As filed with the Securities and Exchange Commission on March 8, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
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)
<TABLE>
<CAPTION>
California 6361 95-1068610
<S> <C> <C>
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation of Organization) Classification Code No.) Identification No.)
</TABLE>
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. [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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================
Proposed Proposed
Title of Each Class of Maximum Maximum Amount of
Securities Amount To Be Aggregate Price Aggregate Registration
To Be Registered Registered Per Unit(1) Offering Price(1) Fee(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
common shares, $1.00 par value 769,584 shares $23.875 $18,373,818 $5,108
=================================================================================================================
</TABLE>
(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 March 4, 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.
<PAGE>
PROSPECTUS
769,584 COMMON SHARES
THE FIRST AMERICAN FINANCIAL CORPORATION
Offer by the Selling Shareholders.
o We have prepared this prospectus so that the shareholders listed on the
table on page 4 may sell their shares.
Share Price
o The sale price of the shares offered with this prospectus may be determined
in any of the following ways.
o By negotiation.
o By a formula.
o By the market price of the shares at the time of sale.
An Investment in Our Company Entails Risk
o Before making an investment in our shares, you should consider carefully
the "Risk Factors" set forth beginning on page 1.
Our Business.
o We provide real estate-related financial and informational services to real
property buyers and mortgage lenders.
Listing.
o The shares offered by this prospectus will be listed for trading on the New
York Stock Exchange.
o The trading symbol for our shares on the New York Stock Exchange is "FAF."
o On , 1999, the closing price of our shares on the New
York Stock Exchange was $ .
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 , 1999.
<PAGE>
(inside cover page)
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. You may read and
copy, upon payment of a fee set by the SEC, any document that we file with the
SEC at any of its public reference rooms in the following locations.
450 Fifth Street, N.W.
Washington, D.C. 20549
Seven World Trade Center
13th Floor, Suite 1300
New York, New York 10048
Citicorp Center
500 West Madison Street
14th Floor, Suite 1400
Chicago, Illinois 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" information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information in this prospectus. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about our
company, including information concerning its financial performance.
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
o Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 1998, June 30, 1998 and September 30, 1998.
o Our 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,
October 22, 1998 and February 10, 1999.
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.
o Any additional documents that we file with the SEC between the date of
this prospectus and the earlier of the following dates.
o The date on which all of the shares offered by this prospectus
are resold by the persons or entities who or which acquire them
from us.
o The date that is one year after the last date on which shares
offered by this prospectus are issued by us.
This prospectus is part of a registration statement on Form S-3 which
we have filed with the SEC. As permitted by SEC rules, this prospectus does not
contain all of the information contained in the registration statement and
accompanying exhibits and schedules filed with the SEC. You may refer to the
registration statement, the exhibits and schedules for more information about us
and our 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.
<PAGE>
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.
Revenues may decline during periods when the demand for our products decreases
Our revenues decrease as the number of real estate transactions in
which our products are purchased decreases. We have found that the number of
real estate transactions in which our products are purchased decreases in the
following situations.
o When mortgage rates are high.
o When the mortgage fund supply is limited.
o When the United States economy is weak.
We believe that this trend will recur.
Earnings may be reduced if acquisition projections are inaccurate
Our earnings have improved since 1991 in large part because of our
acquisition and integration of non-title insurance businesses. These businesses
generally have higher margins than our title insurance businesses. The success
or failure of each of these acquisitions has depended in large measure upon the
accuracy of our projections. Our projections are not always accurate. Inaccurate
projections have historically led to lower than expected earnings.
Business interruption, shutdown and liability because of Year 2000 problems
The following situations could occur as a result of the Year 2000
problem.
o Our information suppliers may be unable to provide us accurate
data in a timely manner.
o We may be unable to process information in an accurate and timely
manner.
o Our customers may be unable to receive and use our products and
services.
Each of these situations could result in the interruption or shutdown
of one or more of our businesses. Additionally, a disruption of
telecommunications and utilities as a result of the Year 2000 problem would most
likely result in the interruption or shutdown of one or more of our businesses.
A business interruption and/or shutdown, if prolonged, would most likely result
in financial loss, potential regulatory action, harm to our reputation and
potential legal liability.
To the extent we package or use erroneous information resulting from
the Year 2000 problem in our products and services, we may incur liability to
others. The degree of liability will depend in large measure upon the harm
caused and the particular product or service involved. For example, an error in
monitoring tax payments for a property under a tax service contract could result
in the imposition of a tax lien. That could lead to a foreclosure proceeding
against the property, which in turn could result in harm to the property owner
and mortgage lender. By way of contrast, in our credit reporting business, we
act as a consumer reporting agency when we use data provided by credit bureaus.
As such, under the Fair Credit Reporting Act, we have no liability for
inaccuracies in information contained in credit reports so long as we use
reasonable procedures to assure the accuracy of such information.
Changes in government regulation could prohibit or limit our operations
Our title insurance, home warranty, thrift, trust and investment
businesses are regulated by various governmental agencies. Many of our other
businesses operate within statutory guidelines. Changes in the applicable
regulatory environment or statutory guidelines could prohibit or restrict our
existing or future operations. Such restrictions may adversely affect our
financial performance.
RECENT DEVELOPMENTS
Effective January 1, 1999, we implemented a change to our revenue
recognition accounting policy for tax service contracts. The new accounting
policy was adopted prospectively and applies to all new loans serviced beginning
January 1, 1999. Prior to January 1, 1999, we recognized revenues from tax
service contracts over the estimated duration of the contracts as the related
servicing costs were estimated to occur. The majority of the servicing costs,
approximately 70%, are incurred in the year the contract is executed, with the
remaining 30% incurred over the remaining service life of the contract. The new
policy provides for a more ratable recognition of revenues, reducing the amount
recognized at the inception of the contract and recognizing it over the expected
service period. The amortization rates applied to recognize the revenues assume
a 10-year contract life and are adjusted to reflect prepayments. The resulting
rates by year (starting with year one) are 32%, 24%, 14%, 9%, 7%, 5%, 4%, 2%, 2%
and 1%. We periodically review our tax service contract portfolio to determine
if there have been changes in contract lives and/or changes in the number and/or
timing of prepayments; accordingly, we may adjust the rates to reflect current
trends. We estimate that adoption of this new policy will result in a decrease
in diluted earnings per share for 1999 of $0.25 to $0.35. This estimate is
heavily dependent on the volume of tax service contracts entered into in 1999.
Assuming the new accounting policy had been consistently applied in prior years,
we would have reported diluted earnings per share of $1.12, $0.42, $0.17, $0.90
and $1.02 for the years ended December 31, 1993, 1994, 1995, 1996 and 1997,
respectively. Actual reported earnings per share for the years ended December
31, 1993, 1994, 1995, 1996 and 1997, respectively, were $1.26, $0.37, $0.16,
$1.00 and $1.16.
SPECIAL NOTE OF CAUTION REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus, any applicable
supplement to this prospectus and the documents incorporated by reference into
this prospectus, may constitute "forward-looking statements" within the meaning
of the federal securities laws. The following or similar words are intended to
identify forward-looking statements in our documents.
o "anticipate"
o "believe"
o "estimate"
o "expect"
o "objective"
o "projection"
o "forecast"
o "goal"
Forward-looking statements are based on our management's expectations
regarding our future economic performance and take into account only the
information currently available. These statements are not statements of
historical fact. Various factors could cause our actual results, performance or
financial condition to differ materially from the expectations expressed or
implied in any forward-looking statements. Some of these factors are listed
below.
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, and the ability of our significant vendors,
suppliers and customers, to achieve Year 2000 compliance.
o Changes in government regulations that are applicable to our
regulated businesses.
o Changes in the demand for our products.
o Degree and nature of our competition.
o An increase in our expenses.
o An increase in the loss ratio of our title insurance business.
o Consolidation among our customers.
We qualify all forward-looking statements contained in our documents
by these cautionary factors.
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
following information.
o The name of each holder of shares that may be sold pursuant to
this prospectus.
o The number of our common shares that each selling shareholder
owns as of such date.
o The number of our common shares owned by each selling shareholder
that may be offered for sale from time to time pursuant to this
prospectus.
o The number of our common shares to be held by each selling
shareholder assuming the sale of all the shares offered hereby.
o 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.
[The rest of this page has been intentionally left blank.]
Number of
Shares to Shares Owned of
Shares Owned of be Offered Record After
Record Prior to for the Completion of
the Offering Selling the Offering
Name of Selling Number % Shareholder's Number %
Shareholder (*) Account
The Ohio State Bar
Foundation 0 0 700,000 0 0
Gary L. Bates 4,000 <1 605 4,000 <1
Allicia Beach 0 0 293 0 0
Laura Beach 0 0 293 0 0
Ray M. Beach, Richard M.
Beach and Susan Beach 0 0 18,307 0 0
Ray M. Beach, Trustee
Beach Family Trust 0 0 3,026 0 0
Richard M. Beach and
Susan J. Beach 0 0 907 0 0
Ryan Beach 0 0 290 0 0
Ronald Douglas Bogner and
Martha Janeane Bogner 0 0 151
Ginger Bowes 0 0 3,026 0 0
Jennie B. Brown 0 0 302 0 0
John C. Brumett and
Florence I. Brumett 0 0 756 0 0
Carolyn F. Cleland 0 0 3,026 0 0
Jack L. Cox and
Raynette Cox 0 0 266 0 0
Janet A. Ford and Donald
P. Ford (a) 4,400 <1 151 4,400 <1
G&O Mortgage Co. 0 0 4,539 0 0
Herbert H. Giese and Lois
L. Giese 0 0 3,026 0 0
Cheryel Jacomella 0 0 1,513 0 0
Frederick R. Jensen, Sr.
And Louise C. Jensen 0 0 3,026 0 0
Michael G. Kostanecki and
Joanna E. Kostanecki (b) 7,429 <1 302 7,429 <1
Albert J. Lagomarsino and
Helen M. Lagomarsino (c) 108,747 <1 605 108,747 <1
Robert D.Levy 0 0 7,943 0 0
Josephine Lippert 441 <1 302 441 <1
Ronald Luzzi and Cindy
Luzzi 0 0 30 0 0
Dorothy Lynch (d) 11,345 <1 151 11,345 <1
Sulo Matalamaki and Ila
M. Matalamaki 0 0 3,026 0 0
Wayne Miller and Donna Miller 0 0 302 0 0
James C. Monroe 0 0 605 0 0
Robert D. Musante (e) 50,000 <1 605 50,000 <1
Debra Niesen and
Fred Niesen (f) 0 0 302 0 0
Gary L. Nix and John A. Bogner 0 0 151 0 0
Lee F. Persico and Evelyn D.
Persico 0 0 378 0 0
Sandra Phillips, Trustee
Sandra Phillips 1998
Revocable Trust
dated July 31, 1998 0 0 263 0 0
Mary A. Ralphs 0 0 605 0 0
Leslie E. Ryan and Pricilla Ryan 0 0 1,513 0 0
Edith M. Saxon, Trustee
The Herbert E. Saxon and
Edith Saxon Family Trust 0 0 1,210 0 0
James L. Silver and
Alfreida M. Silver 0 0 302 0 0
Arnold B. Slotte and
Judith Slotte (g) 1,000 <1 302 1,000 <1
Terry D. Strickland and
Bernice C. Strickland, Trustees
The Strickland Family (h)
1997 Trust 7,287 <1 4,765 7,287 <1
Lloyd J. Venturi 0 0 302 0 0
Don R. Wangberg and
Bonnie Wangberg (i) 109,608 <1 302 109,308 <1
Anna S. Wong 0 0 1,815 0 0
- ---------------------
(*) This prospectus may also be used by the donees and pledgees of each named
selling shareholder for selling shares received from the named selling
shareholder after the date of this prospectus.
(a) Ms. Ford is an Assistant Vice President of our company or one of its
subsidiaries.
(b) Ms. Kostanecki is an employee of our company or one of its subsidiaries.
(c) Mr. Lagomarsino is a Regulatory Vice President of our company or one of
its subsidiaries.
(d) Ms. Lynch is an Assistant Vice President of our company or one of its
subsidiaries.
(e) Mr. Musante is a Vice President of our company or one of its subsidiaries.
(f) Ms. Niesen is an employee of our company or one of its subsidiaries.
(g) Mr. Slotte is a Vice President of our company or one of its subsidiaries.
(h) Mr. Stickland is a Vice President of our company or one of its
subsidiaries.
(i) Mr. Wangberg is a Regulatory Vice President of our company or one of its
subsidiaries.
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from
time to time by the selling shareholders. 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. The sale price may be the
then prevailing market price or a price related thereto, a price set by formula,
which may be subject to change or a negotiated price. The shares may be sold,
without limitation, by one or more of the following means of distribution.
o 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.
o Purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus.
o A distribution in accordance with the rules of the New York Stock
Exchange.
o Ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
o 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 a hedging 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 the 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
liabilities resulting therefrom. Among these liabilities for which
indemnification may be provided are those arising under the Securities Act of
1933.
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 the following dates.
o The date one year from the date of issuance of such shares.
o Such date 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.
***
<PAGE>
(outside back cover page)
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.
--------------------------
Prospectus
769,584 Common Shares
THE FIRST AMERICAN
FINANCIAL CORPORATION
Table of Contents
Where You Can Find More Information;
Incorporation by Reference.................(i)
Risk Factors.................................1
Recent Developments..........................2
Special Note of Caution Regarding Dated , 1999
Forward-Looking Statements...................2
Use of Proceeds..............................3
Selling Shareholders.........................3
Plan of Distribution.........................7
Legal Matters................................9
Experts......................................9
<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.................................... $5,108
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................................................. $26,608
=======
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,1997 Directors' Stock
Plan, 401(k) Savings Plan, Pension Plan, Pension Restoration Plan and Employee
Profit and Stock Ownership Plan (for purposes of this paragraph, 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 (for purposes of this
paragraph, the "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 accountant.
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.
* * *
<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 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 March 8, 1999.
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: March 8, 1999 By: /s/ D.P. Kennedy
-----------------
D.P. Kennedy, Chairman and Director
Date: March 8, 1999 By: /s/ Parker S. Kennedy
----------------------
Parker S. Kennedy, President and Director
Date: March 8, 1999 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
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date: By:
--------------------------------------
George L. Argyros, Director
Date: March 8, 1999 By: /s/ Gary J. Beban*
--------------------------------------
Gary J. Beban, Director
Date: March 8, 1999 By: /s/ J. David Chatham*
--------------------------------------
J. David Chatham, Director
Date: By:
--------------------------------------
William G. Davis, Director
Date: March 8, 1999 By: /s/ James L. Doti*
--------------------------------------
James L. Doti, Director
Date: March 8, 1999 By: /s/ Lewis W. Douglas, Jr.*
--------------------------------------
Lewis W. Douglas, Jr., Director
Date: March 8, 1999 By: /s/ Paul B. Fay, Jr.*
--------------------------------------
Paul B. Fay, Jr., Director
Date: March 8, 1999 By: /s/ Dale F. Frey*
--------------------------------------
Dale F. Frey, Director
Date: By:
--------------------------------------
Anthony R. Moiso, Director
Date: March 8, 1999 By: /s/ Frank O'Bryan*
--------------------------------------
Frank O'Bryan, Director
Date: March 8, 1999 By: /s/ Roslyn B. Payne, Director*
--------------------------------------
Roslyn B. Payne, Director
Date: March 8, 1999 By: /s/ D. Van Skilling*
--------------------------------------
D. Van Skilling, Director
Date: March 8, 1999 By: /s/ Virginia Ueberroth*
--------------------------------------
Virginia Ueberroth, Director
*By:/s/ Mark R Arnesen
----------------------------
Mark R Arnesen
Attorney-in-Fact
<PAGE>
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]
March 8, 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 769,584 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
March 8, 1999
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: December 10, 1998 By:
------------------------------
George L. Argyros, Director
Date: December 10, 1998 By: /s/ Gary J. Beban
------------------------------
Gary J. Beban, Director
Date: December 10, 1998 By: /s/ J. David Chatham
-------------------------------
J. David Chatham, Director
Date: December 10, 1998 By:
------------------------------
William G. Davis, Director
Date: December 10, 1998 By: /s/ James L. Doti
------------------------------
James L. Doti, Director
Date: December 10, 1998 By: /s/ Lewis W. Douglas, Jr.
------------------------------
Lewis W. Douglas, Jr., Director
Date: December 10, 1998 By: /s/ Paul B. Fay, Jr.
------------------------------
Paul B. Fay, Jr., Director
Date: December 10, 1998 By: /s/ Dale F. Frey, Jr.
------------------------------
Dale F. Frey, Jr., Director
Date: December 10, 1998 By:
------------------------------
Anthony R. Moiso, Director
Date: December 10, 1998 By:/ s/ Frank O'Bryan
-------------------------------
Frank O'Bryan, Director
Date: December 10, 1998 By: /s/Roslyn B. Payne, Director*
------------------------------
Roslyn B. Payne, Director
Date: December 10, 1998 By: /s/ D. Van Skilling
------------------------------
D. Van Skilling, Director
Date: December 10, 1998 By: /s/ Virginia Ueberroth
------------------------------
Virginia Ueberroth, Director
