As filed with the Securities and Exchange Commission on November 20, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
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California 6361 95-1068610
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation of Organization) Classification Code No.) Identification No.)
114 East Fifth Street
Santa Ana, California 92701-4642
(800) 854-3643
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(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. [X]
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. [ ]
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CALCULATION OF REGISTRATION FEE
- ----------------------------- ---------------- ---------------- --------------- ----------------
Proposed Proposed
Title of Each Class of Amount To Be Maximum Maximum Amount of
Securities Registered Aggregate Aggregate Registration
To Be Registered Price Per Unit(1) Offering Price(1) Fee
- ----------------------------- ---------------- ---------------- --------------- ----------------
- ----------------------------- ---------------- ---------------- --------------- ================
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Common shares, $1.00 par 521,740 $32 $16,695,680 $4,641
value shares
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act, based on the average
of the high and low prices of the Common shares registered on the New York
Stock Exchange as of November 19, 1998.
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.
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The information in this Prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where their offer or sale is not permitted.
Subject to completion, dated November 20, 1998.
PROSPECTUS
521,740 COMMON SHARES
THE FIRST AMERICAN FINANCIAL CORPORATION
Offer by the Selling Shareholders.
o We have prepared this Prospectus for use by certain persons that hold our
unregistered Common shares, $1.00 par value (hereinafter referred to as the
"Selling Shareholders"), in order to allow them to sell such shares without
the restrictions imposed on the sale of unregistered securities by the
federal securities laws.
o A list of the Selling Shareholders may be found in the section of this
Prospectus entitled "Selling Shareholders".
o The Selling Shareholders have informed us that they may offer the shares
offered pursuant to this Prospectus through public or private transactions.
For a more detailed description of these transactions, please see the
section of this Prospectus entitled "Plan of Distribution" on page 4.
o The sale price of the shares offered pursuant to this Prospectus may be
negotiated, fixed by formula (possibly subject to change), or determined by
the market price of the shares at the time of sale.
o We will file a supplement to this Prospectus if we are required to do so by
the federal securities laws to describe a specific sale of shares offered
pursuant to this Prospectus or to identify additional selling shareholders.
No Proceeds to The First American Financial Corporation
o The Selling Shareholders will receive all net proceeds from the sale of the
shares offered pursuant to this Prospectus. Accordingly, we will not
receive any of the proceeds from sales of the shares offered pursuant to
this Prospectus.
Our Business.
o We provide real estate-related financial and informational services to real
property buyers and mortgage lenders.
o The trading symbol for our Common shares on the New York Stock Exchange is
"FAF."
o On November 19, 1998, the closing price of our Common shares on the New
York Stock Exchange was $31.
o Before making an investment in our company, you should consider carefully
the "Risk Factors" beginning on page 1.
o The address and telephone number of our principal offices are: 114 East
Fifth Street, Santa Ana, California 92701; (714) 558-3211.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense.
The date of this Prospectus is , 1998.
WHERE YOU CAN FIND MORE INFORMATION;
INCORPORATION BY REFERENCE
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy, upon payment of a fee set by the SEC, any document that we
file with the SEC at its public reference rooms in Washington, D.C. (450 Fifth
Street, N.W., 20549), New York, New York (Seven World Trade Center, 13th Floor,
Suite 1300, 10048) and Chicago, Illinois (Citicorp Center, 500 West Madison
Street, 14th Floor, Suite 1400, 60661). You may also call the SEC at
1-800-432-0330 for more information on the public reference rooms. Our filings
are also available to the public on the internet, through the SEC's EDGAR
database. You may access the EDGAR database at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this Prospectus
the information we file with them. This means that we can disclose important
business, financial and other information in our SEC filings by referring you to
the documents containing this information. All information incorporated by
reference is part of this Prospectus, unless that information is updated and
superseded by the information contained in this Prospectus or by any information
filed subsequently that is incorporated by reference or by any prospectus
supplement. Any prospectus supplement or any information that we subsequently
file with the SEC that is incorporated by reference will automatically supersede
any prior information that is part of this Prospectus or any prior prospectus
supplement. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") until the earlier of (i)
the date on which all the securities offered with this Prospectus are sold by
the Selling Shareholders and (ii) the date that is one year following the date
of this Prospectus:
o Annual Report on Form 10-K for the fiscal year ended December 31, 1997.
o Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1998, June 30, 1998 and September 30, 1998.
o Current Reports on Form 8-K dated January 23, 1998, January 27, 1998, March
18, 1998, March 31, 1998, April 7, 1998, June 26, 1998 and October 22,1998.
o The description of our Common shares, $1.00 par value, contained in our
Registration Statement on Form 8-A, dated November 19, 1993, which
registers the shares under Section 12(b) of the Exchange Act.
o The description of Rights to Purchase Series A Junior Participating
Preferred Shares, which may be transferred with our Common shares,
contained in our Registration Statement on Form 8-A, dated November 7,
1997, which registers the rights under Section 12(b) of the Exchange Act.
This Prospectus is part of a registration statement (on Form S-3) we
have filed with the SEC relating to our Common shares registered under this
Prospectus. As permitted by SEC rules, this Prospectus does not contain all of
the information contained in the registration statement and accompanying
exhibits and schedules we file with the SEC. You may refer to the registration
statement, the exhibits and schedules for more information about us and our
Common shares. The registration statement, exhibits and schedules are also
available at the SEC's public reference rooms or through its EDGAR database on
the internet.
You may obtain a copy of these filings at no cost by writing to us at
The First American Financial Corporation, 114 East Fifth Street, Santa Ana,
California 92701-4642, Attention: Mark R Arnesen, or by telephoning us at (714)
558-3211. In order to obtain timely delivery, you must request the information
no later than five business days prior to the date you decide to invest in our
Common shares.
SPECIAL NOTE OF CAUTION REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements contained in (i) this Prospectus, (ii) any
applicable prospectus supplement and (iii) the documents incorporated by
reference into this Prospectus, may constitute "forward-looking statements"
within the meaning of the federal securities laws. Forward-looking statements
are based on our management's beliefs, assumptions, and expectations of our
future economic performance, taking into account the information currently
available to them. These statements are not statements of historical fact.
Forward-looking statements involve risks and uncertainties that may cause our
actual results, performance or financial condition to be materially different
from the expectations of future results, performance or financial condition we
express or imply in any forward-looking statements. Some of the important
factors that could cause our actual results, performance or financial condition
to differ materially from our expectations are:
o General volatility of the capital markets and the market price of our
shares.
o Changes in the real estate market, interest rates or the general economy.
o Our ability to identify and complete acquisitions and successfully
integrate businesses we acquire.
o Our ability to employ and retain qualified employees.
o Our ability to achieve Year 2000 compliance.
o Changes in government regulations, particularly those applicable to the
insurance industry.
o Changes in the demand for our products.
o Degree and nature of our competition.
When used in our documents or oral presentations, the words
"anticipate," "estimate," "expect," "objective," "projection," "forecast,"
"goal," or similar words are intended to identify forward-looking statements. We
qualify any such forward-looking statements entirely by these cautionary
factors.
RISK FACTORS
In addition to the other information contained in this Prospectus, you
should carefully consider the following risk factors before investing in our
company.
Volatility of Share Price
The market price of our shares could be subject to significant
fluctuations in response to variations in financial results or announcements of
material events by ourselves or our competitors. Regulatory changes,
developments in the real estate services industry or changes in general
conditions in the economy or the financial markets could also adversely affect
the market price of our shares.
Cyclical Nature of the Real Estate Market
Substantially all of our title insurance and real estate-related
information business results from resales and refinancings of real estate,
including residential and commercial properties, and from the construction and
sale of new properties. Our home warranty business results exclusively from
residential resales. Accordingly, resales and refinancings of real estate
constitute the major source of our revenues.
Real estate refinancings and resales go through periods of activity
and inactivity based largely on the cost and availability of long-term mortgage
funds. Periods of inactivity often result when interest rates are high or there
is a limited money supply. As a result of the relationship between real estate
refinancings and resales and our revenues (discussed in the preceding
paragraph), our revenue base may be adversely affected during such periods.
However, we continue to diversify our operations into areas outside of our
traditional title insurance business in order to mitigate this adverse effect.
Risks Associated with Acquisition Strategy
We acquire other companies in the real estate-related financial
services industry as a key component of our growth strategy. Certain risks are
inherent in an acquisition strategy and could adversely affect our financial
position and operating results. These risks include:
o difficulty servicing debt incurred to facilitate acquisitions;
o difficulty in retaining key employees;
o difficulty combining disparate company cultures, personalities and
facilities;
o the possibility that suitable acquisition candidates may not be identified
or available;
o the possibility that affordable financing may not be available;
o the possibility that suitable acquisition terms may not be negotiable; and
o the possibility that completed acquisitions may not be successful.
Dependence on Key Personnel
We depend on the continued services of our executive officers and
senior management, particularly our President, Parker S. Kennedy, our Chairman
and Director, D. P. Kennedy, and our 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 our operations and financial
position. We also depend on our ability to attract and retain other highly
qualified managerial personnel and employees.
Year 2000 Problems
What is the Year 2000 Problem?
Much of today's information technology (e.g., computer systems) and
embedded technology (e.g., microcontrollers) identifies a particular year on the
basis of the last two digits of that year. For example, the year "1998" is
recognized by the digits "98." The inability of information technology and
embedded technology to properly recognize a year that begins with "20" instead
of "19," if not corrected, may result in the failure of systems (or the
production of erroneous results) which rely on information technology and
embedded technology. This failure of systems, production of erroneous results
and the resulting damages is commonly known as the "Year 2000 Problem."
How Does the Year 2000 Problem Impact Us?
We are dependent, to a substantial degree, upon the proper functioning
of our computer systems as well as those of our vendors, suppliers and
customers. Most of our products and services rely on information and data
provided by others. Most of this information and data is provided electronically
and is dependent on information systems and telecommunications. For example, we
rely on governmental agencies to provide title and tax information. Similarly,
we deliver most of our products and services electronically. The inability of
our vendors and suppliers to provide accurate information in a timely manner,
our inability to accurately and timely process such information, the inability
of our customers to receive and use our products and services, and a general
disruption of telecommunications and utilities as a result of the Year 2000
Problem would most likely result in business interruption or shutdown, financial
loss, potential regulatory action, harm to our reputation and potential legal
liability.
What is our State of Readiness?
With the help of an outside consulting firm, we have created a Year
2000 Program Management Office and have adopted a five-step plan to address the
Year 2000 Problem. The five steps of our plan are: (1) awareness, (2)
inventory/assessment, (3) renovation, (4) testing, and (5) implementation. To
implement our plan, we have divided our company into "business units" comprised
of (a) the reporting regions of the title insurance subsidiaries, (b) the
subsidiary companies of our real estate information services business, (c) our
home warranty subsidiaries, (d) our trust and banking subsidiaries and (e) our
various other subsidiaries.
Our "awareness" phase involves communicating the nature and scope of the
Year 2000 Problem to the management of the business units in order to engender
strong management support for its resolution. Our "inventory/assessment" phase
involves the identification of our information systems and non-information
systems which require renovation or replacement to become Year 2000 compliant.
Our "renovation" phase involves ther repair and/or replacement of the systems
identified in the prior phase. Our "testing" phase involves the testing of
repaired and replaced systems. Our "implementation" phase involves the
integration of tested systems into our daily operations.
All phases of our plan are currently active. The awareness phase will
continue throughout 1998 and 1999. June 30, 1998 was the target date for
completion of the inventory/assessment phase; that phase is substantially
complete. However, all of the phases of the plan must be revisited each time we
acquire a new business. Accordingly, the inventory/assessment phase remains
active. Based on our current knowledge, we have established the following target
dates: (1) December 31, 1998 for completion of renovation, (2) April 30, 1999
for completion of testing, and (3) June 30, 1999 for completion of
implementation. In each case, completion of the applicable phase is subject to
the limitation noted above for newly acquired businesses. We make no assurance
that we will be able to meet these target dates.
Our efforts to survey the Year 2000 readiness of our significant
vendors, suppliers and customers continues. To date, we have not received
sufficient information from these parties about their Year 2000 plans to predict
the outcome of their efforts. Even after responses are received, there can be no
assurance that the systems of our significant vendors, suppliers and customers
will be timely renovated.
What will it cost to implement the Year 2000 Plan?
To date we have spent approximately $5 million in implementing our Year
2000 plan. We expect to incur at least an additional $25 million to $35 million
in implementing our Year 2000 plan. About half the costs will be for hardware
and software replacement and about half will be for labor. The costs for
hardware and software will be capitalized and amortized over their estimated
useful lives. Labor costs will be expensed as incurred. Our Year 2000 plan costs
are being funded through operating cash flow.
Do we have Contingency Plans?
With the help of a professional disaster planner, we are in the
process of creating company-wide and business unit contingency plans for
unexpected systems failures as a result of the Year 2000 Problem. We hope to
have our contingency plans in effect by the end of 1998.
Will our Year 2000 Plan be audited?
We have engaged a consultant to review our Year 2000 plan. Under the
terms of this engagement, the consultant will (1) review the operations of the
Year 200 Program Management Office, (2) review our Year 2000 plan, and (3)
review the implementation of the Year 2000 plan at selected locations. From time
to time during the review, the consultant will report its findings to the Audit
Committee of our Board of Directors.
No Assurances
The costs to implement our Year 2000 plan and our target dates for
completion of the various phases of our Year 2000 plan are based on current
estimates. These estimates reflect numerous assumptions about future events,
including the continued availability of certain resources, the timing and
effectiveness of third party renovation plans and other factors. We can give no
assurance that these estimates will be achieved, and actual results could differ
materially from these estimates.
Government Regulation
Various governmental agencies regulate the title insurance industry
extensively. The laws which apply to the industry and their interpretation vary
from state to state and are enforced with broad discretion. A review of our
operations and business relationships by courts or other regulatory authorities
could result in an adverse determination. Furthermore, the regulatory
environment could change in such a manner that would restrict our existing or
future operations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered
pursuant to this Prospectus; all proceeds from the sale of the shares will be
for the account of the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth, as of the date of this Prospectus, the
name of each holder of shares that may be sold pursuant to this Prospectus (the
"Selling Shareholders"), the number of our Common shares that each such Selling
Shareholder owns as of such date, the number of our Common shares owned pursuant
to each Selling Shareholder that may be offered for sale from time to time
pursuant to this Prospectus, the number of our Common shares to be held by each
such Selling Shareholder assuming the sale of all the shares offered hereby and,
by footnote, any position or office held or material relationship with The First
American Financial Corporation or any of its affiliates within the past three
years (other than that of being a shareholder). We may amend or supplement this
Prospectus from time to time to update the disclosure set forth herein.
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Number of Shares
to be Offered Shares Owned of
Shares Owned of for the Selling Record After
Record Prior to Shareholder's Completion of
the Offering Account the Offering
Name of Selling Shareholder Number % Number %
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Norwest Mortgage, Inc.(1) 521,740 * 521,740 0 0
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* Less than 1%.
(1) Norwest Mortgage, Inc. and The First American Financial Corporation,
directly or indirectly, each own 50% of RELS Title Services, LLC and RELS,
LLC, both of which are Delaware limited liability companies.
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PLAN OF DISTRIBUTION
The shares covered by this Prospectus may be offered and sold from time
to time by the Selling Shareholders. As used in this section, "Selling
Shareholders" includes donees and pledgees selling shares received from a named
Selling Shareholder after the date of this Prospectus. The Selling Shareholders
will act independently of us in making decisions with respect to the timing,
manner and price of each sale. The Selling Shareholders may sell the shares
being offered hereby on the New York Stock Exchange, or otherwise, at prices and
under terms then prevailing or at prices related to the then current market
price, at varying prices or at negotiated prices. The shares may be sold,
without limitation, by one or more of the following means of distribution: (i) a
block trade in which the broker-dealer so engaged will attempt to sell shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (ii) purchases by a broker-dealer as principal and
resale by such broker-dealer for its own account pursuant to this Prospectus;
(iii) a distribution in accordance with the rules of the New York Stock
Exchange; (iv) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (v) in privately negotiated transactions. To the
extent required, this Prospectus may be amended and supplemented from time to
time to describe a specific plan of distribution.
In connection with distributions of the shares or otherwise, the
Selling Shareholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of the
shares in the course of hedging the positions they assume with Selling
Shareholders. The Selling Shareholders may also sell the shares short and
deliver the shares offered hereby to close out such short positions. The Selling
Shareholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of shares offered hereby,
which shares such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Shareholders may also pledge shares to a broker-dealer
or other financial institution, and, upon a default, such broker-dealer or other
financial institution may effect sales of the pledged shares pursuant to this
Prospectus (as supplemented or amended to reflect such transaction). In
addition, any shares that qualify for sale pursuant to Rule 144 may, at the
option of the holder thereof, be sold under Rule 144 rather than pursuant to
this Prospectus.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Shareholders and/or purchasers of the
shares offered hereby. Usual and customary brokerage fees will be paid by the
Selling Shareholders. Broker-dealers may agree with the Selling Shareholders to
sell a specified number of shares at a stipulated price per share, and, to the
extent such a broker-dealer is unable to do so acting as agent for the Selling
Shareholders, to purchase as principal any unsold shares at the price required
to fulfill the broker-dealer commitment to the Selling Shareholders.
Broker-dealers who acquire shares as principal may thereafter resell such shares
from time to time in transactions (which may involve cross and block
transactions and which may involve sales to and through other broker-dealers,
including transactions of the nature described above) in the market, in
negotiated transactions or otherwise at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such resales may pay to, or
receive from, the purchasers of such shares, commissions computed as described
above.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only though registered
or licensed brokers or dealers. In addition, in certain states the shares may
not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the Selling Shareholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the Selling Shareholders and their affiliates.
In addition, we will make copies of this Prospectus available to the Selling
Shareholders and have informed them of the need for delivery of copies of this
Prospectus to purchasers at or prior to the time of any sale of the shares
offered hereby. The Selling Shareholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act of 1933 (the
"Securities Act").
At the time a particular offer of shares offered pursuant to this
Prospectus is made, if required, a supplement to this Prospectus will be
distributed that will set forth the number of shares being offered and the terms
of the offering, including the name of any underwriter, dealer or agent, the
purchase price paid by any underwriter, any discount, commission and other item
constituting compensation, any discount, commission or concession allowed or re-
allowed or paid to any dealer, and the proposed selling price to the public.
We have agreed to keep the registration statement of which this
Prospectus constitutes a part effective in respect of shares issued pursuant
thereto until the first to occur of (i) the date one year from the date of
issuance of such shares and (ii) such time as all of the shares offered by the
Selling Shareholders listed above have been sold; we intend to de-register any
of the shares not sold by the Selling Shareholders after such time.
LEGAL MATTERS
The validity of our Common shares offered hereby will be passed upon
for us by White & Case LLP, Los Angeles, California.
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 included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
***
o We have not authorized anyone to give you any information that differs from
the information in this Prospectus. If you receive any different
information, you should not rely on it.
o The delivery of this Prospectus shall not, under any circumstances, create
an implication that The First American Financial Corporation is operating
under the same conditions that it was operating under when this Prospectus
was written. Do not assume that the information contained in this
Prospectus is correct at any time past the date indicated.
o 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.
o This Prospectus does not constitute an offer to sell, or the solicitation
of an offer to buy, the securities to which it relates in any circumstances
in which such offer or solicitation is unlawful.
Table of Contents
Where You Can Find More Information; Incorporation by Reference.............(i)
Special Note of Caution Regarding Forward-Looking Statements ..............(ii)
Risk Factors.................................................................1
Use of Proceeds..............................................................4
Selling Shareholders.........................................................5
Plan of Distribution.........................................................6
Legal Matters................................................................7
Experts......................................................................7
Prospectus
521,740 Common Shares
THE FIRST AMERICAN FINANCIAL CORPORATION
Dated , 1998
<PAGE>
Part II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The Company will pay all expenses incident to the offering and sale to
the public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except for the Securities and Exchange Commission ("Commission")
registration fee.
Commission registration fee........................................... $ 4,641
New York Stock Exchange listing fee .................................. $ 3,500
Printing expenses..................................................... $ 1,000
Transfer Agent fees and expenses...................................... $ 1,000
Accounting fees and expenses.......................................... $ 5,000
Legal fees and expenses, including "blue sky"......................... $10,000
Miscellaneous......................................................... $ 3,000
Total........................................................ $28,141
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 set forth 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."
The Registrant's Deferred Compensation Plan provides that, "To the
extent permitted by applicable state law, the Company shall indemnify and save
harmless the Committee and each member thereof, the Board of Directors and any
delegate of the Committee who is an employee of the Company against any and all
expenses, liabilities and claims, including legal fees to defend against such
liabilities and claims arising out of their discharge in good faith of
responsibilities under or incident to the Plan, other than expenses and
liabilities arising out of willful misconduct. This indemnity shall not preclude
such further indemnities as may be available under insurance purchased by the
Company or provided by the Company under any bylaw, agreement or otherwise, as
such indemnities are permitted under state law."
Item 16. Exhibits and Financial Statement Schedules.
4.1. Description of the Registrant's capital stock in Article Sixth of the
Restated Articles of Incorporation of The First American Financial
Corporation, incorporated by reference to Exhibit 3.1 of the
Registrant's Post-Effective Amendment No. 1 to Registration Statement
on Form S-4 dated July 28, 1998.
4.2. Rights Agreement, incorporated by reference to Exhibit 4 of the
Registrant's Registration Statement on Form 8-A dated November 7,
1997.
5. Opinion of counsel regarding legality.
23.1. Consent of independent accountants.
23.2. Consent of counsel (contained in Exhibit 5).
24. Power of Attorney.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during the period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) 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.
(5) 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 for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
* * *
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 caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Santa Ana, state of California, on November 20, 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
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date: November 20, 1998 By:/s/ D.P. Kennedy
----------------------------
D.P. Kennedy, Chairman and Director
Date: November 20, 1998 By:/s/ Parker S. Kennedy
----------------------------
Parker S. Kennedy, President and Director
Date: November 20, 1998 By:/s/ Thomas A. Klemens
----------------------------
Thomas A. Klemens, Executive Vice
President, Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date: November 20, 1998 By:/s/ George L. Argyros
------------------------------
George L. Argyros, Director
Date: November 20, 1998 By:/s/ Gary J. Beban
------------------------------
Gary J. Beban, Director
Date: November 20, 1998 By:/s/ J. David Chatham
------------------------------
J. David Chatham, Director
Date: November 20, 1998 By:/s/ William G. Davis
------------------------------
William G. Davis, Director
Date: November 20, 1998 By:/s/ James L. Doti
------------------------------
James L. Doti, Director
Date: November 20, 1998 By:/s/ Lewis W. Douglas, Jr.
------------------------------
Lewis W. Douglas, Jr., Director
Date: November 20, 1998 By:/s/ Paul B. Fay, Jr.
------------------------------
Paul B. Fay, Jr., Director
Date: November 20, 1998 By:/s/ Dale F. Frey
------------------------------
Dale F. Frey, Director
Date: November 20, 1998 By:/s/ Anthony R. Moiso
------------------------------
Anthony R. Moiso, Director
Date: November 20, 1998 By:/s/ Frank O'Bryan
------------------------------
Frank O'Bryan, Director
Date: November __, 1998 By:
------------------------------
Roslyn B. Payne, Director
Date: November 20, 1998 By:/s/ D. Van Skilling
------------------------------
D. Van Skilling, Director
Date: November 20, 1998 By:/s/ Virginia Ueberroth
------------------------------
Virginia Ueberroth, Director
*By:/s/ Mark R Arnesen
-------------------------
Mark R Arnesen
Attorney-in-Fact
Exhibit Index
Exhibit
Number Description
4.1. Description of the Registrant's capital stock in Article Sixth of the
Restated Articles of Incorporation of The First American Financial
Corporation, incorporated by reference to Exhibit 3.1 of the Registrant's
Post-Effective Amendment No. 1 to Registration Statement on Form S-4 dated
July 28, 1998.
4.2. Rights Agreement, incorporated by reference to Exhibit 4 of the
Registrant's Registration Statement on Form 8-A dated November 7, 1997.
5. Opinion of counsel regarding legality.
23.1. Consent of independent accountants.
23.2. Consent of counsel (contained in Exhibit 5).
24. Power of Attorney.
EXHIBIT 5
[LETTERHEAD OF WHITE & CASE LLP]
November 20, 1998
The First American Financial Corporation
114 East Fifth Street
Santa Ana, CA 92701
Ladies and Gentlemen:
We have acted as counsel to The First American Financial Corporation, a
California corporation (the "Company"), and are familiar with the proceedings
and documents relating to the proposed registration by the Company, through a
Registration Statement on Form S-3 (the "Registration Statement"), to be filed
by the Company with the Securities and Exchange Commission, of 1,000,000 Common
shares, $1.00 par value, of the Company and an equal number of Rights to
purchase $1.00 par value Series A Junior Participating Preferred Shares
(collectively, the "Shares").
For the purposes of rendering this opinion, we have examined originals
or photostatic copies of certified copies of such corporate records, agreements
and other documents of the Company as we have deemed relevant and necessary as a
basis for the opinion hereinafter set forth.
Based on the foregoing, we are of the opinion that the Shares, when
issued and paid for, will be duly authorized, validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and we further consent to the use of our name under the heading
"Legal Matters" in the Prospectus which is a part of the Registration Statement.
Very truly yours,
/s/ White & Case LLP
EXHIBIT 23.1.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of The First
American Financial Corporation of our report dated February 9, 1998, appearing
on page 21 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/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Costa Mesa, California
November 20, 1998
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of The
First American Financial Corporation, a California corporation (the
"Corporation"), hereby constitute and appoint Parker S. Kennedy and Mark R
Arnesen, and each of them, the true and lawful agents and attorneys-in-fact of
the undersigned, with full power and authority in said agents and
attorneys-in-fact, and in either or both of them, to sign for the undersigned
and in their respective names as directors of the Corporation the Registration
Statement on Form S-3 to be filed with the United States Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933, as amended, and
any amendment or amendments to such Registration Statement, relating to the
Common shares, par value $1.00 per share, of the Corporation to be offered
thereunder, and the undersigned ratify and confirm all acts taken by such agents
and attorneys-in-fact, or either or both of them, as herein authorized. This
Power of Attorney may be executed in one or more counterparts.
Date: October 22, 1998 By:/s/ George L. Argyros
------------------------------
George L. Argyros, Director
Date: October 22, 1998 By:/s/ Gary J. Beban
------------------------------
Gary J. Beban, Director
Date: October 22, 1998 By:/s/ J. David Chatham
------------------------------
J. David Chatham, Director
Date: October 22, 1998 By:/s/ William G. Davis
------------------------------
William G. Davis, Director
Date: October 22, 1998 By:/s/ James L. Doti
------------------------------
James L. Doti, Director
Date: October 19, 1998 By:/s/ Lewis W. Douglas, Jr.
------------------------------
Lewis W. Douglas, Jr., Director
Date: October 22, 1998 By:/s/ Paul B. Fay, Jr.
------------------------------
Paul B. Fay, Jr., Director
Date: October 22, 1998 By:/s/ Dale F. Frey, Jr.
------------------------------
Dale F. Frey, Jr., Director
Date: October 22, 1998 By:/s/ Anthony R. Moiso
------------------------------
Anthony R. Moiso, Director
Date: October 22, 1998 By:/s/ Frank O'Bryan
------------------------------
Frank O'Bryan, Director
Date: October __, 1998 By:
------------------------------
Roslyn B. Payne, Director
Date: October 22, 1998 By:/s/ D. Van Skilling
------------------------------
D. Van Skilling, Director
Date: October 22, 1998 By:/s/ Virginia Ueberroth
------------------------------
Virginia Ueberroth, Director
