these costs will be expensed as incurred. In addition,
the appropriate course of action may include replacement or an upgrade of
certain systems or equipment at a substantial cost to the Company. There can be
no assurance that the Year 2000 issues will be resolved in 1998 or 1999. The
Company may incur significant costs in resolving its Year 2000 issues. If not
resolved, this issue could have a significant adverse impact on the Company's
operations.
GOVERNMENT REGULATION
The title insurance industry is subject to extensive governmental
regulation. Applicable laws and their interpretation vary from state to state
and are enforced with broad discretion. There can be no assurance that any
review of the Company's operations and business relationships by courts or other
regulatory authorities will not result in determinations that could adversely
affect the Company or that the regulatory environment will not change to
restrict the Company's existing or future operations.
USE OF PROCEEDS
The net proceeds from the sale of the Senior Debentures will be used for
general corporate purposes, including, without limitation, repayment of certain
debt and the financing and construction of new corporate facilities. The Company
will use approximately $12.1 million of net proceeds to satisfy the Company's
obligations under a certain sale-leaseback agreement which imposes an implicit
interest rate of 10.3% per annum and approximately $4.8 million of net proceeds
to retire certain of the Company's senior notes bearing an interest rate of
9.38% per annum and maturing in April 1999. Pending such uses, some portion of
such funds may be invested in short-term marketable securities. The remainder of
such proceeds will be added to the general funds of the Company.
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The Company's consolidated ratio of earnings to fixed charges is set forth
below for each of the periods indicated:
Year Ended December 31,
---------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
- -------------------------------------------------------------------------------
Earnings to Fixed Charges 24.5 6.1 3.2 19.6 11.6
For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income plus applicable income taxes and fixed charges. Fixed
charges represent interest expense.
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
subsidiaries, on a consolidated basis, as of December 31, 1997, and as adjusted
to give effect the offering of the Senior Debentures and the use of proceeds
therefrom. See "Use of Proceeds."
AS OF DECEMBER 31, 1997
ACTUAL AS ADJUSTED
(IN THOUSANDS)
NOTES AND CONTRACTS PAYABLE................... $41,973 $36,653
-------- --------
SENIOR DEBENTURES............................. -- 100,000
--------
MINORITY INTERESTS............................ 25,214 25,214
-------- --------
GUARANTEED PREFERRED BENEFICIAL
INTERESTS IN THE COMPANY'S
JUNIOR SUBORDINATED DEFERRABLE
INTEREST DEBENTURES......................... 100,000 100,000
-------- --------
SHAREHOLDERS' EQUITY
Common Stock............................... 61,327 61,327
Retained Earnings.......................... 344,645 344,645
Net Unrealized Gain on Securities.......... 5,440 5,440
-------- --------
Total Shareholders' Equity.............. 411,412 411,412
-------- --------
TOTAL CAPITALIZATION.......................... $578,599 $673,279
======== ========
<PAGE>
THE FIRST AMERICAN FINANCIAL CORPORATION
OVERVIEW
The Company was organized in 1894 as Orange County Title Company,
succeeding to the business of two title abstract companies founded in 1889 and
operating in Southern California. In 1924, the Company commenced issuing title
insurance policies. In 1986, the Company began a diversification program by
acquiring and developing financial service businesses closely related to the
real estate transfer and closing process. The Company is a California
corporation whose executive offices are located at 114 East Fifth Street, Santa
Ana, California 92701-4642, and its telephone number is (714) 558-3211.
The Company, through its subsidiaries, is engaged in the business of
providing real estate-related financial and informational services, including
title insurance, real estate tax monitoring, mortgage credit reporting, flood
zone determination, mortgage loan servicing systems, property information, home
warranty services, appraisal services and mortgage document preparation to real
property buyers and mortgage lenders. The Company also provides trust and
limited banking services.
Through growth and acquisitions, the Company believes it has become the
United States' largest provider of real estate-related financial and
informational services. The Company has assembled an array of companies which,
together, provide comprehensive services to the mortgage industry, commercial
and residential real estate developers, home buyers and other customers. As a
part of its growth strategy, the Company has pursued and is pursuing
acquisitions in the real estate-related financial services industry.
BUSINESS SEGMENTS
TITLE INSURANCE
Title insurance policies are insured statements of the condition of title
to real property, showing priority of ownership as indicated by public records,
as well as outstanding liens, encumbrances and other matters of record, and
certain other matters not of public record. Policies are issued based on a title
report prepared after a search of public records, maps, and documents and are
typically issued when a title is transferred.
Unlike other types of insurance policies, title insurance policies do not
insure against future risk. Before issuing title policies, title insurers seek
to limit their risk of loss by accurately performing title searches and
examinations. The major expenses of a title company relate to such searches and
examinations, the preparation of preliminary reports or commitments and the
maintenance of title plants, and not from claim losses as in the case of
property and casualty insurers.
The Company, through First American Title Insurance Company and its other
subsidiaries, transacts its title insurance business through a network of more
than 300 branch offices and more than 4,000 independent agents. In 1997, the
Company's title insurance operations generated $1.46 billion in operating
revenues.
REAL ESTATE INFORMATION SERVICES
In recent years management has developed a strategy to be a "one-stop" real
estate information service company. To this end, in 1991 the Company acquired
what was believed to be the second largest tax service company, and in 1995
acquired what were believed to be, in each case, the largest mortgage credit
reporting company and the largest flood zone determination company, in the
United States.
In general, the Company's real estate information service products generate
higher margins than its title insurance products. The majority of pre-tax
profits generated by the Company from non-title business is derived from the
real estate services business, which generated $45.3 million in pre-tax profits
in 1997 and $331.4 million in operating revenues. Approximately 29% of the
Company's pre-tax profits in 1997 were derived from its real estate information
services businesses. These businesses are not regulated and hence not
constrained by dividend statutes enforceable by the states in which the Company
operates its title business or by constraints imposed by California on the
Company's trust and banking business.
First American Real Estate Information Services, Inc. ("FAREIS") has grown
from its tax service origins into a diversified mortgage services company.
FAREIS and its subsidiaries now serve mortgage originators, mortgage servicers,
title companies, real estate attorneys, consumers as well as non-lending
entities. The business was initially established in 1987 to advise mortgage
lenders as to the status of tax payments on real property securing their loans.
The Company's real estate information services also include mortgage and other
credit reporting services, flood zone determinations, mortgage loan servicing
systems, property inspections, appraisal services and mortgage document
preparation.
The tax service business includes both real estate tax reporting as well as
tax outsourcing and tax certification. The Company's tax service business
reports on 12 million properties annually and is believed to be the second
largest provider of tax services to the real estate market. The Company works
with over 22,000 taxing authorities nationwide.
First American CREDCO, Inc. ("CREDCO"), the Company's mortgage credit
reporting entity, is believed by the Company to be the largest provider of these
services in the United States and processes over 600,000 credit reports per
month. CREDCO provides residential mortgage credit reports, prequalifying
reports, merged credit data, resident screening services, business reports,
credit scoring tools and personal credit reports. CREDCO has recently branched
into the consumer lending and risk scoring areas, providing credit reporting and
information management services to automobile dealers, consumers and home equity
lenders nationwide. Approximately 25% of CREDCO's 1997 revenues were from
non-real estate related sources.
The Company is the leading provider of flood zone determinations. Flood
reporting services consist of a broad range of information required by
regulatory agencies regarding properties in relation to flood zones. This
business currently processes over 400,000 flood determinations per month.
The property/field services business consists of processing single family
home inspections, conducting field interviews with delinquent mortgagors,
monitoring the condition of properties and assuring timely property
preservation. The Company's acquisition in December 1996 of Ward Associates
places the Company among the leaders in this business.
The appraisal services business utilizes leading technology to provide
national mortgage lenders with property-relative value assessments. The
appraisal services business operates throughout the United States. Electronic
appraisals are supplemented with qualified local appraisers.
In April 1996, the Company acquired the Excelis Mortgage Loan Servicing
System ("Excelis MLS"), now known as Excelis, Inc. Excelis MLS is the only
commercially available real-time on-line servicing system that has been
developed since 1990 to meet increasingly sophisticated market demands. The
software employs rules-based technology, which enables the user to customize the
system to fit its individual servicing criteria and policies.
In May 1997, the Company purchased all of the operations of Strategic
Mortgage Services, Inc., a Delaware Corporation ("SMS"), other than SMS' flood
zone determination business. SMS is a leading provider of real estate
information services to the U.S. mortgage and title insurance industries. The
acquired businesses include SMS' credit division, which the Company believes is
the third largest provider of U.S. mortgage credit information; SMS' property
appraisal division, which the Company believes is the second largest provider of
U.S. appraisal services; SMS' title division, which provides title and closing
services throughout the United States, servicing primarily second mortgage
originators; SMS' settlement services business, which provides title plant
systems and accounting services, as well as escrow closing software, to the
title industry; and a controlling interest in what the Company believes is
largest mortgage document preparation firm.
On January 1, 1998, the Company and its real estate information service
subsidiaries (other than Excelis Inc.) (the "Real Estate Information
Subsidiaries") consummated a joint venture with Experian Information Solutions,
Inc. ("Experian"), pursuant to which First American Real Estate Solutions LLC
("FARES") was established. Under the joint venture, the Real Estate Information
Subsidiaries contributed substantially all of their assets and liabilities to
FARES in exchange for an 80% ownership interest and Experian transferred
substantially all of the assets and liabilities of its Real Estate Solutions
division ("RES") to FARES in exchange for a 20% ownership interest. The Company
believes that RES is the nation's foremost supplier of core real estate data,
providing, among other things, property valuation information, title
information, tax information and imaged title documents. As a result of this
joint venture, the Company believes that FARES is the nation's largest and most
diverse provider of information technology and decision support solutions for
the mortgage and real estate industries. See the Company's Report on Form 8-K
dated January 27, 1998, which is incorporated by reference herein.
HOME WARRANTY
The Company currently owns 79% of its home warranty business, with the
remaining balance owned by current and former management of this subsidiary. The
home warranty business issues one-year warranties which protect homeowners
against defects in household systems and appliances such as plumbing, water
heaters, and furnaces. The warranties issued are for household systems and
appliances only, not for the homes themselves. The Company's home warranty
business currently operates in certain counties of Arizona, California, Nevada,
North Carolina, South Carolina, Texas, Utah and Washington. The Company's home
warranty business is one of the largest in the United States based on contracts
under service, with $46.9 million in operating revenues in 1997.
TRUST AND THRIFT
Since 1960, the Company has conducted a general trust business in Southern
California. In 1985, the Company formed a banking subsidiary into which its
subsidiary trust operation was merged. As of December 31, 1997, the trust
operations were administering fiduciary and custodial assets having a market
value in excess of $1.3 billion.
During 1988, the Company, through a majority owned subsidiary, acquired an
industrial loan corporation (the "Thrift") that accepts thrift deposits and uses
deposited funds to originate and purchase loans secured by commercial properties
in Southern California. The loans made by the Thrift currently range in amount
from $20,000 to $1,105,000, with an average loan balance of $270,500. Loans are
made only on a secured basis, at loan-to-value percentages no greater than 75%.
The Thrift specializes in making commercial real estate loans and financing
commercial equipment leases. In excess of 93% of the Thrift's loans are made on
a variable rate basis. The average yield on the Thrift's loan portfolio as of
December 31, 1997, was 11%. The Thrift's average loan is 60 months in duration.
Current deposits total $62.5 million and the loan portfolio totals $65.5
million.
DESCRIPTION OF THE SENIOR DEBENTURES
The Senior Debentures will be issued under a Senior Indenture (the
"Indenture") between the Company and Wilmington Trust Company, as trustee (the
"Trustee"). This summary of the material terms and provisions of the Senior
Debentures and the Indenture does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Indenture.
GENERAL
The Senior Debentures will be issued in a principal amount of one hundred
million dollars ($100,000,000). The Senior Debentures will bear interest at the
annual rate of [__]% of the principal amount thereof, payable semi-annually in
arrears on [_____] and [_____] of each year (each, an "Interest Payment Date"),
commencing [_____], 1998, to the person in whose name each Senior Debenture is
registered, subject to certain exceptions, at the close of business on the first
day of the month of the relevant Interest Payment Date. In addition, to the
extent permitted by law, interest shall accrue on any interest due but not paid
on such Interest Payment Date at the annual rate of [ ]%. The amount of interest
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on the
Senior Debentures is not a Business Day (as such term is defined below), then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), except that if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case, with the same force and effect as if made on the date such
payment was originally payable. A "Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in The City of New
York are authorized or required by law or executive order to remain closed or a
day on which the corporate trust office of the Trustee is closed for business.
MATURITY; OPTIONAL REDEMPTION
The Senior Debentures will mature on [_____], 2028 (such date, the "Stated
Maturity"). No sinking fund is provided for the Senior Debentures. The Company
may at any time and from time to time, at its option, and subject to the terms
and conditions of the Indenture, redeem the Senior Debentures in whole at any
time or in part from time to time at a redemption price equal to the Make Whole
Amount.
The "Make Whole Amount" will be equal to the amount, as determined by a
Quotation Agent (as defined below), equal to the sum of the principal amount of
the Senior Debentures to be redeemed and the present value of scheduled
semi-annual interest payments thereon accrued on a daily basis (assuming a
360-day year consisting of twelve 30-day months) from the thereon Redemption
Date to Stated Maturity (the "Make Whole Payment Period"), discounted to the
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate.
"Adjusted Treasury Rate" means the Treasury Rate plus 0.20%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Make
Whole Payment Period that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the Make Whole Payment Period. If no
United States Treasury security has a maturity which is within a period from
three months before to three months after the Stated Maturity, the two most
closely corresponding United States Treasury securities shall be used as the
Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Comparable Treasury Price" means, with respect to any Redemption Date, (A)
the average of five Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Quotations Agent obtains fewer than five such
Reference Treasury Dealer Quotations for such Redemption Date, the average of
all such quotations.
"Quotation Agent" means Chase Securities Inc. and its successors; provided,
however, that if the foregoing shall cease to be a primary U.S. government
securities dealer in New York City (a "Primary Treasury Dealer"), the Company
shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Quotation Agent after consultation
with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Quotation Agent, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities", for the maturity corresponding to the
Make Whole Payment Period (if no maturity is within three months before or after
the Make Whole Payment Period, yields for the two published maturities most
closely corresponding to the Make Whole Payment Period shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Date preceding the Redemption Date.
RANKING
The Senior Debentures will be unsecured and will rank senior to all
existing or future indebtedness of the Company that is by its terms expressly
subordinated to the Senior Debentures and will rank pari passu with all other
indebtedness of the Company. The Senior Debentures will be effectively
subordinated to all existing and future liabilities and obligations of the
Company's subsidiaries and holders of the Senior Debentures should look only to
the assets of the Company for payments on the Senior Debentures. As of December
31, 1997, the Company's subsidiaries had liabilities and obligations of
approximately $642.1 million net of intercompany indebtedness. See "The First
American Financial Corporation."
BOOK-ENTRY SYSTEM
The Senior Debentures will initially be issued in the form of a Global
Security held in book-entry form. DTC or its nominee will be the sole registered
holder of the Senior Debentures for all purposes under the Indenture.
Upon the issuance of a Global Security evidencing the Senior Debentures,
DTC or its nominee will credit the accounts of persons holding through it with
the respective principal amounts of the Senior Debentures represented by such
Global Security purchased by such persons. Such accounts shall be designated by
the Underwriters, with respect to Senior Debentures placed by the Underwriters
for the Company. Ownership of beneficial interests in a Global Security will be
limited to persons that have accounts with DTC ("participants") or persons that
may hold interests through participants. Ownership by participants of beneficial
interests in a Global Security will be shown on, and the transfer of such
ownership interests will be effected only through, records maintained by DTC for
such Global Security. Ownership of beneficial interests in such Global Security
by persons that hold through participants will be shown on, and the transfer of
such ownership interests within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Security.
Payment of principal and interest on Senior Debentures represented by any
such Global Security will be made to DTC or its nominee, as the case may be, as
the sole registered owner and the sole holder of the Senior Debentures
represented thereby for all purposes under the Indenture. None of the Company,
any agent of the Company, or the Trustee or the Underwriters will have any
responsibility or liability for any aspect of DTC's records relating to, or
payments made on account of, beneficial ownership interests in a Global Security
representing any Senior Debentures or for maintaining, supervising, or reviewing
any of DTC's records relating to such beneficial ownership interests.
The Company has been advised by DTC that upon receipt of any payment of
principal of or interest on any Global Security, DTC will immediately credit, on
its book-entry registration and transfer system, the accounts of participants
with payments in amounts proportionate to their respective beneficial interests
in the principal or face amount of such Global Security as shown on the records
of DTC. Payments by participants to owners of beneficial interests in a Global
Security held through such participants will be governed by standing
instructions and customary practices as is now the case with securities held for
customer accounts registered in "street name" and will be the sole
responsibility of such participants.
A Global Security may not be transferred except as a whole by DTC to a
nominee of DTC. A Global Security is exchangeable for Senior Debentures only if
(i) DTC notifies the Company that it is unwilling or unable to continue as a
Depositary for such Global Security or if at any time DTC ceases to be a
clearing agency registered under the Exchange Act, (ii) the Company executes and
delivers to the Trustee a notice that such Global Security shall be so
transferable, registrable, and exchangeable, and such transfers shall be
registrable, or (iii) there shall have occurred and be continuing an Event of
Default (defined below) or an event which, with the giving of notice or lapse of
time or both, would constitute an Event of Default (defined below) with respect
to the Senior Debentures represented by such Global Security. Any Global
Security that is exchangeable for Senior Debentures pursuant to the preceding
sentence will be transferred to, and registered and exchanged for, Senior
Debentures in authorized denominations and registered in such names as the
Depositary holding such Global Security may direct. Subject to the foregoing,
the Global Security is not exchangeable, except for a Global Security of like
denomination to be registered in the name of the Depositary or its nominee. In
the event that a Global Security becomes exchangeable for Senior Debentures, (i)
Senior Debentures will be issued only in fully registered form in denominations
of $1,000 or integral multiples thereof, (ii) payment of principal, any
repurchase price, and interest on the Senior Debentures will be payable, and the
transfer of the Senior Debentures will be registrable, at the office or agency
of the Company maintained for such purposes, and (iii) no service charge will be
made for any registration of transfer or exchange of the Senior Debentures,
although the Company may require payment of a sum sufficient to cover any tax or
governmental charge imposed in connection therewith.
So long as DTC or its nominee is the registered owner of such Global
Security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Senior Debentures represented by such Global Security for
the purposes of receiving payment on the Senior Debentures, receiving notices,
and for all other purposes under the Indenture and the Senior Debentures.
Beneficial interests in Senior Debentures will be evidenced only by, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Cede & Co. has been appointed as the nominee of DTC. Except as
provided above, owners of beneficial interests in a Global Security will not be
considered the holders thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in such a Global Security
must rely on the procedures of DTC and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, in the event that the Company requests
any action of holders, or that an owner of a beneficial interest in such a
Global Security desires to give or take any action which a holder is entitled to
give or take under the Indenture, DTC would authorize the participants holding
the relevant beneficial interest to give or take such action and such
participants would authorize beneficial owners owning through such participants
to give or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
DTC has advised the Company that DTC is a limited-purpose trust company
organized under the Banking Law of the State of New York, a member of the
Federal Reserve system, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered under the
Exchange Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations, and certain other organizations some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers, and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Initial settlement for the Senior Debentures will be made in immediately
available funds. All payments of principal and interest will be made by the
Company in immediately available funds or the equivalent, so long as DTC
continues to make the Same-Day Funds Settlement System available to the Company.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Senior
Debentures will trade in DTC's Same-Day Funds Settlement System. Secondary
market trading activity in the Senior Debentures will therefore be required by
DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Senior Debentures.
CERTAIN COVENANTS OF THE COMPANY
LIMITATION ON LIENS ON CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Indenture provides that the Company may not, and may not permit any
Subsidiary to, create, assume, incur or suffer to exist any Lien, other than a
Purchase Money Lien, upon any capital stock of any Restricted Subsidiary,
whether owned on the date of the Indenture or thereafter acquired, to secure any
Indebtedness (other than the Senior Debentures) of the Company, any Subsidiary
or any other Person without in any such case making effective provision whereby
all of the outstanding Senior Debentures shall be directly secured equally and
ratably with such Indebtedness or, if such Indebtedness is secured by such a
Lien and is expressly subordinated or junior in right of payment to the Senior
Debentures, secured by such a Lien that is senior in priority to the Lien
securing such Indebtedness; provided, however, that this restriction will not
apply to (i) Liens on the capital stock of any Restricted Subsidiary securing
Indebtedness outstanding from time to time, provided that the principal amount
of all such Indebtedness secured by Liens on the capital stock of any Restricted
Subsidiary, at the time of each incurrence of any portion of any such
Indebtedness, does not exceed 20% of Total Capitalization and (ii) Liens
securing Indebtedness from the Company to any wholly-owned Restricted Subsidiary
or from any wholly-owned Restricted Subsidiary to the Company or its
subsidiaries. This provision will not restrict any other property of the Company
or its Subsidiaries. Pursuant to clause (i) above, as of December 31, 1997, the
Company could have secured by Liens on the capital stock of Restricted
Subsidiaries up to approximately $134.7 million of Indebtedness, without
providing security to the holders of the Senior Debentures. In fact, however, as
of December 31, 1997, the Company has no Indebtedness secured by Liens on the
capital stock of the Restricted Subsidiaries and the Company's Credit Facility
is unsecured.
The Indenture defines: "Total Capitalization," as of the date of
determination, as the sum of (i) all Indebtedness of the Company outstanding as
of such date, including, without limitation, the Company's junior deferrable
interest debentures, the Securities and all Indebtedness under bank credit
facilities, (ii) the Company's consolidated shareholders' equity at the end of
the most recently completed fiscal quarter of the Company immediately preceding
such date of determination for which financial statements are or are required to
be available and (iii) the minority interests in Subsidiaries of the Company at
the end of the most recently completed fiscal quarter of the Company immediately
preceding such date of determination for which financial statements are or are
required to be available; "Credit Facility" as the Amended and Restated Credit
Agreement among the Company, The Chase Manhattan Bank, and the lenders party
thereto from time to time, dated as of July 29, 1997, as amended from time to
time; "Lien" as any mortgage, pledge, hypothecation, encumbrance, charge or
security interest of any kind; "Indebtedness" as indebtedness for money borrowed
or indebtedness evidenced by a bond, note, debenture or other evidence of
indebtedness; "Person" as any individual, corporation, partnership, joint
venture, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof; "Purchase Money Lien"
as (i) a Lien upon any capital stock of any Restricted Subsidiary acquired
before or after the date of the Indenture if such Lien is for the purpose of
financing the acquisition of the capital stock of such Restricted Subsidiary,
and does not exceed the cost to the Company or any Subsidiary of acquiring the
capital stock of such Restricted Subsidiary and such financing is effected
concurrently with, or within six months after, the date of such acquisition and
(ii) any extension, renewal or refinancing of any such Lien described in clause
(i) immediately above so long as the principal amount of obligations secured
thereby shall not exceed the original principal amount of obligations so secured
at the time of any such extension, renewal or refinancing; "Restricted
Subsidiary" as any Subsidiary that is a licensed insurance company having
capital and surplus in excess of $2.5 million; "Securities" as the Company's
senior unsecured debt securities; and "Subsidiary" as a corporation or business
trust, a majority of the outstanding voting securities of which is owned,
directly or indirectly, by the Company and/or one or more Subsidiaries. On the
date hereof, the Restricted Subsidiaries of the Company are First American Title
and Trust Company, First American Title Insurance Company, First American Home
Buyers Protection Corporation, First American Title Insurance Company of New
York, First American Title Insurance Company of Oregon, First American Title
Insurance Company of Texas and Port Lawrence Title and Trust Company.
LIMITATION ON CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless (i) the successor Person is
organized under the laws of the United States or any state or the District of
Columbia, and such successor Person expressly assumes the Company's obligations
on the Senior Debentures issued under the Indenture; (ii) immediately after
giving effect thereto, 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; (iii) any such lease shall provide that it will remain in effect
so long as any Senior Debentures are outstanding; and (iv) certain other
conditions prescribed in the Indenture are met.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to the Senior Debentures that has occurred and is continuing
constitutes an "Event of Default" with respect to the Senior Debentures:
(i) failure for 30 days to pay any interest on the Senior Debentures when due;
or
(ii) failure to pay any principal on the Senior Debentures when due whether at
maturity, upon redemption by declaration or otherwise; or
(iii)failure to observe or perform in any material respect any other covenant
contained in the Indenture for 90 days after written notice to the Company
from the Trustee or the holders of at least 25% in aggregate outstanding
principal amount of outstanding Senior Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the Company;
or
(v) any default or event of default under any Indebtedness of the Company or
any of its Subsidiaries other than Indebtedness secured by assets of the
Company or any of its Subsidiaries the terms of which limit the remedies of
the holder or holders thereof primarily to the assets so secured
("Nonrecourse Indebtedness"), which default or event of default results in
at least $10 million of aggregate principal amount of such Indebtedness
being declared due and payable prior to maturity and such acceleration is
not rescinded within 10 days thereafter; or
(vi) failure by the Company or any of its Subsidiaries to pay at maturity any
Indebtedness other than Nonrecourse Indebtedness in excess of $10 million
aggregate principal amount, and such failure shall not have been cured
within 10 days thereafter.
The holders of a majority in aggregate outstanding principal amount of
Senior Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee. The Trustee
or the holders of not less than 25% in aggregate outstanding principal amount of
Senior Debentures may declare the principal due and payable immediately upon an
Event of Default. The holders of a majority in aggregate outstanding principal
amount of Senior Debentures may annul such declaration and waive the default if
the default (other than the non-payment of the principal of Senior Debentures
which has become due solely by such acceleration) has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Trustee.
The holders of a majority in aggregate outstanding principal amount of the
Senior Debentures may, on behalf of the holders of all the Senior Debentures,
waive any past default, except a default in the payment of principal or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Trustee) or a default in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding Senior Debenture. The Company is
required to file annually with the Trustee a certificate as to whether or not
the Company is in compliance with all the conditions and covenants applicable to
it under the Indenture.
In case an Event of Default shall occur and be continuing, the Trustee will
have the right to declare the principal of and the interest on such Senior
Debentures and any other amounts payable under the Indenture to be forthwith due
and payable and to enforce its other rights as a creditor with respect to such
Senior Debentures.
MODIFICATION OF INDENTURE
From time to time the Company and the Trustee may, without the consent of
the holders of the Senior Debentures, amend, waive or supplement the Indenture
for specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies (provided that any such action does not materially
and adversely affect the interests of the holders of Senior Debentures) and
qualifying, or maintaining the qualification of, the Indenture under the Trust
Indenture Act of 1939, as amended. The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the holders of not less than a
majority in principal amount of outstanding Senior Debentures affected, to
modify the Indenture in a manner affecting the rights of the holders of such
Senior Debentures; provided that no such modification may, without the consent
of the holder of each outstanding Senior Debenture so affected, (i) change the
stated maturity of Senior Debentures or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon (except such
extension as is contemplated hereby) or (ii) reduce the percentage of principal
amount of Senior Debentures the holders of which are required to consent to any
such modification of the Indenture.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company, at the Company's option: (a) will
be discharged from any and all obligations in respect of the Senior Debentures
(except for certain obligations to register the transfer or exchange of Senior
Debentures, replace stolen, lost or mutilated Senior Debentures, maintain paying
agencies and hold moneys for payment in trust) or (b) need not comply with
certain restrictive covenants of the Indenture (including those described under
"Certain Covenants of the Company"), in each case if the Company deposits, in
trust with the Trustee, money or U.S. government obligations which through the
payment of interest thereon and principal thereof in accordance with their terms
will provide money, in an amount sufficient to pay all the principal of, and
interest and premium, if any, on the Senior Debentures on the dates such
payments are due in accordance with the terms of such Senior Debentures. To
exercise any such option, the Company is required to deliver to the Trustee an
opinion of counsel to the effect that the deposit and related defeasance would
not cause the holders of Senior Debentures to recognize income, gain or loss for
United States federal income tax purposes and, in the case of a discharge
pursuant to clause (a), such opinion shall be accompanied by a private letter
ruling to that effect received by the Company from the United States Internal
Revenue Service or revenue ruling pertaining to a comparable form of transaction
to such effect by the United States Internal Revenue Service.
PAYMENT AND PAYING AGENTS
Initially, the Company will act as paying agent with respect to the Senior
Debentures. The Company at any time may designate additional paying agents or
rescind the designation of any paying agent or approve a change in the office
through which any paying agent acts, except that the Company will be required to
maintain a paying agent at the place of payment.
Any moneys deposited with the Trustee or any paying agent, or then held by
the Company in trust, for the payment of the principal of or interest on any
Senior Debentures and remaining unclaimed for two years after such principal or
interest has become due and payable shall, at the request of the Company, be
repaid to the Company, and the holder of such Senior Debentures shall thereafter
look, as a general unsecured creditor, only to the Company for payment thereof.
GOVERNING LAW
The Indenture and the Senior Debentures will be governed by and construed
in accordance with the laws of the State of New York.
INFORMATION CONCERNING THE TRUSTEE
The Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Trustee is under no obligation to
exercise any of the powers vested in it by the Indenture at the request of any
holder of Senior Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby. The
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Trustee
reasonably believes that repayment or adequate indemnity is not reasonably
assured to it.
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
between the Company and the several Underwriters named below (each an
"Underwriter"), dated __________ __, 1998 (the "Underwriting Agreement"), the
Company has agreed to sell to the Underwriters, and the Underwriters have
severally agreed to purchase from the Company, the principal amount of the
Senior Debentures set forth below opposite their respective names:
Principal Amount of
Underwriter Senior Debentures
Chase Securities Inc............................................................
First Chicago Capital Markets, Inc..............................................
Total......................................................$100,000,000
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Senior Debentures
offered hereby if any of the Senior Debentures are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Senior Debentures to the public initially at the respective
offering price set forth on the cover page of this Prospectus, and to certain
dealers initially at such price less a discount not in excess of 0.[_____]% of
the principal amount of the Senior Debentures. The Underwriters may allow, and
such dealers may reallow, a concession to certain other dealers not in excess of
0.[_____]% of the principal amount of the Senior Debentures on sales to certain
other dealers. After the initial public offering, the public offering price and
such concessions may be changed.
Chase Securities Inc. is an affiliate of The Chase Manhattan Bank which is
the agent for and a lender under the Credit Facility. Chase Securities Inc.
served as arranger for the Credit Facility. First Chicago Capital Markets, Inc.
is an affiliate of The First National Bank of Chicago. The Chase Manhattan Bank,
The First National Bank of Chicago and their respective affiliates participate
on a regular basis in various general financing and banking transactions for the
Company and its affiliates.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act, and to contribute
to payments which the Underwriters might be required to make in respect thereof.
In connection with the offering of the Senior Debentures, Chase Securities
Inc., on behalf of the Underwriters, may engage in overallotment, stabilizing
transactions and syndicate covering transactions. Overallotment involves sales
in excess of the offering size, which creates a short position for the
Underwriters. Stabilizing transactions involve bids to purchase the Senior
Debentures in the open market for the purpose of pegging, fixing or maintaining
the price of the Senior Debentures. Syndicate covering transactions involve
purchases of the Senior Debentures in the open market after the distribution has
been completed in order to cover short positions. Such stabilizing transactions
and syndicate covering transactions may cause the price of the Senior Debentures
to be higher than it would otherwise be in the absence of such transactions.
Such activities, if commenced, may be discontinued at any time.
The Senior Debentures are a new series of securities with no established
trading market and will not be listed on any securities exchange. The
Underwriters have advised the Company that they intend to make a market in the
Senior Debentures, but are under no obligation to do so and such market making
may be terminated at any time. Therefore, no assurance can be given as to the
liquidity of, or the trading market for, the Senior Debentures.
LEGAL MATTERS
The validity of the Senior Debentures will be passed upon by White & Case
LLP, 633 West Fifth Street, Los Angeles, California 90071, as counsel for the
Company. Certain legal matters will be passed upon for the Underwriters by
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1997, have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
* * *
<PAGE>
(outside back cover page)
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR THE SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, OR ANY OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY, SUCH SECURITIES, IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER
OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
TABLE OF CONTENTS
Available Information 2
Incorporation of Documents by Reference 2
Forward-Looking Statements 3
Prospectus Summary 4
Risk Factors 9
Use of Proceeds 11
Ratio of Earnings to Fixed Charges 12
Capitalization 12
The First American Financial Corporation 13
Description of the Senior Debentures 17
Underwriting 26
Legal Matters 27
Experts 27
<PAGE>
Prospectus
THE FIRST AMERICAN
FINANCIAL CORPORATION
$100,000,000
[_____]% Senior Debentures due 2028
[Logo of The First American
Financial Corporation]
CHASE SECURITIES INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
Dated [__________], 1998
<PAGE>
PART II
Information Not Required in Prospectus
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions,
are estimated to be as follows:
Securities and Exchange Commission registration fee..................... $29,500
Trustee's fees*......................................................... $7,000
Printing expenses*...................................................... $15,000
Legal fees and expenses*................................................ $80,000
Accounting fees and expenses*........................................... $50,000
Miscellaneous*.......................................................... $5,000
Total*.........................................................$186,500
____________
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subject to certain limitations, Section 317 of the California Corporations
Code provides in part that a corporation shall have the power to indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of the corporation to
procure a judgment in its favor) by reason of the fact that the person is or was
an agent (which term includes officers and directors) of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with the proceeding if that person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of the person was unlawful.
The California indemnification statute, as provided in Section 317 of the
California Corporations Code (noted above), is nonexclusive and allows a
corporation to expand the scope of indemnification provided, whether by
provisions in its Bylaws or by agreement, to the extent authorized in the
corporation's articles.
The Restated Articles of Incorporation of the Registrant provide that: "The
liability of the directors of the Corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law." The effect
of this provision is to exculpate directors from any liability to the
Registrant, or anyone claiming on the Registrant's behalf, for breaches of the
directors' duty of care. However, the provision does not eliminate or limit the
liability of a director for actions taken in his capacity as an officer. In
addition, the provision applies only to monetary damages and is not intended to
impair the rights of parties suing on behalf of the Registrant to seek equitable
remedies (such as actions to enjoin or rescind a transaction involving a breach
of the directors' duty of care or loyalty).
The Bylaws of the Registrant provide that, subject to certain
qualifications, "(i) The corporation shall indemnify its Officers and Directors
to the fullest extent permitted by law, including those circumstances in which
indemnification would otherwise be discretionary; (ii) the corporation is
required to advance expenses to its Officers and Directors as incurred,
including expenses relating to obtaining a determination that such Officers and
Directors are entitled to indemnification, provided that they undertake to repay
the amount advanced if it is ultimately determined that they are not entitled to
indemnification; (iii) an Officer or Director may bring suit against the
corporation if a claim for indemnification is not timely paid; (iv) the
corporation may not retroactively amend this Section 1 in a way which is adverse
to its Officers and Directors; (v) the provisions of subsections (i) through
(iv) above shall apply to all past and present Officers and Directors of the
corporation." "Officer" includes the following officers of the Registrant:
Chairman of the Board, President, Vice President, Secretary, Assistant
Secretary, Chief Financial Officer, Treasurer, Assistant Treasurer and such
other officers as the board shall designate from time to time. "Director" of the
Registrant means any person appointed to serve on the Registrant's board of
directors either by its shareholders or by the remaining board members.
Each of the Registrant's 1996 Stock Option Plan and its 1997 Directors'
Stock Plan (each individually, the "Plan") provides that, subject to certain
conditions, "The Company shall, through the purchase of insurance or otherwise,
indemnify each member of the Board (or board of directors of any affiliate),
each member of the [Compensation] Committee, and any [other] employees to whom
any responsibility with respect to the Plan is allocated or delegated, from and
against any and all claims, losses, damages, and expenses, including attorneys'
fees, and any liability, including any amounts paid in settlement with the
Company's approval, arising from the individual's action or failure to act,
except when the same is judicially determined to be attributable to the gross
negligence or willful misconduct of such person."
ITEM 16. EXHIBITS.
1 Form of Underwriting Agreement.
4.1 Form of Senior Indenture.
4.2 Form of Senior Debenture.
5 Opinion of White & Case LLP regarding validity of the Senior Debentures.
12 Statement re computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of White & Case LLP (contained in Exhibit 5).
24 Power of Attorney.
25 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of
Wilmington Trust Company to act as trustee under the Senior Debentures.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim of
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
* * *
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Santa Ana, state of
California, on March 31, 1998.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By:/s/ Parker S. Kennedy
---------------------
Parker S. Kennedy, President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
Date: March 31, 1998 By:/s/ D.P. Kennedy
----------------
D.P. Kennedy, Chairman and Director
Date: March 31, 1998 By:/s/ Parker S. Kennedy
---------------------
Parker S. Kennedy, President and Director
Date: March 31, 1998 By:/s/ Thomas A. Klemens
---------------------
Thomas A. Klemens, Executive Vice
President, Chief Financial Officer
(Principal Financial and Accounting Officer)
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
Date: March 31, 1998 By:/s/ George L. Argyros*
----------------------
George L. Argyros, Director
Date: March 31, 1998 By:/s/ Gary J. Beban*
------------------
Gary J. Beban, Director
Date: March 31, 1998 By:/s/ J. David Chatham*
---------------------
J. David Chatham, Director
Date: March 31, 1998 By:/s/ William G. Davis*
---------------------
William G. Davis, Director
Date: March 31, 1998 By:/s/ James L. Doti*
------------------
James L. Doti, Director
Date: March 31, 1998 By:/s/ Lewis W. Douglas, Jr.*
--------------------------
Lewis W. Douglas, Jr., Director
Date: March 31, 1998 By:/s/ Paul B. Fay, Jr.*
---------------------
Paul B. Fay, Jr., Director
Date: March 31, 1998 By:/s/ Dale F. Frey*
-----------------
Dale F. Frey, Director
Date: March 31, 1998 By:/s/ Anthony R. Moiso*
---------------------
Anthony R. Moiso, Director
Date: March 31, 1998 By:/s/ Rudolph J. Munzer*
----------------------
Rudolph J. Munzer, Director
Date: March 31, 1998 By:/s/ Frank O'Bryan*
------------------
Frank O'Bryan, Director
Date: March 31, 1998 By:/s/ Roslyn B. Payne*
--------------------
Roslyn B. Payne, Director
Date: March __, 1998 By:______________________
D. Van Skilling, Director
Date: March 31, 1998 By:/s/ Virginia Ueberroth*
-----------------------
Virginia Ueberroth, Director
*By:/s/ Mark R Arnesen
Mark R Arnesen
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1 Form of Underwriting Agreement.*
4.1 Form of Senior Indenture.
4.2 Form of Senior Debenture.
5 Opinion of White & Case LLP regarding validity of the Senior
Debentures.*
12 Statement re computation of Ratio of Earnings to Fixed Charges.*
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of White & Case LLP (contained in Exhibit 5).*
24 Power of Attorney.*
25 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of Wilmington Trust Company to act as trustee
under the Senior Debentures.*
*Previously filed.
EXHIBIT 4.1
________________________________________________________________________________
------------------------------------
SENIOR INDENTURE
DATED AS OF _____________ __, 1998
------------------------------------
BETWEEN
THE FIRST AMERICAN FINANCIAL CORPORATION
AND
WILMINGTON TRUST COMPANY
AS TRUSTEE
________________________________________________________________________________
<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 Senior Indenture, dated as of __________ ___, 1998.
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
ss. 310 (a) (1), (2) and (5)................................6.9
(a) (3).............................................Not Applicable
(a) (4).............................................Not Applicable
(b).................................................6.8
6.10
(c).................................................Not Applicable
ss.311 (a).................................................6.13(a)
(b).................................................6.13(b)
(b) (2).............................................7.3(a) (2)
7.3(a) (2)
ss.312 (a).................................................7.1
7.2(a)
(b).................................................7.2(b)
(c).................................................7.2(c)
ss.313 (a).................................................7.3(a)
(b).................................................7.3(b)
(c).................................................7.3(a), 7.3(b)
(d).................................................7.3(c)
ss.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
ss.315 (a).................................................6.1(a)
(b).................................................6.2
7.3(a) (6)
(c).................................................6.1(b)
(d).................................................6.1(c)
(d) (1).............................................6.1(a) (1)
(d) (2).............................................6.1(c) (2)
(d) (3).............................................6.1(c) (3)
(e).................................................5.14
ss.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)
ss.317 (a) (1).............................................5.3
(a) (2).............................................5.4
(b).................................................10.3
ss.318 (a).................................................1.7
__________
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Senior Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
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...................... 10
SECTION 1.4 Acts of Holders.............................................. 11
SECTION 1.5 Notices, Etc. to Trustee and Company......................... 13
SECTION 1.6 Notice to Holders; Waiver.................................... 14
SECTION 1.7 Conflict with Trust Indenture Act............................ 14
SECTION 1.8 Effect of Headings and Table of Contents..................... 14
SECTION 1.9 Successors and Assigns....................................... 14
SECTION 1.10 Separability Clause.......................................... 14
SECTION 1.11 Benefits of Indenture........................................ 15
SECTION 1.12 Governing Law................................................ 15
SECTION 1.13 Non-Business Days. .......................................... 15
ARTICLE II
SECURITY FORMS ........................................ 15
SECTION 2.1 Forms Generally.............................................. 15
SECTION 2.2 Legends...................................................... 17
SECTION 2.3 Form of Face of Security..................................... 20
SECTION 2.5 Form of Trustee's Certificate of Authentication. ............ 25
ARTICLE III
THE SECURITIES......................................... 25
SECTION 3.1 Title and Terms. ............................................ 25
SECTION 3.2 Denominations. .............................................. 28
SECTION 3.3 Execution, Authentication, Delivery and Dating. ............. 29
SECTION 3.4 Temporary Securities. ....................................... 31
SECTION 3.5 Registration, Transfer and Exchange. ........................ 31
SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities. ........... 37
SECTION 3.7 Payment of Interest; Interest Rights Preserved. ............. 38
SECTION 3.8 Persons Deemed Owners. ...................................... 40
SECTION 3.9 Cancellation. ............................................... 40
SECTION 3.10 Computation of Interest. .................................... 40
SECTION 3.11 CUSIP Numbers. .............................................. 40
ARTICLE IV
SATISFACTION AND DISCHARGE .............................. 41
SECTION 4.1 Satisfaction and Discharge of Indenture. .................... 41
SECTION 4.2 Legal Defeasance............................................. 42
SECTION 4.3 Covenant Defeasance.......................................... 42
SECTION 4.4 Conditions to Legal Defeasance or Covenant Defeasance........ 43
SECTION 4.5 Application of Trust Money................................... 44
SECTION 4.6 Indemnity for U.S. Government Obligations.................... 44
ARTICLE V
REMEDIES ....................................... 44
SEC.1 Events of Default. .......................................... 44
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. ......... 46
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee. .................................................... 47
SECTION 5.4 Trustee May File Proofs of Claim. ........................... 48
SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities. 49
SECTION 5.6 Application of Money Collected. ............................. 49
SECTION 5.7 Limitation on Suits. ........................................ 50
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium
and Interest................................................. 50
SECTION 5.9 Restoration of Rights and Remedies. ......................... 51
SECTION 5.10 Rights and Remedies Cumulative. ............................. 51
SECTION 5.11 Delay or Omission Not Waiver. ............................... 51
SECTION 5.12 Control by Holders. ......................................... 52
SECTION 5.13 Waiver of Past Defaults. .................................... 52
SECTION 5.14 Undertaking for Costs. ...................................... 53
SECTION 5.15 Waiver of Usury, Stay or Extension Laws. .................... 53
ARTICLE VI
THE TRUSTEE ......................................... 54
SECTION 6.1 Certain Duties and Responsibilities. ........................ 54
SECTION 6.2 Notice of Defaults. ......................................... 55
SECTION 6.3 Certain Rights of Trustee. .................................. 56
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities. ..... 57
SECTION 6.5 May Hold Securities. ........................................ 57
SECTION 6.6 Money Held in Trust. ........................................ 57
SECTION 6.7 Compensation and Reimbursement. ............................. 57
SECTION 6.8 Disqualification; Conflicting Interests. .................... 58
SECTION 6.9 Corporate Trustee Required; Eligibility. .................... 58
SECTION 6.10 Resignation and Removal; Appointment of Successor. .......... 59
SECTION 6.11 Acceptance of Appointment by Successor. ..................... 61
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business. 62
SECTION 6.13 Preferential Collection of Claims Against Company. .......... 63
SECTION 6.14 Appointment of Authenticating Agent. ........................ 63
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY ................. 65
SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.... 65
SECTION 7.2 Preservation of Information, Communications to Holders. ..... 65
SECTION 7.3 Reports by Trustee. ......................................... 65
SECTION 7.4 Reports by Company. ......................................... 66
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE ................ 67
SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms. ....... 67
SECTION 8.2 Successor Corporation Substituted. .......................... 68
ARTICLE IX
SUPPLEMENTAL INDENTURES ............................... 69
SECTION 9.1 Supplemental Indentures without Consent of Holders. ......... 69
SECTION 9.2 Supplemental Indentures with Consent of Holders. ............ 70
SECTION 9.3 Execution of Supplemental Indentures......................... 71
SECTION 9.4 Effect of Supplemental Indentures. .......................... 71
SECTION 9.5 Conformity with Trust Indenture Act. ........................ 72
SECTION 9.6 Reference in Securities to Supplemental Indentures. ......... 72
ARTICLE X
COVENANTS....................................... 72
SECTION 10.1 Payment of Principal, Premium and Interest. ................. 72
SECTION 10.2 Maintenance of Office or Agency. ............................ 73
SECTION 10.3 Money for Security Payments to be Held in Trust. ............ 73
SECTION 10.4 Statement as to Compliance. ................................. 75
SECTION 10.5 Waiver of Certain Covenants. ................................ 75
SECTION 10.6 Calculation of Original Issue Discount. ..................... 75
SECTION 10.7 Limitation on Liens. ........................................ 76
ARTICLE XI
REDEMPTION OF SECURITIES ............................... 76
SECTION 11.1 Applicability of This Article................................ 76
SECTION 11.2 Election to Redeem; Notice to Trustee. ...................... 77
SECTION 11.3 Selection of Securities to be Redeemed. ..................... 77
SECTION 11.4 Notice of Redemption. ....................................... 78
SECTION 11.5 Deposit of Redemption Price. ................................ 79
SECTION 11.6 Payment of Securities Called for Redemption. ................ 79
ARTICLE XII
SINKING FUNDS..................................... 80
SECTION 12.1 Applicability of Article. ................................... 80
SECTION 12.2 Satisfaction of Sinking Fund Payments with Securities. ...... 80
SECTION 12.3 Redemption of Securities for Sinking Fund. .................. 81
EXHIBITS
Exhibit A Transferees Letter of Representation
<PAGE>
SENIOR INDENTURE, dated as of __________ ___, 1998, 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 senior
debt securities in one or more series (hereinafter called the "Securities") of
substantially the tenor hereinafter provided 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;
(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.
"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. 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.
"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 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 Stock" means the Common shares, $1.00 par value, 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.
"Credit Facility" shall mean the Amended and Restated Credit Agreement
among the Company, The Chase Manhattan Bank, and the lenders party thereto from
time to time, dated as of July 29, 1997, 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.
"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).
"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.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indebtedness" means indebtedness for money borrowed or indebtedness
evidenced by a bond, note, debenture or other evidence of indebtedness.
"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.
"Legal Defeasance" has the meaning specified in Section 4.2.
"Lien" means any mortgage, pledge, hypothecation, encumbrance, charge or
security interest of any kind.
"Make Whole Amount" when used with respect to any Security means the amount
required to be paid by the Company in order to redeem such Security prior to its
Stated Maturity.
"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.
"Non-Global Purchasers" has the meaning set forth in Section 2.1.
"Nonrecourse Indebtedness" has the meaning set forth in Section 5.1.
"Notice of Default" means a written notice of the kind specified in Section
5.1(3).
"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.
"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.
"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.
"Purchase Money Lien" means (i) a Lien upon any capital stock of any
Restricted Subsidiary acquired before or after the date of the Indenture if such
Lien is for the purpose of financing the acquisition of the capital stock of
such Restricted Subsidiary, and does not exceed, the cost to the Company or any
Subsidiary of acquiring the capital stock of such Restricted Subsidiary and such
financing is effected concurrently with, or within six months after, the date of
such acquisition and (ii) any extension, renewal or refinancing of any such Lien
described in clause (i) immediately above so long as the principal amount of
obligations secured thereby shall not exceed the original principal amount of
obligations so secured at the time of any such extension, renewal or
refinancing.
"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 or Make Whole Amount 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).
"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.
"Restricted Subsidiary" means any Subsidiary that is a licensed insurance
company having capital and surplus in excess of $2.5 million.
"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.
"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 or business trust, a majority of the
outstanding voting securities of which is owned, directly or indirectly, by the
Company and/or one or more Subsidiaries.
"Total Capitalization" means, as of the date of determination, the sum of
(i) all Indebtedness of the Company outstanding as of such date, including,
without limitation, the Company's junior deferrable interest debentures, the
Securities and all Indebtedness under the Credit Facility, (ii) the Company's
consolidated shareholders' equity at the end of the most recently completed
fiscal quarter of the Company immediately preceding such date of determination
for which financial statements are or are required to be available and (iii) the
minority interests in Subsidiaries of the Company at the end of the most
recently completed fiscal quarter of the Company immediately preceding such date
of determination for which financial statements are or are required to be
available.
"Transfer Restricted Securities" Securities that bear or are required to
bear the Restricted Securities Legend set forth in Section 2.2 hereof.
"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.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. ss.
77aaa-77bbbb), as amended and as in effect on the date as of this Indenture,
except as provided in Section 9.5.
"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.
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 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 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 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 or any Holder 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 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.
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, holders of indebtedness ranking pari passu with the Securities and the
Holders of the 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 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 a 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 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 in 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, 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, (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 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)(C), (D) AND (E) IS SUBJECT TO THE
RIGHT OF THE ISSUER OF THIS SECURITY TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THE ISSUER 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 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 ____
__% SENIOR DEBENTURES DUE ______________
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 __________ __, ____. 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] 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. 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 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 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.
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 unsecured and ranks senior
in right of payment to all existing or future indebtedness of the Company that
is by its terms expressly subordinated in right of payment to this Security and
ranks pari passu with all other indebtedness of the Company.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
THE FIRST AMERICAN FINANCIAL
CORPORATION
By:_____________________________
[President or Vice President]
Attest:
__________________________________
[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 Senior Indenture, dated as of __________ __, 1998 (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 shall
have the meanings assigned to them therein.
[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 plus Additional Interest, if any] to but excluding the
Redemption Date. If redeemed during the 12-month period beginning _____ __:
Redemption
Year Price
---- ----------
20__ %
20__
20__
20__
20__
20__
20__
20__
20__
20__
and at 100% on or after _________ __, 20__][Make Whole Amount].
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of all series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of all series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof 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) 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.]
[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). 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.]
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 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.
SECTION 2.5 Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:_____________ The Wilmington Trust Company
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;
(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 of any Securities of such series,
the Interest Payment Dates on which such interest shall be payable, 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 (including, if applicable, Make Whole Amounts) 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;
(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 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 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;
(s) 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;
(t) 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
(u) any other terms, conditions and rights of the Securities of such series
(which terms, conditions and rights 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 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.
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 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.
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.
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
(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.
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 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.
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.
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 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.
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.
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 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 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, (a) 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 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 face 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
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; 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 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 default or event of default under any Indebtedness of the Company
or any of its Subsidiaries other than Indebtedness secured by assets of the
Company or any of its Subsidiaries the terms of which limit the remedies of the
holder or holders thereof primarily to the assets so secured ("Nonrecourse
Indebtedness"), which default or event of default results in at least $10
million of aggregate principal amount of such Indebtedness being declared due
and payable prior to maturity and such acceleration is not rescinded within 10
days thereafter; or
(7) failure by the Company or any of its Subsidiaries to pay at maturity
any Indebtedness other than Nonrecourse Indebtedness in excess of $10 million
aggregate principal amount, and such failure shall not have been cured within 10
days thereafter; or
(8) 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) and upon any such declaration
such principal amount (or specified portion thereof) of and the accrued interest
on all the Securities of such series shall become immediately due and payable.
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 Additional Interest) on
all Securities of that series,
(B) the unpaid 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 (or all
series, as the case may be), other than the non-payment of the principal of (or
the premium, if any, on) or interest on Securities of that series (or of all
series, as the case may be) which have become due solely by such acceleration,
have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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 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 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 Additional Interest) shall 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 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.
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 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: To the payment of the amounts then due and unpaid upon such series
of Securities for principal (and premium, if any), interest (including
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 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
(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.
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)
interest (including 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.
SECTION 5.9 Restoration of Rights and Remedies.
If the Trustee or any Holder 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 or
such Holder, then and in every such case the Company, the Trustee or the Holders
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 or the Holders shall continue as though no such
proceeding had been instituted.
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 or any Holder of any 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 may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or the Holders, 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
(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 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 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 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.
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.
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
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 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 Additional
Interest) on any Security of such series, 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;
(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 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.
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).
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 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
(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.
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.
(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
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
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 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, if any, 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:
(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 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; and
(3) 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 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
(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
(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) 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
(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.
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 which modifies the
rights of the Holders of 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 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.
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.
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:
(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 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.
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 Calculation of Original Issue Discount.
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.
SECTION 10.7 Limitation on Liens.
The Company shall not, and shall not permit any Subsidiary to, create,
assume, incur or suffer to exist any Lien, other than a Purchase Money Lien,
upon any capital stock of any Restricted Subsidiary, whether owned on the date
of the Indenture or thereafter acquired, to secure any Indebtedness (other than
the Senior Debentures) of the Company, any Subsidiary or any other Person
without in any such case making effective provision whereby all of the
outstanding Senior Debentures shall be directly secured equally and ratably with
such Indebtedness or, if such Indebtedness is secured by such a Lien and is
expressly subordinated or junior in right of payment to the Senior Debentures,
secured by such a Lien that is senior in priority to the Lien securing such
Indebtedness; provided, however, that this restriction will not apply to (i)
Liens on the capital stock of any Restricted Subsidiary securing Indebtedness
outstanding from time to time, provided that the principal amount of all such
Indebtedness secured by Liens on the capital stock of any Restricted Subsidiary,
at the time of each incurrence of any portion of any such Indebtedness, does not
exceed 20% of Total Capitalization and (ii) Liens securing Indebtedness from the
Company to any wholly-owned Restricted Subsidiary or from any wholly-owned
Restricted Subsidiary to the Company or its subsidiaries.
Nothing in this Section 10.7 or elsewhere in this Indenture contained shall
prevent or be deemed to restrict any other property of the Company or its
Subsidiaries or to prohibit the creation, assumption, or guaranty by the Company
or any Subsidiary of any debentures, notes, or other evidences of unsecured
indebtedness, whether in the ordinary course of business or otherwise.
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 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;
(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 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.
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.
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 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 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.
* * * *
<PAGE>
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:_________________________
Name:
Title:
WILMINGTON TRUST COMPANY
as Trustee
By:_________________________
Name:
Title:
<PAGE>
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 ________% Senior Debentures Due __________ (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 Restricted Securities, other than the Offering
Memorandum dated ____________________ (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.
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 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______________________________
EXHIBIT 4.2
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
REFERRED TO ON THE REVERSE HEREOF.
THE FIRST AMERICAN FINANCIAL CORPORATION
CUSIP [_____]
[_____]% Senior Debentures Due __________ __, 2028
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 one thousand
Dollars on [__________ ____], 2028. The Company further promises to pay interest
on said principal sum from [__________ ____], 1998 or from the most recent
interest payment date (each such date, an "Interest Payment Date") on which
interest has been paid or duly provided for, semi-annually in arrears on
[__________] 15 and [__________] 15 of each year, commencing [__________] 15,
1998, 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. 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 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 Business Day next preceding such Interest Payment Date. Any such interest
installment not so punctually paid or duly provided for shall forthwith cease to
be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date for the payment
of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange or automated
quotation system on which the Securities of this series may be listed or traded,
and upon such notice as may be required by such exchange or self-regulatory
organization, all as more fully provided in said Indenture.
Payment of principal of (and premium, if any) and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the United States, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest
may be made (i) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Securities Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated in writing at least 15 days before the relevant Interest Payment Date
by the Person entitled thereto as specified in the Securities Register.
The indebtedness evidenced by this Security is unsecured and ranks senior
in right of payment to all existing or future indebtedness of the Company that
is by its terms expressly subordinated in right of payment to this Security and
ranks pari passu with all other indebtedness of the Company.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
THE FIRST AMERICAN FINANCIAL CORPORATION
By:________________________________________
Thomas A. Klemens, Executive Vice President
Attest:
______________________________
Mark R Arnesen, Secretary
<PAGE>
(reverse)
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 Senior Indenture, dated as of __________ ____, 1998 (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
$100,000,000.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them therein.
The Company may at any time and from time to time, at its option, and
subject to the terms and conditions of Article XI of the Indenture, redeem this
Security in whole at any time or in part at a redemption price equal to the Make
Whole Amount.
The "Make Whole Amount" will be equal to the amount, as determined by a
Quotation Agent (as defined below), equal to the sum of the principal amount of
the Senior Debentures to be redeemed and the present value of scheduled
semi-annual interest payments thereon accrued on a daily basis (assuming a
360-day year consisting of twelve 30-day months) from the thereon Redemption
Date to Stated Maturity (the "Make Whole Payment Period"), discounted to the
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate.
"Adjusted Treasury Rate" means the Treasury Rate plus 0.20%.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Make
Whole Payment Period that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the Make Whole Payment Period. If no
United States Treasury security has a maturity which is within a period from
three months before to three months after the Stated Maturity, the two most
closely corresponding United States Treasury securities shall be used as the
Comparable Treasury Issue, and the Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Comparable Treasury Price" means, with respect to any Redemption Date, (A)
the average of five Reference Treasury Dealer Quotations for such Redemption
Date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Quotations Agent obtains fewer than five such
Reference Treasury Dealer Quotations for such Redemption Date, the average of
all such quotations.
"Quotation Agent" means Chase Securities Inc. and its successors; provided,
however, that if the foregoing shall cease to be a primary U.S. government
securities dealer in New York City (a "Primary Treasury Dealer"), the Company
shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Quotation Agent after consultation
with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Quotation Agent, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the immediately prior week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve and which establishes yields on actively
traded United States Treasury securities adjusted to constant maturity under the
caption "Treasury Constant Maturities", for the maturity corresponding to the
Make Whole Payment Period (if no maturity is within three months before or after
the Make Whole Payment Period, yields for the two published maturities most
closely corresponding to the Make Whole Payment Period shall be determined and
the Treasury Rate shall be interpolated or extrapolated from such yields on a
straight line basis, rounding to the nearest month) or (ii) if such release (or
any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The Treasury Rate shall be calculated on the third
Business Date preceding the Redemption Date.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company with certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of all series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of all series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this Security shall be conclusive and binding upon such Holder and
upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, if an Event
of Default with respect to the Securities of this series at the time Outstanding
occurs and is continuing, then and in every such case the Trustee or the Holders
of not less than 25% in principal amount of the Outstanding Securities of this
series may declare the principal amount of all the Securities of this series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders) and upon any such declaration the principal
amount of and the accrued interest (including Additional Interest) on all the
Securities of this series shall become immediately due and payable.
Upon payment (i) of the amount of principal so declared due and payable and
(ii) of interest on any overdue principal and overdue interest (in each case to
the extent that the payment of such interest shall be legally enforceable), all
of the Company's obligations in respect of the payment of the principal of and
interest, if any, on this Security shall terminate.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of such series of a different authorized denomination, as
requested by the Holder surrendering the same.
THE 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.
This is one of the Securities referred to in the within mentioned
Indenture.
Dated:_____________ The Wilmington Trust Company
By:____________________________________
Authorized Signatory
* * *
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Pre-Effective Amendment No. 2 to the Registration
Statement on Form S-3 of The First American Financial Corporation of our report
dated February 9, 1997, appearing on page 19 of The First American Financial
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
By: /s/ Price Waterhouse LLP
------------------------
Price Waterhouse LLP
Costa Mesa, California
Date: March 31, 1998
