As filed with the Securities and Exchange Commission on July 16, 2001
Registration No. [___]-[_____]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE FIRST AMERICAN CORPORATION
(Exact Name of Registrant as Specified in its Charter)
California 95-1068610
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
1 First American Way
Santa Ana, California 92707-5913
(714) 800-3000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Mark R Arnesen, Esq. With Copy to:
Secretary Neil W. Rust, Esq.
1 First American Way White & Case LLP
Santa Ana, California 92707-5913 633 West Fifth Street
(714) 800-3000 Los Angeles, California 90071
(Name, Address, Including Zip Code, and (213) 620-7700
Telephone Number, Including Area Code, of
Agent For Service)
Approximate date of commencement of proposed sale to
the public: From time to time 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 interest 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 of 1933, please check
the following box and list the Securities Act of 1933 registration statement
number of the earlier effective registration statement for the same offering.
/ /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
=========================== ===================== ======================= ===================== =======================
Proposed Proposed
Title of Each Class of Maximum Per Maximum
Securities To Be Amount To Be Aggregate Price Aggregate Amount of
Registered Registered Per Unit Offering Price Registration Fee(1)
--------------------------- --------------------- ----------------------- --------------------- -----------------------
4.50% Senior $210,000,000 100% $210,000,000 $52,500
Convertible
Debentures Due 2008
--------------------------- --------------------- ----------------------- --------------------- -----------------------
Common shares, 7,500,000(2) N/A N/A N/A
$1.00 par value per
share
=========================== --------------------- ----------------------- --------------------- =======================
Total $52,500(3)
=========================== ===================== ======================= ===================== =======================
(1) The common shares registered hereunder are issuable upon conversion of
the senior convertible debentures registered hereunder. Pursuant to
Rule 457(i) under the Securities Act, there is no filing fee with
respect to the common shares issuable upon conversion of the exercise
of the conversion privilege.
(2) Plus such additional indeterminate number of shares as may become
issuable upon conversion of the senior convertible debentures
registered hereunder by means of adjustment to the conversion price
applicable thereto.
(3) Pursuant to Rule 457(p) of the Securities Act of 1933, this
registration fee is to be offset by the $52,800.00 registration fee
paid by the applicant for the Registration Statement on Form S-3
initially filed by The First American Corporation on August 14, 2000
with registration number 333-43676, as amended September 15, 2000,
September 20, 2000 and October 4, 2000.
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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, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
================================================================================
The information contained in this prospectus is not complete and may be changed.
These securities may not be sold until the registation 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 the offer or sale is not permitted.
Subject to completion, dated July 16, 2001
PROSPECTUS
[First American Logo]
THE FIRST AMERICAN CORPORATION
----------------------------
$210,000,000 Principal Amount of
4.50% Senior Convertible Debentures Due 2008
(Interest Payable April 15 and October 15)
----------------------------
----------------------------
7,500,000 Common Shares
(subject to adjustment)
----------------------------
On April 24, 2001, we issued and sold $210,000,000 principal amount of
our 4.50% senior convertible debentures due 2008 in a private offering. The
initial purchasers of the senior convertible debentures subsequently transferred
their senior convertible debentures to various other holders. In connection with
the private offering, we agreed to register the senior convertible debentures
and the common shares into which the senior convertible debentures are
convertible to facilitate secondary trading by these holders, who we refer to as
selling securityholders. This prospectus is part of a registration statement
that fulfills that obligation. All securities offered by this prospectus are
offered by selling securityholders. The principal terms of the senior
convertible debentures include the following:
o Aggregate Principal Amount: $210,000,000
o Interest Rate: 4.50% per year
o Maturity Date: April 15, 2008, unless earlier redeemed
o Conversion Rate: $28.00 in principal amount per
common share, for a total of
7,500,000 common shares
(subject to adjustment)
In addition, at certain times and under certain circumstances some or all of the
senior convertible debentures may be redeemed by us and upon a change in control
of The First American Corporation, holders of the senior convertible debentures
will have the right to require us to repurchase the senior convertible
debentures. You can find a more extensive description of the senior convertible
debentures beginning on page __.
The senior convertible debentures are not secured and are senior to
all of our existing or future indebtedness that is by its terms expressly
subordinated to the senior convertible debentures. The senior convertible
debentures will rank equally with all of our senior unsecured indebtedness,
including approximately $99,504,000 of 7.55% senior debentures maturing in 2028,
but will be effectively subordinate to the indebtedness
of our subsidiaries. The senior convertible debentures do not restrict us or our
subsidiaries from incurring additional debt.
The senior convertible debentures have been designated eligible for
trading on the Private Offerings, Resales and Trading through Automated
Linkages, or PORTAL, Market. However, any senior convertible debentures sold
under this prospectus will no longer trade in the PORTAL Market. Our common
shares are traded on the New York Stock Exchange under the trading symbol "FAF."
The securities offered by this prospectus may be offered in negotiated
transactions or otherwise, at negotiated prices or at the market prices
prevailing at the time of sale.
--------------------
YOU SHOULD READ CAREFULLY THE "RISK FACTORS"
BEGINNING ON PAGE ___ BEFORE DECIDING
WHETHER TO INVEST IN OUR SENIOR CONVERTIBLE DEBENTURES OR COMMON SHARES.
--------------------
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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.
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This prospectus is dated , 2001
TABLE OF CONTENTS
Prospectus Summary.....................................
Risk Factors...........................................
Ratio of Earnings to Fixed Charges.....................
Use of Proceeds........................................
Description of Senior Convertible Debentures...........
Description of Capital Stock...........................
Selling Securityholders................................
Plan of Distribution...................................
About this Prospectus..................................
Documents Incorporated by Reference....................
Special Note of Caution Regarding
Forward-Looking Statements..........................
Legal Matters..........................................
Experts................................................
PROSPECTUS SUMMARY
This summary highlights information described more fully elsewhere in
this prospectus. It may not contain all the information you should consider
before investing in our senior convertible debentures or common shares. You
should read this entire prospectus and the registration statement of which this
prospectus is a part before making an investment decision.
The First American Corporation
We are a leading provider of business information, providing products
and services in connection with the major economic events in a consumer's life.
We provide information and related services in connection with:
o Getting a job
o Renting an apartment
o Buying a car
o Buying a house, boat or airplane
o Arranging a mortgage
o Opening or buying a business
o Retirement
The following is a list of our major products and services, categorized by
business segment:
Title Insurance and Services
--------------------------------------------------------------------------------
o Equity loan services o Subdivision title insurance
o Lender services o 1031 tax-deferred exchange services
o National/Commercial title insurance o Title and escrow systems
o Residential title insurance o Aircraft and vessel title insurance
Real Estate Information and Services
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o Default management services o Mortgage origination/servicing
o Credit reporting and information software systems
management o Appraisal and property valuation
o Residential and commercial real o Property characteristic and
estate tax reporting and valuation information
valuation services o Title plant and document imaging
o Flood determination and compliance services
o Mortgage document services
o Field inspections
Consumer Information and Services
--------------------------------------------------------------------------------
o Pre-employment screening o Banking services
o Resident screening o Consumer credit reports
o Specialized credit reporting o Home warranty
o Sub-prime consumer information o Investment services
o Vehicle information and insurance o Property and casualty insurance
tracking
o Trust services
Our principal executive office is located at 1 First American Way,
Santa Ana, California 92707-5913, and our telephone number is (714) 800-3000.
1
The Senior Convertible Debentures
Securities Offered........................ $210,000,000 in aggregate principal amount of 4.50% senior
convertible debentures due 2008. The senior convertible debentures
are convertible into our common shares. Each of our common shares
includes a right to purchase a fraction of a Series A Participating
Preferred Share under certain circumstances. See "Description of
Capital Stock--Rights to Purchase Preferred Shares."
Maturity.................................. April 15, 2008, unless earlier redeemed, repurchased or converted.
Interest Payment Dates.................... April 15 and October 15 of each year, beginning October 15, 2001.
Interest Rate............................. 4.50% per year, subject to adjustment under certain circumstances.
See "Description of Senior Convertible Debentures--Interest."
Optional Conversion by Holders............ Holders may convert the senior convertible debentures into our common
shares at any time prior to or on the first business day preceding
April 15, 2008, unless previously redeemed or repurchased, initially
at a conversion price of $28.00 per common share (equal to a
conversion rate of 35.7143 shares per $1,000 principal amount of
senior convertible debentures), subject to adjustment under certain
circumstances. See "Description of Senior Convertible Debentures--Conversion
Rights."
Optional Redemption by First
American.................................. On or after April 15, 2004, we may redeem some or all of the senior
convertible debentures at the redemption prices, plus accrued and
unpaid interest to but excluding the redemption date, set forth under
"Description of Senior Convertible Debentures--Optional Redemption by
First American."
Right of Holders to Require
Repurchase................................ Each holder of the senior convertible debentures may require us to
repurchase some or all of the holder's senior convertible debentures
at 100% of their principal amount plus accrued and unpaid interest in
certain circumstances involving a change of control. See "Description
of Senior Convertible Debentures--Repurchase at Option of Holders upon
a Change of Control."
Form, Denomination and Registration....... The senior convertible debentures have been issued in fully
registered form in denominations of $1,000.
Senior convertible debentures sold by the selling securityholders
pursuant to the registration statement of which this prospectus
forms a part will be represented by a global senior convertible
debenture deposited with the trustee as custodian for The Depository
Trust Company and registered in the name of Cede & Co., DTC's nominee.
Investors may hold their interests in the global senior convertible
debenture directly through DTC if they are DTC participants, or
indirectly through organizations that are DTC participants.
Investors who purchase senior convertible debentures in offshore
transactions in reliance on Regulation S under the Securities Act
may hold their interests in the global senior convertible debenture directly
2
through the Euroclear System and Clearstream Banking, if
they are participants in these systems, or indirectly through
organizations that are participants in these systems. Euroclear and/or
Clearstream hold interests in the global senior convertible debenture
on behalf of their participants through their respective
depositaries, which in turn hold the interests in the global senior
convertible debenture in customers' securities accounts in the
depositaries' names on the books of DTC.
See "Description of Senior Convertible Debentures--Form,
Denomination and Registration."
Use of Proceeds........................... We will not receive any of the proceeds from the sale of the
securities covered by this prospectus.
Absence of a Public Market for the
Senior Convertible Debentures............. The senior convertible debentures are new securities. We cannot
assure you that any active or liquid market will develop or be
sustained for the senior convertible debentures. See "Plan of
Distribution."
Trading................................... The senior convertible debentures have been declared eligible for
trading in the Private Offerings, Resales and Trading through
Automated Linkages market, known as PORTAL. However, any senior
convertible debentures sold under this prospectus will no longer
trade in the PORTAL market.
NYSE Symbol for Our Common
Shares.................................... Our common shares are traded on the New York Stock Exchange under
the trading symbol "FAF."
3
RISK FACTORS
You should carefully consider the risks described below and other
information contained in this prospectus and the registration statement of which
this prospectus is a part before making an investment decision. We cannot assure
you that any of the events discussed in the risk factors below will not occur.
If they do, our business, financial condition or results of operations could be
materially adversely affected. In such case, the trading price of our securities
could decline, and you might lose all or part of your investment.
Our revenues may decline during periods when the demand for our
products decreases
Our revenues derived from real-estate related products 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; and
o when the United States economy is weak.
We believe that this trend will recur.
As a holding company, we depend on distributions from our subsidiaries, and if
distributions from our subsidiaries are materially impaired, our ability to pay
interest on or repay principal of the senior convertible debentures and to
declare and pay dividends on our common shares may be adversely affected
We are a holding company whose primary assets are the securities of our
operating subsidiaries. Our ability to pay interest on and repay principal of
the senior convertible debentures and to pay dividends on our common shares is
dependent on the ability of our subsidiaries to pay dividends or repay funds to
us. If our operating subsidiaries are not able to pay dividends or repay funds
to us, we may not be able to pay interest or repay principal on the senior
convertible debentures or declare and pay dividends on our common shares.
Moreover, pursuant to insurance and other regulations under which our insurance
subsidiaries operate, the amount of dividends, loans and advances available to
us from our regulated subsidiaries is limited. Under such regulations, the
maximum amount of dividends, loans and advances available to us from our
insurance subsidiaries in 2001 is $138.2 million.
As we are a holding company, the senior convertible debentures will effectively
be junior to all prior claims of creditors of our subsidiaries
Our status as a shareholder of our subsidiaries means that we will be
subject to the prior claims of creditors of our subsidiaries, except to the
extent that we have a claim as a creditor. For example, we would be a creditor
of a subsidiary if we make a loan to that subsidiary. As a result, the senior
convertible debentures will effectively be junior to all existing and future
liabilities and obligations of our subsidiaries and you should look only to the
assets of our company for payments on the senior convertible debentures. As of
December 31, 2000, our subsidiaries had liabilities and obligations of
approximately $1.07 billion to creditors other than us.
Changes in government regulation could prohibit or limit our operations
Our title insurance, property and casualty 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.
4
Current legal proceedings may have a material adverse effect on our financial
condition or results of operations
On May 19, 1999, the State of California and the controller and
insurance commissioner of the State of California filed a class action suit in
the state court in Sacramento. Initially, the action sought to certify as a
class of defendants all title and escrow companies doing business in California
from 1970 to the present, including certain of our subsidiaries. The plaintiffs
allege that the defendants:
o failed to give unclaimed property to the State of California on a
timely basis;
o charged California home buyers and other escrow customers fees for
services that were never performed or which cost less than the
amount charged; and
o devised and carried out schemes, known as earnings credits, with
financial institutions to receive interest on escrow funds
deposited by defendants with financial institutions in demand
deposits.
Since the initial filing of the suit, the California Attorney General's
Office, on behalf of the State, the controller and the insurance commissioner,
indicated that it would not seek to certify a class of defendants, but would
instead amend its suit to name an unspecified number of title underwriters and
underwritten title companies. To date, the Attorney General has neither amended
the suit, nor to our knowledge taken steps to progress with it, including the
service of process on any party. The Attorney General, however, has entered into
settlement discussions with various title insurance underwriters, including
certain of our subsidiaries. Additionally, the Attorney General indicated that
it will address issues pertaining to escheat obligations through routine audits
conducted by the controller's office, rather than through litigation.
Subsequent to the filing of this lawsuit, First American Title
Insurance Company, a subsidiary of ours, was named and served as a defendant in
two private class actions in California courts. The allegations in those actions
include some, but not all, of the allegations contained in the lawsuit discussed
above. The private class actions independently seek injunctive relief,
attorneys' fees, damages and penalties in unspecified amounts. One of the
private class actions has been dismissed. The remaining private class action has
not progressed beyond limited document production.
An adverse decision in these lawsuits may have a material adverse
effect on our financial condition or results of operations.
Certain provisions of our charter and our rights plan may make a takeover of us
difficult even if such takeover could be beneficial to some of our shareholders
Our restated articles of incorporation authorize the issuance of "blank
check" preferred stock with such designations, rights and preferences as may be
determined from time to time by our board of directors. Accordingly, our board
is empowered, without further shareholder action, to issue shares or series of
preferred stock with dividend, liquidation, conversion, voting or other rights
that could adversely affect the voting power or other rights, including the
ability to receive dividends, of our common shareholders. The issuance of such
preferred stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control. In conjunction with
the rights plan discussed below, we have authorized the issuance of our Series A
Junior Participating Preferred Shares. Although we have no present intention of
issuing any additional shares or series of preferred stock, we cannot guarantee
that we will not make such an issuance in the future.
We have adopted a rights plan which could, alone or in combination with
our restated articles of incorporation, discourage transactions involving actual
or potential changes of control, including transactions that otherwise could
involve payment of a premium over prevailing market prices to our shareholders
for their common shares.
5
Our ability to repurchase the senior convertible debentures upon a change of
control may be limited
In certain circumstances involving a change of control, you may
require us to repurchase some or all of your senior convertible debentures. We
cannot assure you that we will have sufficient financial resources at such time
or would be able to arrange financing to pay the repurchase price of the senior
convertible debentures. Our ability to repurchase the senior convertible
debentures in such event may be limited by law or by the terms of such
agreements as we may enter into from time to time. We may be required to
refinance our other debts or incur new debts in order to make such payments.
You may not be able to sell your senior convertible debentures
The senior convertible debentures are not currently traded on any
securities exchange. Although the senior convertible debentures have been
declared eligible for trading in the PORTAL market, any senior convertible
debentures sold under this prospectus will no longer trade in the PORTAL market.
We cannot predict whether an active trading market for the senior convertible
debentures will develop or be sustained. If an active market for the senior
convertible debentures fails to develop or be sustained, the trading price of
the senior convertible debentures could fall. If an active trading market were
to develop, the senior convertible debentures could trade at prices that may be
lower than the initial offering price. Whether or not the senior convertible
debentures trade at lower prices depends on many factors, including:
o prevailing interest rates;
o the markets for similar securities;
o general economic conditions; and
o our financial condition, historical financial performance and
future prospects.
RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges is set forth below
for each of the periods indicated:
Three Months
Year Ended December 31 Ended March 31
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Earnings to Fixed Charges........ 5.80 5.25 9.95 4.59 3.72 3.70
For purposes of computing the ratio of earnings to fixed charges,
earnings represent net income before cumulative effect of a change in accounting
principle plus applicable income taxes, minority interests and fixed charges.
Fixed charges represent interest expense, capitalized interest and the interest
factor of rent expense.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the securities
covered by this prospectus.
DESCRIPTION OF SENIOR CONVERTIBLE DEBENTURES
We have issued the senior convertible debentures under an indenture
between us and Wilmington Trust Company, as trustee. The terms of the senior
convertible debentures include those provided in the indenture and those
provided in the registration rights agreement, which we have entered into with
the initial purchasers.
The following description is only a summary of the material provisions
of the senior convertible debentures, the indenture and the registration rights
agreement. We urge you to read these documents in their entirety because they,
and not this description, define your rights as holders of these senior
convertible debentures. You may request copies of these documents at our address
set forth under the caption "Prospectus Summary" above.
When we refer to First American in this section, we refer only to The
First American Corporation, a corporation organized under the laws of
California, and not its subsidiaries.
6
Brief Description of the Senior Convertible Debentures
The senior convertible debentures are:
o limited to $210,000,000;
o general unsecured senior obligations;
o convertible into our common shares at a conversion price of
$28.00 per share, subject to adjustment as described under
"--Conversion Rights";
o redeemable at our option in whole or in part beginning on April
15, 2004 upon the terms and at the redemption prices set forth
under "--Optional Redemption by First American," plus accrued and
unpaid interest;
o subject to repurchase by us at your option if a change of control
of First American, as described under "--Repurchase at Option of
Holders upon a Change of Control" below, occurs; and
o due on April 15, 2008, unless earlier redeemed by us at our
option or converted or repurchased by us at your option.
The indenture does not contain any financial covenants and does not
restrict us from paying dividends, incurring other indebtedness or issuing or
repurchasing our other securities. The indenture also does not protect you in
the event of a highly leveraged transaction or a change of control of First
American except to the extent described under "--Repurchase at Option of Holders
upon a Change of Control" below.
You may present definitive senior convertible debentures for
conversion, registration of transfer and exchange, without service charge, at
our office or agency in New York City, which will initially be the office or
agency of the trustee or its correspondent in New York City. For information
regarding conversion, registration of transfer and exchange of the global senior
convertible debenture, see "--Form, Denomination and Registration."
Interest
The senior convertible debentures bear interest from April 24, 2001 at
the rate of 4.50% per year, subject to adjustment upon the occurrence of a Reset
Transaction. See "--Interest Rate Adjustments" below. We will pay interest
semiannually in arrears on April 15 and October 15 of each year to the holders
of record at the close of business on the preceding April 1 and October 1,
respectively, beginning October 15, 2001. There are two exceptions to the
preceding sentence:
(1) In general, we will not pay interest accrued and unpaid on any
senior convertible debenture that is converted into our common shares. See
"--Conversion Rights." Consequently, if a holder of senior convertible
debentures converts after a record date for an interest payment but prior
to the corresponding interest payment date, it will receive on the interest
payment date interest accrued and unpaid on such senior convertible
debentures, notwithstanding the conversion of such senior convertible
debentures prior to such interest payment date, because such holder will
have been the holder of record on the corresponding record date. However,
at the time such holder surrenders such senior convertible debentures for
conversion, it must pay us an amount equal to the interest that has accrued
and will be paid on the interest payment date. However, the preceding
sentence does not apply if we call the senior convertible debentures for
redemption, and the redemption date is after a record date for an interest
payment but prior to the corresponding interest payment date and a holder
chooses to convert such senior convertible debentures prior to the
redemption date. In such case, the holder will not be required to pay us,
at the time it surrenders such senior convertible debentures for
conversion, the amount of interest on such senior convertible debentures it
will receive on the interest payment date.
(2) We will pay interest to a person other than the holder of record
on the record date if we redeem the senior convertible debentures on a date
that is after the record date and prior to the corresponding interest
7
payment date. In this instance, we will pay interest accrued and unpaid on
the senior convertible debentures being redeemed to but not including the
redemption date to the same person to whom we pay the principal of such
senior convertible debentures.
Except as provided below, we will pay interest on:
o the global senior convertible debenture to DTC in immediately
available funds;
o any definitive senior convertible debentures having an aggregate
principal amount of $5,000,000 or less by check mailed to the
holders of these senior convertible debentures; and
o any definitive senior convertible debentures having an aggregate
principal amount of more than $5,000,000 by wire transfer in
immediately available funds at the election of the holders of
these senior convertible debentures.
At maturity, we will pay interest on the definitive senior convertible
debentures at our office or agency in New York City, which initially will be the
office or agency of the trustee or its correspondent in New York City.
We will pay principal and premium, if any, on:
o the global senior convertible debenture to DTC in immediately
available funds; and
o any definitive senior convertible debentures at our office or
agency in New York City, which initially will be the office or
agency of the trustee or its correspondent in New York City.
Interest generally will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Interest Rate Adjustments
If a Reset Transaction occurs, the interest rate will be adjusted to
equal the Adjusted Interest Rate from the effective date of such Reset
Transaction to, but not including, the effective date of any succeeding Reset
Transaction.
A "Reset Transaction" means:
o a merger, consolidation or statutory share exchange to which the
entity that is the issuer of the common shares into which the
senior convertible debentures are then convertible is a party;
o a sale of all or substantially all the assets of that entity;
o a recapitalization of those common shares; or
o a transaction or distribution described in clause (4) of the
seventh paragraph under "--Conversion Rights" below, after the
effective date of which transaction or distribution the senior
convertible debentures would be convertible into:
o shares of an entity the common stock of which had a dividend
yield for the four fiscal quarters of such entity
immediately preceding the public announcement of the
transaction or distribution that was more than 2.5
percentage points higher than the dividend yield on our
common shares (or other common stock then issuable upon
conversion of the senior convertible debentures) for the
four fiscal quarters preceding the public announcement of
the transaction or distribution; or
o shares of an entity that announces a dividend policy prior
to the effective date of the transaction or distribution
which policy, if implemented, would result in a dividend
yield on that entity's common stock for the next four fiscal
quarters that would result in such a 2.5 percentage point
increase over the dividend yield on our common shares (or
other common stock then issuable upon conversion of the
senior convertible debentures) for the four fiscal quarters
preceding such announcement.
8
The "Adjusted Interest Rate" with respect to any Reset Transaction
will be the rate per year that is the arithmetic average of the rates quoted by
two dealers engaged in the trading of convertible securities selected by us or
our successor as the rate at which interest should accrue so that the fair
market value, expressed in dollars, of a senior convertible debenture
immediately after the later of:
o the public announcement of the Reset Transaction; or
o the public announcement of a change in dividend policy in connection
with the Reset Transaction,
will most closely equal the average Trading Price of a senior convertible
debenture for the 20 trading days preceding the date of public announcement of
the Reset Transaction. However, the Adjusted Interest Rate will not be less than
4.50% per year.
For purposes of the definition of Reset Transaction, the dividend
yield on any security for any period means the dividends paid or proposed to be
paid pursuant to an announced dividend policy on the security for that period
divided by, if with respect to dividends paid on that security, the average
Trading Price of the security during that period and, if with respect to
dividends proposed to be paid on the security, the Trading Price of such
security on the effective date of the related Reset Transaction.
The "Trading Price" of a security on any date of determination means:
o the closing sale price (or, if no closing sale price is reported,
the last reported sale price) of a security (regular way) on the
New York Stock Exchange on that date;
o if that security is not listed on the NYSE on that date, the
closing sale price as reported on that date by the Nasdaq
National Market;
o if that security is not listed on the NYSE and not quoted on the
Nasdaq National Market on that date, the closing sale price as
reported on that date in the composite transactions for the
principal U.S. securities exchange on which that security is
listed;
o if that security is not so reported, the last price quoted by
Interactive Data Corporation for that security on that date or,
if Interactive Data Corporation is not quoting such price, a
similar nationally recognized quotation service selected by us;
o if that security is not so quoted, the average of the mid-point
of the last bid and ask prices for that security on that date
from at least two dealers recognized as market-makers for that
security selected by us for this purpose; or
o if that security is not so quoted, the average of that last bid
and ask prices for that security on that date from a dealer
engaged in the trading of convertible securities selected by us
for this purpose.
Conversion Rights
You may convert any outstanding senior convertible debentures (or
portions of outstanding senior convertible debentures) into our common shares,
initially at the conversion price of $28.00 per share (equal to a conversion
rate of 35.7143 shares per $1,000 principal amount of senior convertible
debentures). The conversion price is, however, subject to adjustment as
described below. You will not receive fractional common shares upon conversion
of senior convertible debentures. Instead, we will pay a cash adjustment based
upon the Trading Price of our common shares on the business day immediately
preceding the conversion date. You may convert the senior convertible debentures
only in denominations of $1,000 and whole multiples of $1,000.
You may exercise conversion rights at any time prior to the close of
business on the business day preceding the maturity date of the senior
convertible debentures. However, if you are a holder of senior convertible
debentures that have been called for redemption, you must exercise your
conversion rights prior to the close of business on the second business day
preceding the redemption date, unless we default in payment of the
9
redemption price. In addition, if you have exercised your right to require us to
repurchase your senior convertible debentures because a change of control has
occurred, you may convert your senior convertible debentures into our common
shares only if you withdraw your notice and convert your senior convertible
debentures prior to the close of business on the business day immediately
preceding the change of control repurchase date.
Except as provided below, if you convert your senior convertible
debentures into our common shares on any day other than an interest payment
date, you will not receive any interest that has accrued on those senior
convertible debentures. By delivering to the holder the number of common shares
issuable upon conversion, determined by dividing the principal amount of the
senior convertible debentures being converted by the conversion price, together
with a cash payment, if any, in lieu of fractional shares, we will satisfy our
obligation with respect to the senior convertible debentures. That is, accrued
but unpaid interest will be deemed to be forfeited. If you convert after a
record date for an interest payment but prior to the corresponding interest
payment date, you will receive on the interest payment date interest accrued and
unpaid on such senior convertible debentures, notwithstanding the conversion of
such senior convertible debentures prior to such interest payment date, because
you will have been the holder of record on the corresponding record date.
However, at the time you surrender such senior convertible debentures for
conversion, you must pay us an amount equal to the interest that has accrued and
will be paid on the senior convertible debentures being converted on the
interest payment date. However, the preceding sentence does not apply to senior
convertible debentures that have been converted after being called by us for
redemption. Accordingly, if we call your senior convertible debentures for
redemption, and the redemption date is after a record date for an interest
payment but prior to the corresponding interest payment date and you choose to
convert your senior convertible debentures prior to the redemption date, you
will not be required to pay us at the time you surrender such senior convertible
debentures for conversion the amount of interest on such senior convertible
debentures you will receive on the date that has been fixed for redemption.
Furthermore, if we call your senior convertible debentures for redemption on a
date that is prior to a record date for an interest payment date, and prior to
the redemption date you choose to convert your senior convertible debentures,
you will receive on the date that has been fixed for redemption the amount of
interest you would have received if you had not converted your senior
convertible debentures.
You will not be required to pay any taxes or duties relating to the
issuance or delivery of our common shares if you exercise your conversion
rights, but you will be required to pay any tax or duty which may be payable
relating to any transfer involved in the issuance or delivery of the common
shares in a name other than yours. Certificates representing common shares will
be issued or delivered only after all applicable taxes and duties, if any,
payable by you have been paid.
To convert interests in the global senior convertible debenture, you
must deliver to DTC the appropriate instruction form for conversion pursuant to
DTC's conversion program. If application has been made to make the underlying
common shares eligible for trading on Euroclear or Clearstream, the normal
operating procedures of Euroclear or Clearstream, as applicable, shall be
followed. To convert a definitive senior convertible debenture, you must:
o complete the conversion notice on the back of the senior
convertible debenture (or a facsimile thereof);
o deliver the completed conversion notice and the senior
convertible debentures to be converted to the specified office of
the conversion agent;
o pay all funds required, if any, relating to interest on the
senior convertible debentures to be converted to which you are
not entitled, as described in the second preceding paragraph; and
o pay all taxes or duties, if any, as described in the preceding
paragraph.
The conversion date will be the date on which all of the foregoing
requirements have been satisfied. The senior convertible debentures will be
deemed to have been converted immediately prior to the close of business on the
conversion date. A certificate for the number of common shares into which the
senior convertible debentures are converted (and cash in lieu of any fractional
shares) will be delivered as soon as practicable on or after the conversion
date.
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We will adjust the initial conversion price for certain events,
including:
(1) issuances of our common shares as a dividend or distribution on our
common shares;
(2) certain subdivisions, splits and combinations of our common shares;
(3) issuances to all holders of our common shares of rights or warrants to
purchase our common shares (or securities convertible into our common
shares) at less than (or having a conversion price per share less
than) the current market price (calculated as provided in the
indenture) of our common shares, other than pursuant to our existing
rights plan referred to in "Description of Capital Stock--Rights to
purchase preferred shares";
(4) distributions to all holders of our common shares of shares of our
capital stock (other than our common shares), evidences of our
indebtedness or assets (including securities, but excluding:
(a) the rights and warrants referred to in clause (3) above,
(b) any dividends and distributions in connection with a
reclassification, change, consolidation, merger, combination,
sale or conveyance resulting in a change in the conversion
consideration pursuant to the second succeeding paragraph, or
(c) any dividends or distributions paid exclusively in cash);
(5) distributions consisting exclusively of cash to all holders of our
common shares to the extent that such distributions, combined together
with:
(a) all other such cash distributions made within the preceding 12
months for which no adjustment has been made, plus
(b) any cash and the fair market value of other consideration paid
for any tender offers by us or any of our subsidiaries for our
common shares expiring within the preceding 12 months for which
no adjustment has been made,
exceed 10% of our market capitalization on the record date for such
distribution; market capitalization is the product of the then current
market price of our common shares times the number of our common
shares then outstanding; and
(6) purchases of our common shares pursuant to a tender offer made by us
or any of our subsidiaries to the extent that the same involves an
aggregate consideration that, together with:
(a) any cash and the fair market value of any other consideration
paid in any other tender offer by us or any of our subsidiaries
for our common shares expiring within the 12 months preceding
such tender offer for which no adjustment has been made, plus
(b) the aggregate amount of any all-cash distributions referred to in
clause (5) above to all holders of our common shares within 12
months preceding the expiration of tender offer for which no
adjustments have been made,
exceeds 10% of our market capitalization on the expiration of such
tender offer.
We will not make an adjustment in the conversion price unless such
adjustment would require a change of at least 1% in the conversion price then in
effect at such time. We will carry forward and take into account in any
subsequent adjustment any adjustment that would otherwise be required to be
made. Except as stated above, we will not adjust the conversion price for the
issuance of our common shares or any securities convertible into or exchangeable
for our common shares or carrying the right to purchase any of the foregoing.
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If we:
o reclassify or change our common shares (other than changes
resulting from a subdivision, split or combination); or
o consolidate or combine with or merge into any person, or sell or
convey to another person all or substantially all of our property
and assets, or liquidate, dissolve or wind up,
and the holders of our common shares receive stock, other securities or other
property or assets (including cash or any combination thereof) with respect to
or in exchange for their common shares, the holders of the senior convertible
debentures may convert the senior convertible debentures into the consideration
they would have received if they had converted their senior convertible
debentures immediately prior to such reclassification, change, consolidation,
combination, merger, sale or conveyance. We may not become a party to any such
transaction unless its terms are consistent with the foregoing.
If we distribute shares of capital stock of a subsidiary of ours, the
conversion price will be adjusted, if at all, based on the market value of the
subsidiary stock so distributed relative to the market value of our common
shares, in each case over a measurement period following the distribution.
The conversion price at which, and the property or assets into which,
the senior convertible debentures are convertible after an adjustment described
in this section "--Conversion Rights" will be subject to further adjustment in
the same manner when subsequent events of the type described in this section
occur.
If a taxable distribution to holders of our common shares or other
transaction occurs which results in any adjustment of the conversion price, you
may, in certain circumstances, be deemed to have received a distribution subject
to U.S. income tax as a dividend. In certain other circumstances, the absence of
an adjustment may result in a taxable dividend to the holders of our common
shares.
We may from time to time, to the extent permitted by law, reduce the
conversion price of the senior convertible debentures by any amount for any
period of at least 20 days. In that case, we will give at least 15 days' notice
of such decrease. We may make such reductions in the conversion price, in
addition to those set forth above, as our board of directors deems advisable to
avoid or diminish any income tax to holders of our common shares resulting from
any dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes.
Optional Redemption by First American
We may not redeem the senior convertible debentures in whole or in
part at any time prior to April 15, 2004. At any time on or after April 15,
2004, we may redeem some or all of the senior convertible debentures on at least
20 but not more than 60 days' notice, at the following redemption prices
(expressed in percentages of the principal amount).
Redemption
During the Twelve Months Commencing Price
----------------------------------- -----
April 15, 2004........................................ 102.250%
April 15, 2005........................................ 101.500%
April 15, 2006........................................ 100.750%
April 15, 2007........................................ 100.000%
In addition, we will pay interest on the senior convertible debentures
being redeemed, including those senior convertible debentures which are
converted into our common shares after the date the notice of the redemption is
mailed and prior to the redemption date. This interest will include interest
accrued and unpaid to, but excluding, the redemption date. If the redemption
date is an interest payment date, we will pay the interest to
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the holder of record on the corresponding record date, which may or may not be
the same person to whom we will pay the redemption price.
If we do not redeem all of the senior convertible debentures, the
trustee will select the senior convertible debentures to be redeemed in
principal amounts of $1,000 or whole multiples of $1,000 by lot or on a pro rata
basis. If any senior convertible debentures are to be redeemed in part only, we
will issue a new senior convertible debenture or senior convertible debentures
equal in principal amount to the unredeemed principal portion thereof. If a
portion of your senior convertible debentures is selected for partial redemption
and you convert a portion of your senior convertible debentures, the converted
portion will be deemed to be taken from the portion selected for redemption.
Repurchase at Option of Holders upon a Change of Control
If a change of control occurs, you will have the right to require us
to repurchase all of your senior convertible debentures not previously called
for redemption, or any portion of those senior convertible debentures that is
equal to $1,000 or a whole multiple of $1,000. The repurchase price of a senior
convertible debenture will be equal to 100% of its principal amount plus accrued
and unpaid interest.
Payment of the purchase price for a senior convertible debenture for
which a purchase notice has been delivered and not validly withdrawn is
conditioned upon delivery of the senior convertible debenture, together with
necessary endorsements, to the paying agent, who initially is Wilmington Trust
Company, at any time after delivery of the purchase notice. Payment of the
purchase price for the senior convertible debenture will be made promptly
following the later of the purchase date or the time of delivery of the senior
convertible debenture.
Holders may surrender a senior convertible debenture for purchase by
us by means of book entry delivery in accordance with the provisions set forth
in the indenture and the regulations of DTC. A senior convertible debenture will
be considered to have been surrendered to a paying agent upon receipt by such
paying agent of a copy of an irrevocable notice given by DTC to the holder of
the certificate corresponding to such senior convertible debenture instructing
it to deliver such certificate to the relevant registrar for cancellation.
If the paying agent holds money or securities sufficient to pay the
purchase price of the senior convertible debenture on the business day following
the purchase date in accordance with the terms of the indenture, then,
immediately after the purchase date, the senior convertible debenture will cease
to be outstanding and interest on such senior convertible debenture will cease
to accrue, whether or not the senior convertible debenture is delivered to the
paying agent. Thereafter, all other rights of the holder shall terminate, other
than the right to receive the purchase price upon delivery of the senior
convertible debenture.
No senior convertible debentures may be purchased at the option of
holders if there has occurred and is continuing an Event of Default with respect
to the senior convertible debentures described under "--Events of Default" other
than a default in the payment of the purchase price with respect to such senior
convertible debentures.
Within 30 days after the occurrence of a change of control, we are
required to give you notice of the occurrence of the change of control and of
your resulting repurchase right. The repurchase date is 30 days after we give
notice of a change of control.
To exercise the repurchase right, you must deliver, prior to the close
of business on the business day immediately preceding the repurchase date,
written notice to the trustee of your exercise of your repurchase right.
The repurchase notice given by each holder electing to require us to
repurchase senior convertible debentures must state:
o the certificate numbers of the holder's senior convertible
debentures to be delivered for purchase;
o the portion of the principal amount of senior convertible
debentures to be purchased, which must be $1,000 or an integral
multiple of $1,000; and
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o that the senior convertible debentures are to be purchased by us
pursuant to the applicable provisions of the senior convertible
debentures.
You may withdraw a repurchase notice by delivering to the paying agent
a notice of withdrawal prior to the close of business on the business day
immediately preceding the repurchase date.
The notice of withdrawal must state:
o the principal amount of senior convertible debentures being
withdrawn;
o the certificate numbers of the senior convertible debentures
being withdrawn; and
o the principal amount, if any, of the senior convertible
debentures that remains subject to the repurchase notice.
A "change of control" will be deemed to have occurred at such time
after the original issuance of the senior convertible debentures when any of the
following has occurred:
o the acquisition by any person, including any syndicate or group
deemed to be a "person" under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended, of beneficial ownership,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions of shares of
our capital stock entitling that person to exercise 50% or more
of the total voting power of all shares of our capital stock
entitled to vote generally in elections of directors, other than
any acquisition by us, any of our subsidiaries, or any of our
employee benefit plans (except that such person shall be deemed
to have beneficial ownership of all securities that such person
has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a
subsequent condition); or
o the first day on which a majority of the members of the board of
directors of First American are not continuing directors or
directors nominated by continuing directors; or
o our consolidation or merger with or into any other person, any
merger of another person into us, or any conveyance, transfer,
sale, lease or other disposition of all or substantially all of
our properties and assets to another person, other than any
transaction (A) that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of our
capital stock and (B) pursuant to which holders of our capital
stock immediately prior to the transaction have the entitlement
to exercise, directly or indirectly, 50% or more of the total
voting power of all shares of our capital stock entitled to vote
generally in the election of directors of the continuing or
surviving person immediately after the transaction.
However, a change of control will be deemed not to have occurred if:
(1) at least 90% of the consideration in the transaction or transactions
constituting a change of control consists of securities traded or to
be traded immediately following such change of control on a national
securities exchange or the Nasdaq National Market and, as a result of
such transaction or transactions, the senior convertible debentures
become convertible solely into such security; or
(2) the closing sale price per share of our common shares for any five
trading days within:
o the period of 10 consecutive trading days ending immediately
after the later of the change of control or the public
announcement of the change of control, in the case of a change of
control under the first clause under the definition of "change of
control" above; or
o the period of 10 consecutive trading days ending immediately
before the change of control, in the case of a change of control
under the second clause under the definition of "change of
control" above,
equals or exceeds 110% of the conversion price of the senior convertible
debentures in effect on each such trading day. Beneficial ownership shall be
determined in accordance with Rule 13d-3 promulgated by the SEC under the
14
Exchange Act. The term "person" includes any syndicate or group which would be
deemed to be a "person" under Section 13(d)(3) of the Exchange Act.
In connection with any purchase offer, we will:
o comply with the provisions of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Exchange Act which may then be
applicable; and
o file Schedule TO or any other required schedule under the
Exchange Act.
We may, to the extent permitted by applicable law, at any time
purchase the senior convertible debentures in the open market or by tender at
any price or by private agreement. Any senior convertible debenture so purchased
by us may, to the extent permitted by applicable law, be reissued or resold or
may be surrendered to the trustee for cancellation. Any senior convertible
debentures surrendered to the trustee may not be reissued or resold and will be
canceled promptly.
The change of control feature of the senior convertible debentures may
in certain circumstances make more difficult or discourage a takeover of First
American and thus, the removal of incumbent management. The repurchase right is
not the result of our knowledge of any effort to accumulate any common shares or
to obtain control of First American by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by us to adopt a series of
anti-takeover provisions. Instead, this right is the result of negotiations
between us and the initial purchasers.
The foregoing provisions would not necessarily protect holders of the
senior convertible debentures if highly leveraged or other transactions
involving us occur that may adversely affect holders.
Our ability to repurchase senior convertible debentures upon the
occurrence of a change of control is subject to important limitations. The
occurrence of a change of control could cause an event of default under, or be
prohibited or limited by, the terms of debt that we have or may incur in the
future. Further, we cannot assure you that we would have the financial
resources, or would be able to arrange financing, to pay the repurchase price
for all the senior convertible debentures that might be delivered by holders of
senior convertible debentures seeking to exercise the repurchase right. Any
failure by us to repurchase the senior convertible debentures when required
following a change of control would result in an event of default under the
indenture. Any such default may, in turn, cause a default under other debt of
ours that we may incur in the future.
Ranking
The senior convertible debentures will be unsecured and will rank
senior to all of our existing or future indebtedness that is by its terms
expressly subordinated to the senior convertible debentures. The senior
convertible debentures will rank equally with all of our other indebtedness,
including approximately $99,504,000 of 7.55% senior debentures maturing 2028.
The senior convertible debentures will be effectively subordinated to
all existing and future liabilities and obligations of our subsidiaries and
holders of the senior convertible debentures should look only to the assets of
First American for payments on the senior convertible debentures. The indenture
does not limit the amount of indebtedness or other liabilities our subsidiaries
may incur. Our ability to make required interest, principal, repurchase, cash
conversion or redemption payments on the senior convertible debentures may be
impaired as a result of the obligations of our subsidiaries. Our subsidiaries
are separate and distinct legal entities and have no obligation, contingent or
otherwise, to pay any amounts due pursuant to the senior convertible debentures
or to make any funds available therefor, whether by dividends, loans or other
payments. Any right we have to receive assets of any of our subsidiaries upon
the latter's liquidation or reorganization (and the consequent right of the
holders of the senior convertible debentures to participate in those assets)
will be effectively subordinated to the claims of that subsidiary's creditors,
except to the extent that we are ourselves recognized as a creditor of that
subsidiary, in which case our claims would still be subordinate to any security
interests in the assets of that subsidiary and any indebtedness of that
subsidiary senior to that held by us. At December 31, 2000, our subsidiaries had
aggregate liabilities and obligations of approximately $1.07 billion net of
intercompany indebtedness.
15
Events of Default
Each of the following constitutes an event of default under the
indenture:
(1) our failure to pay when due the principal of or premium, if any, on
any of the senior convertible debentures at maturity, upon redemption
or exercise of a repurchase right or otherwise;
(2) our failure to pay an installment of interest on any of the senior
convertible debentures for 30 days after the date when due;
(3) our failure to perform or observe any other term, covenant or
agreement contained in the senior convertible debentures or the
indenture for a period of 60 days after written notice of such
failure, requiring us to remedy the same, shall have been given to us
by the trustee or to us and the trustee by the holders of at least 25%
in aggregate principal amount of the senior convertible debentures
then outstanding;
(4) we or any of our subsidiaries fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any
Indebtedness aggregating $25 million or more, when and as the same
shall become due and payable (beyond any applicable grace period
expressly set forth in the documents governing such Indebtedness); or
any event or condition occurs that results in any such Indebtedness
becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any such Indebtedness or any trustee or
agent on its or their behalf to cause any such Indebtedness to become
due, or to require the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity; or
(5) certain events of bankruptcy, insolvency or reorganization with
respect to us or any of our subsidiaries that is a significant
subsidiary or any group of two or more subsidiaries that, taken as a
whole, would constitute a significant subsidiary.
The indenture provides that the trustee shall, within 90 days of the
occurrence of a default, give to the registered holders of the senior
convertible debentures notice of all uncured defaults known to it, but the
trustee shall be protected in withholding such notice if it, in good faith,
determines that the withholding of such notice is in the best interest of such
registered holders, except in the case of a default in the payment of the
principal of, or premium, if any, or interest on, any of the senior convertible
debentures when due or in the payment of any redemption or repurchase
obligation.
If an event of default specified in clause (5) above occurs and is
continuing, then automatically the principal of all the senior convertible
debentures and the interest thereon will become immediately due and payable. If
any other event of default occurs and is continuing (the default not having been
cured or waived), the trustee or the holders of at least 25% in aggregate
principal amount of the senior convertible debentures then outstanding may
declare the principal amount of the senior convertible debentures due and
payable together with accrued interest, and thereupon the trustee may, at its
discretion, proceed to protect and enforce the rights of the holders of the
senior convertible debentures by appropriate judicial proceedings. Such
declaration may be rescinded or annulled either with the written consent of the
holders of a majority in aggregate principal amount of the senior convertible
debentures then outstanding or a majority in aggregate principal amount of the
senior convertible debentures represented at a meeting at which a quorum (as
specified under "--Modifications, Amendments and Meetings" below) is present, in
each case upon the conditions provided in the indenture.
The indenture contains a provision entitling the trustee, subject to
the duty of the trustee during default to act with the required standard of
care, to be indemnified by the holders of the senior convertible debentures
before proceeding to exercise any right or power under the indenture at the
request of such holders. The indenture provides that the holders of a majority
in aggregate principal amount of the senior convertible debentures then
outstanding through their written consent, or the holders of a majority in
aggregate principal amount of the senior convertible debentures then outstanding
represented at a meeting at which a quorum is present by a written
16
resolution, may direct the time, method and place of conducting any proceeding
for any remedy available to the trustee or exercising any trust or power
conferred upon the trustee.
We are required to furnish annually to the trustee a statement as to
the fulfillment of our obligations under the indenture.
"Indebtedness" of any person means, without duplication:
(1) all obligations of such person for borrowed money or with respect to
deposits or advances of any kind; and
(2) all obligations of such person evidenced by bonds, debentures, notes
or similar instruments (including surplus debentures or notes whether
or not characterized as liabilities for purposes of generally accepted
accounting principles or statutory accounting principles and
non-perpetual preferred stock requiring redemption or repurchase and
any option exercisable in respect thereof to the extent of such
redemption or repurchase).
Consolidation, Merger or Assumption
We may, without the consent of the holders of the senior convertible
debentures, consolidate with, merge into or transfer all or substantially all of
our assets to any other corporation organized under the laws of the United
States or any of its political subdivisions provided that:
o the surviving corporation assumes all our obligations under the
indenture and the senior convertible debentures;
o at the time of such transaction, no event of default, and no
event which, after notice or lapse of time, would become an event
of default, shall have happened and be continuing; and
o certain other conditions are met.
Modifications, Amendments and Meetings
Changes Requiring Approval of Each Affected Holder
The indenture (including the terms and conditions of the senior
convertible debentures) cannot be modified or amended without the written
consent or the affirmative vote of the holder of each senior convertible
debenture affected by such change to:
o change the maturity of the principal of or any installment of
interest on that senior convertible debenture;
o reduce the principal amount of, or any premium or interest, on
that senior convertible debenture;
o change the currency of payment of that senior convertible
debenture or interest thereon;
o impair the right to institute suit for the enforcement of any
payment on or with respect to that senior convertible debenture;
o modify our obligations to maintain an office or agency in New
York City;
o except as otherwise permitted or contemplated by provisions
concerning corporate reorganizations, adversely affect the
repurchase option of holders upon a change of control or the
conversion rights of holders of the senior convertible
debentures;
o modify the redemption provisions of the indenture in a manner
adverse to the holders of the senior convertible debentures;
o reduce the percentage in aggregate principal amount of the senior
convertible debentures outstanding necessary to modify or amend
the indenture or to waive any past default; or
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o reduce the percentage in aggregate principal amount of the senior
convertible debentures outstanding required for the adoption of a
resolution or the quorum required at any meeting of holders of
the senior convertible debentures at which a resolution is
adopted.
Changes Requiring Majority Approval
Except with respect to changes requiring approval of each affected
holder, as discussed above, the indenture (including the terms and conditions of
the senior convertible debentures) may be modified or amended either:
o with the written consent of the holders of at least a majority in
aggregate principal amount of the senior convertible debentures
at the time outstanding; or
o by the adoption of a resolution at a meeting of holders by at
least a majority in aggregate principal amount of the senior
convertible debentures represented at such meeting.
Changes Requiring No Approval
The indenture (including the terms and conditions of the senior
convertible debentures) may be modified or amended by us and the trustee,
without the consent of the holder of any senior convertible debenture, for the
purposes of, among other things:
o adding to our covenants for the benefit of the holders of the
senior convertible debentures;
o surrendering any right or power conferred upon us;
o providing for conversion rights of holders of the senior
convertible debentures if any reclassification or change of our
common shares or any consolidation, merger or sale of all or
substantially all of our assets occurs;
o providing for the assumption of our obligations to the holders of
the senior convertible debentures in the case of a merger,
consolidation, conveyance, transfer or lease;
o reducing the conversion price, provided that the reduction will
not adversely affect the interests of the holders of the senior
convertible debentures;
o complying with the requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust
Indenture Act of 1939, as amended;
o making any changes or modifications necessary in connection with
the registration of the senior convertible debentures under the
Securities Act as contemplated in the registration rights
agreement; provided that such change or modification does not, in
the good faith opinion of our board of directors and the trustee,
adversely affect the interests of the holders of the senior
convertible debentures in any material respect;
o curing any ambiguity or correcting or supplementing any defective
provision contained in the indenture; provided that such
modification or amendment does not, in the good faith opinion of
our board of directors and the trustee, adversely affect the
interests of the holders of the senior convertible debentures in
any material respect; or
o adding or modifying any other provisions which we and the trustee
may deem necessary or desirable and which will not adversely
affect the interests of the holders of the senior convertible
debentures.
Meetings
The indenture contains provisions for convening meetings of the
holders of the senior convertible debentures to consider matters affecting their
interests.
18
Quorum
The quorum at any meeting called to adopt a resolution will be persons
holding or representing a majority in aggregate principal amount of the senior
convertible debentures at the time outstanding and, at any reconvened meeting
adjourned for lack of a quorum, 25% of the aggregate principal amount.
Satisfaction and Discharge
We may satisfy and discharge our obligations under the indenture while
the senior convertible debentures remain outstanding, subject to certain
conditions, if:
o all outstanding senior convertible debentures will become due and
payable at their scheduled maturity within one year; or
o all outstanding senior convertible debentures are scheduled for
redemption within one year,
and, in either case, we have deposited with the trustee an amount sufficient to
pay and discharge all outstanding senior convertible debentures on the date of
their scheduled maturity or the scheduled date of redemption.
Governing Law
The indenture and the senior convertible debentures will be governed
by, and construed in accordance with, the law of the State of New York.
Information Concerning the Trustee
Wilmington Trust Company, as trustee under the indenture, has been
appointed by us as paying agent, conversion agent, registrar and custodian with
regard to the senior convertible debentures. The trustee and its affiliates
provide, and may from time to time in the future provide, banking, trust and
other services to us in the ordinary course of their business.
We will be obligated to pay reasonable compensation to the trustee and
to indemnify the trustee against any losses, liabilities or expenses incurred by
it in connection with its duties relating to the senior convertible debentures.
The trustee's claims for such payments will be senior to those of holders of the
senior convertible debentures in respect of all funds collected or held by the
trustee.
Form, Denomination and Registration
Denomination and Registration
The senior convertible debentures have been issued in fully registered
form, without coupons, in denominations of $1,000 principal amount and whole
multiples of $1,000.
Global Senior Convertible Debenture; Book-Entry Form
We issued the senior convertible debentures sold in the United States
in reliance on Rule 144A under the Securities Act, or in offshore transactions
in reliance on Regulation S under the Securities Act in the form of a single,
permanent global debenture in definitive, fully-registered form without interest
coupons. The global senior convertible debenture has been deposited with the
trustee as custodian for DTC and registered in the name of a nominee of DTC in
New York, New York for the accounts of participants in DTC. The senior
convertible debentures sold by the selling securityholders pursuant to the
registration statement of which this prospectus forms a part will be represented
by the global senior convertible debenture. Investors may hold their interests
in the
19
global senior convertible debenture directly through DTC if they are DTC
participants, or indirectly through organizations that are DTC participants.
Investors who purchase senior convertible debentures in offshore
transactions in reliance on Regulation S under the Securities Act may hold their
interests in the global senior convertible debenture directly through the
Euroclear System and Clearstream Banking, if they are participants in these
systems, or indirectly through organizations that are participants in these
systems. Euroclear and/or Clearstream hold interests in the global senior
convertible debenture on behalf of their participants through their respective
depositaries, which in turn hold the interests in the global senior convertible
debenture in customers' securities accounts in the depositaries' names on the
books of DTC. Citibank, N.A., is acting initially as depositary for Clearstream,
and The Chase Manhattan Bank is acting initially as depositary for Euroclear.
Except as set forth below, the global senior convertible debenture may
be transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of the
State of New York;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York
Uniform Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act.
DTC was created to hold securities of institutions that have accounts
with DTC and to facilitate the clearance and settlement of securities
transactions among its participants in securities through electronic book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. DTC's participants include:
o securities brokers and dealers;
o banks;
o trust companies;
o clearing corporations; and
o certain other organizations.
Access to DTC's book-entry system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, whether directly or indirectly.
Upon the issuance of the global senior convertible debenture, DTC
credited, on its book-entry registration and transfer system, the respective
principal amounts of the individual beneficial interests represented by the
global senior convertible debenture to the accounts of participants. The
accounts credited have been designated by the initial purchasers of the
beneficial interests. Ownership of beneficial interests in the global senior
convertible debenture is limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in the global
senior convertible debenture are shown on, and the transfer of those ownership
interests will be effected only through, records maintained by DTC (with respect
to participants' interests) and the participants (with respect to the owners of
beneficial interests in the global senior convertible debenture other than
participants).
So long as DTC or its nominee is the registered holder and owner of
the global senior convertible debenture, DTC or its nominee, as the case may be,
will be considered the sole legal owner of the senior convertible debentures
represented by the global senior convertible debenture for all purposes under
the indenture and the senior convertible debentures. Except as set forth below,
owners of beneficial interests in the global senior convertible debenture are
not entitled to receive definitive senior convertible debentures and are not
considered to be the owners or holders of any senior convertible debentures
under the global senior convertible debenture. We
20
understand that under existing industry practice, in the event an owner of a
beneficial interest in the global senior convertible debenture desires to take
any action that DTC, as the holder of the global senior convertible debenture,
is entitled to take, DTC would authorize the participants to take the action,
and that participants would authorize beneficial owners owning through the
participants to take the action or would otherwise act upon the instructions of
beneficial owners owning through them. No beneficial owner of an interest in the
global senior convertible debenture will be able to transfer the interest except
in accordance with DTC's applicable procedures, in addition to those provided
for under the indenture and, if applicable, those of Euroclear and Clearstream.
We will make payments of the principal, premium, if any, and interest
on the senior convertible debentures represented by the global senior
convertible debenture registered in the name of and held by DTC or its nominee
to DTC or its nominee, as the case may be, as the registered owner and holder of
the global senior convertible debenture.
We expect that DTC or its nominee, upon receipt of any payment of
principal, premium or interest in respect of the global senior convertible
debenture, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global senior convertible debenture as shown on the records of DTC or its
nominee. We also expect that payments by participants and indirect participants
to owners of beneficial interests in the global senior convertible debenture
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for accounts of
customers registered in the names of nominees for these customers. The payments,
however, will be the responsibility of the participants and indirect
participants, and neither we, the trustee nor any paying agent or conversion
agent will have any responsibility or liability for:
o any aspect of the records relating to, or payments made on
account of, beneficial ownership interests in the global senior
convertible debenture;
o maintaining, supervising or reviewing any records relating to the
beneficial ownership interests;
o any other aspect of the relationship between DTC and its
participants; or
o the relationship between the participants and indirect
participants and the owners of beneficial interests in the global
senior convertible debenture.
Unless and until it is exchanged in whole or in part for definitive
senior convertible debentures, the global senior convertible debenture may not
be transferred except as a whole by DTC to a nominee of DTC or by a nominee of
DTC to DTC or another nominee of DTC.
We believe participants in DTC will effect transfers with other
participants in the ordinary way in accordance with DTC rules and will settle
transfers in same-day funds. We believe participants in Euroclear and
Clearstream will effect transfers with other participants in the ordinary way in
accordance with the rules and operating procedures of Euroclear and Clearstream,
as applicable. If a holder requires physical delivery of a definitive senior
convertible debenture for any reason, including to sell senior convertible
debentures to persons in jurisdictions which require physical delivery or to
pledge senior convertible debentures, the holder must transfer its interest in
the global senior convertible debenture in accordance with the normal procedures
of DTC and the procedures set forth in the indenture.
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear or Clearstream participants, on the other, will be
effected in DTC in accordance with DTC rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, these
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in the system in accordance
with its rules and procedures and within its established deadlines (Brussels
time). Euroclear or Clearstream, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by delivering
or receiving interests in the global senior convertible debenture in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Clearstream
participants may not deliver instructions directly to the depositaries for
Euroclear or Clearstream.
21
Because of time zone differences, the securities account of a
Euroclear or Clearstream participant purchasing an interest in the global senior
convertible debenture from a DTC participant will be credited during the
securities settlement processing day (which must be a business day for Euroclear
or Clearstream, as the case may be) immediately following the DTC settlement
date, and the credit of any transactions interests in the global senior
convertible debenture settled during the processing day will be reported to the
relevant Euroclear or Clearstream participant on that day. Cash received by
Euroclear or Clearstream as a result of sales of interests in the global senior
convertible debenture by or through a Euroclear or Clearstream participant to a
DTC participant will be received with value on the DTC settlement date, but will
be available in the relevant Euroclear or Clearstream cash account only as of
the business day following settlement in DTC.
We expect that DTC will take any action permitted to be taken by a
holder of senior convertible debentures (including the presentation of senior
convertible debentures for exchange as described below) only at the direction of
one or more participants to whose accounts at DTC interests in the global senior
convertible debenture are credited and only in respect of the portion of the
aggregate principal amount of the senior convertible debentures as to which the
participant or participants has or have given direction. However, if there is an
event of default under the senior convertible debentures, DTC will exchange the
global senior convertible debenture for definitive debentures, which it will
distribute to its participants. These definitive debentures are subject to
certain restrictions on registration of transfers and will bear appropriate
legends restricting their transfer.
Although we expect that DTC, Euroclear and Clearstream will agree to
the foregoing procedures in order to facilitate transfers of interests in the
global senior convertible debenture among participants of DTC, Euroclear, and
Clearstream, DTC, Euroclear and Clearstream are under no obligation to perform
or continue to perform these procedures, and these procedures may be
discontinued at any time. Neither we nor the trustee have any responsibility for
the performance by DTC, Euroclear or Clearstream or their participants or
indirect participants of their obligations under the rules and procedures
governing their operations.
If DTC is at any time unwilling or unable to continue as a depositary
for the global senior convertible debenture or ceases to be a clearing agency
registered under the Exchange Act and we do not appoint a successor depositary
within 90 days, we will issue definitive senior convertible debentures in
exchange for the global senior convertible debenture. The definitive senior
convertible debentures will be subject to certain restrictions on registration
of transfers and will bear appropriate legends concerning these restrictions.
Registration Rights
On April 24, 2001, we entered into a registration rights agreement
with the initial purchasers for the benefit of the holders of the senior
convertible debentures and the common stock issuable upon the conversion of the
senior convertible debentures. Pursuant to the registration rights agreement, we
filed with the SEC a shelf registration statement of which this prospectus is a
part to cover resales of the senior convertible debentures and the shares of
common stock issuable upon the conversion thereof by the holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the shelf registration statement.
We agreed pursuant to the registration rights agreement to use our
best efforts to cause the registration statement to which this prospectus
relates to become effective as promptly as is practicable and to keep the
registration statement effective until the earliest of:
o two years after the last date of original issuance of any of the
senior convertible debentures;
o the date when the holders of the senior convertible debentures
and the common shares issuable upon conversion of the senior
convertible debentures are able to sell all such securities
immediately without restriction pursuant to the volume limitation
provisions of Rule 144 under the Securities Act; or
o the date when all of the senior convertible debentures and common
shares into which the senior convertible debentures are
convertible that are owned by the holders who complete and
deliver in a timely manner the selling security holder election
and questionnaire described in the offering memorandum associated
with the senior convertible debentures are registered under the
shelf registration statement and sold in accordance with it.
22
The registration rights agreement provides that we may suspend the use
of this prospectus in connection with sales of senior convertible debentures and
common shares issuable upon conversion of the senior convertible debentures by
holders for a period not to exceed an aggregate of 45 days in any 90 day period,
under certain circumstances relating to pending corporate developments, public
filings with the Commission and similar events. In certain circumstances
involving pending material business transactions, we may extend such a
suspension period to up to 60 days. The total of all suspension periods may not
exceed 120 days in any 360-day period. We will bear the expenses of preparing
and filing the registration statement and all post-effective amendments.
A holder who elects to sell any securities pursuant to the shelf
registration statement:
o will be required to be named as selling securityholder;
o will be required to deliver a prospectus to purchasers;
o will be subject to the civil liability provisions under the
Securities Act in connection with any sales; and
o will be bound by the provisions of the registration rights
agreement which are applicable, including indemnification
obligations.
We refer to the senior convertible debentures and the common stock
issuable on conversion of the senior convertible debentures as "registrable
securities." Promptly upon request from any holder of registrable securities, we
will provide a form of notice and questionnaire to be completed and delivered by
that holder to us before any intended distribution of registrable securities
under the shelf registration statement. If we receive from a holder of
registrable securities a completed questionnaire, together with such other
information as may be reasonably requested by us, after the effectiveness of the
shelf registration statement, we will file an amendment to the shelf
registration statement or supplement to the related prospectus to permit the
holder to deliver a prospectus to purchasers of registrable securities. Any
holder that does not complete and deliver a questionnaire or provide such other
information will not be named as a selling securityholder in the prospectus and
therefore will not be permitted to sell any registrable securities under the
shelf registration statement.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock currently consists of 180,000,000 common
shares and 500,000 preferred shares, each class of shares having a $1.00 par
value per share. Of the preferred shares, 1,000 shares have been designated
Series A Junior Participating Preferred Shares. Each of our common shares has
the same relative rights and is identical in all respects with every other
common share. First American Trust Company is the transfer agent and registrar
for our common shares.
Voting rights
Each shareholder is entitled to one vote for each share of common
stock held. Each Series A Junior Participating Preferred Share would entitle its
holder to 100,000 votes on all matters submitted to a vote of our shareholders.
Shareholders are entitled to vote on all matters requiring shareholder approval
under California law and our restated articles of incorporation and bylaws,
including the election of members of the board of directors. At each annual
meeting of our shareholders, the entire board of directors is put up for
election by the shareholders.
Shareholders may "cumulate" their votes in elections for directors,
which means that each shareholder has a number of votes equal to the number of
shares owned, multiplied by the number of directors to be elected (currently
13), and the shareholder may cumulate such votes for a single candidate, or
distribute such votes among as many candidates as such shareholder deems
appropriate.
23
Dividends
We pay dividends out of statutory surplus or from net profits if, as
and when declared by our board of directors. If we issue preferred shares, the
holders of the preferred shares may have a priority over the holders of the
common shares with respect to dividends.
Liquidation
If we are liquidated or dissolved, holders of common shares are
entitled to receive all of our assets which remain after our debts and
liabilities are paid. If we issue preferred shares, the holders of our preferred
shares may have a priority over the holders of common shares in the event of our
liquidation or dissolution. As of the date of this prospectus, we have not
issued any preferred shares.
Preemptive rights; redemption; non-accessibility
Our common shares have no preemptive rights. This means that our
shareholders do not have a right to buy their proportional share of any
additional shares we issue. There are no provisions for redemption, conversion
rights, sinking funds, or liability for further calls or assessments on our
common shares. This means that we cannot ask you for more money for your shares,
we cannot force you to sell your shares back to us (absent a separate agreement
to do so) and your shares cannot be exchanged for a different security. It also
means that we do not set aside any money to buy your shares from you.
Amendments to articles of incorporation or bylaws
Our restated articles of incorporation do not specify the approvals
necessary to adopt amendments to the articles. Therefore, under the California
General Corporation Law, except for certain amendments as prescribed therein for
which the approval of the board of directors alone is required, any amendment to
our restated articles of incorporation must be approved by the holders of a
majority of our outstanding common shares.
Rights to purchase preferred shares
Each of our common shares has attached to it a right which, subject to
the terms and conditions of the rights agreement between First American and
Wilmington Trust Company, dated October 23, 1997, entitles the holder to
purchase a fraction of a Series A Junior Participating Preferred Share upon the
occurrence of certain change of control events which are defined in the rights
agreement. As of the date of this prospectus, such rights are not exercisable.
See Description of the Stock and the description of Rights to Purchase Series A
Junior Participating Preferred Shares contained in our Registration Statement on
Form 8-A, dated November 7, 1997, and incorporated by reference herein.
SELLING SECURITYHOLDERS
The senior convertible debentures were originally purchased from First
American on April 24, 2001. The initial purchasers of the senior convertible
debentures have advised First American that the senior convertible debentures
were resold in transactions exempt from the registration requirements of the
Securities Act to "qualified institutional buyers," defined in Rule 144A of the
Securities Act and to buyers outside the United States in accordance with
Regulation S under the Securities Act. These subsequent purchasers, or their
transferees, pledgees, donees or successors, may from time to time offer and
sell any or all of the senior convertible debentures and/or First American
common shares issuable upon conversion of the senior convertible debentures
pursuant to this prospectus.
The selling securityholders may choose to sell senior convertible
debentures and/or common shares issuable upon conversion of the senior
convertible debentures from time to time. See "Plan of Distribution."
The following table sets forth:
24
o the name of each selling securityholder who has provided First
American with notice as of the date of this prospectus pursuant
to the registration rights agreement of its intent to sell or
otherwise dispose of senior convertible debentures and/or common
shares issuable upon conversion of the senior convertible
debentures pursuant to the registration statement;
o the principal amount of senior convertible debentures and the
number of common shares issuable upon conversion of the senior
convertible debentures which it may sell from time to time
pursuant to the registration statement; and
o the amount of outstanding senior convertible debentures and
common shares beneficially owned by the selling securityholder
prior to the offering (assuming no conversion of the senior
convertible debentures).
No selling securityholder, and no affiliate of a selling
securityholder, has held any position or office with, been employed by or
otherwise has had any material relationship with First American or First
American's affiliates, during the three years prior to the date of this
prospectus.
A selling securityholder may offer all or some portion of the senior
convertible debentures and common shares issuable upon conversion of the senior
convertible debentures. Accordingly, no estimate can be given as to the amount
or percentage of senior convertible debentures or common shares that will be
held by the selling securityholders upon termination of sales pursuant to this
prospectus. In addition, the selling securityholders identified below may have
sold, transferred or disposed of all or a portion of their senior convertible
debentures since the date on which they provided the information regarding their
holdings in transactions exempt from the registration requirements of the
Securities Act.
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Acacia Life Insurance $220,000 $220,000 7,857 0
Company
Aftra Health Fund $285,000 $285,000 10,178 0
AIG/National Union Fire $600,000 $600,000 21,428 0
Insurance
Alpine Associates $4,350,000 $4,350,000 155,357 0
Alpine Partners, L.P. $650,000 $650,000 23,214 0
American Country $400,000 $400,000 14,285 0
Insurance Company
American Fidelity $150,000 $150,000 5,357 0
Assurance Company
American Founders Life $250,000 $250,000 8,928 0
Insurance Company
25
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
American Motorist $575,000 $575,000 20,535 0
Insurance Company
American Pioneer Life $80,000 $80,000 2,857 0
Insurance Co. of New York
American Progressive $80,000 $80,000 2,857 0
Life and Health
Insurance Company of
New York
American Public Entity $80,000 $80,000 2,857 0
Excess Pool
Amerisure Companies / $300,000 $300,000 10,714 0
Michigan Mutual
Insurance Company
Ameritas Life Insurance $450,000 $450,000 16,071 0
Company
Amwest Surety Insurance $370,000 $370,000 13,214 0
Company
Arbitex Master Fund, $6,775,000 $6,775,000 241,964 0
L.P.
Arkansas PERS $1,150,000 $1,150,000 41,071 0
Baltimore Life Insurance $300,000 $300,000 10,714 0
Banc of America $7,430,000 $7,430,000 265,357 0
Securities LLC
Bankers Trust Company $5,250,000 $5,250,000 187,500 0
Trustee for
DaimlerChrysler Corp
Emp.#1 Pension Plan Dtd
4/1/89
Bay County PERS $155,000 $155,000 5,535 0
BayState Health System, $15,000 $15,000 535 0
Inc.
26
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
BCS Life Insurance $600,000 $600,000 21,428 0
Company
Bear, Stearns & Co. $3,000,000 $3,000,000 107,142 0
INC.
Blue Cross Blue Shield $750,000 $750,000 26,785 0
of Florida
Boilermakers Blacksmith $1,575,000 $1,575,000 56,250 0
Pension Trust
British Virgin Island $54,000 $54,000 1,928 0
Social Security Board
Buckeye State Mutual $25,000 $25,000 892 0
Insurance Co.
CapitalCare, Inc. $35,000 $35,000 1,250 0
CareFirst of Maryland, $150,000 $150,000 5,357 0
Inc.
Catholic Mutual Relief $700,000 $700,000 25,000 0
Society of America
Catholic Mutual Relief $300,000 $300,000 10,714 0
Society of America
Retirement Plan and
Trust
Catholic Relief $550,000 $550,000 19,642 0
Insurance Company of
America
Celina Mutual Insurance $20,000 $20,000 714 0
Company
Central States Health $260,000 $260,000 9,285 0
and Life Company of
Omaha
Chicago Mutual $70,000 $70,000 2,500 0
Insurance Company
27
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Chrysler Insurance $2,000,000 $2,000,000 71,428 0
Company
City of Birmingham $750,000 $750,000 26,785 0
Retirement & Relief
System
Clinton Riverside $7,025,000 $7,025,000 250,892 0
Convertible Portfolio
Limited
Colonial Life Insurance $45,000 $45,000 1,607 0
Company of Texas
Colonial Lloyd $15,000 $15,000 535 0
Insurance Company
Commonwealth $180,000 $180,000 6,428 0
Dealers--CDLIC
Concord Life Insurance $180,000 $180,000 6,428 0
Company
Condor Insurance Company $160,000 $160,000 5,714 0
CSA Fraternal Life $130,000 $130,000 4,642 0
Insurance Company
CSFB Convertible & $2,500,000 $2,500,000 89,285 0
Quantitative Strategies
Cumberland Insurance $100,000 $100,000 3,571 0
Company
Cumberland Mutual Fire $400,000 $400,000 14,285 0
Insurance Company
Dakota Truck $25,000 $25,000 892 0
Underwriters
Delaware PERS $1,725,000 $1,725,000 61,607 0
DLB High Yield Fund $40,000 $40,000 1,428 0
28
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Dorinco Reinsurance $800,000 $800,000 28,571 0
Company
Educators Mutual Life $230,000 $230,000 8,214 0
Insurance Company
F.R. Convt. Sec. Fn. $300,000 $300,000 10,714 0
Farmers Home Mutual $450,000 $450,000 16,071 0
Insurance Company
Farmers Mutual $130,000 $130,000 4,642 0
Protective Association
of Texas
Federated Rural $450,000 $450,000 16,071 0
Electric Insurance
Exchange
First Dakota Indemnity $15,000 $15,000 535 0
Company
First Mercury Insurance $600,000 $600,000 21,428 0
Company
Founders Insurance $40,000 $40,000 1,428 0
Company
Franklin and Marshall $220,000 $220,000 7,857 0
College
FreeState Health Plan, $45,000 $45,000 1,607 0
Inc.
Genessee County $275,000 $275,000 9,821 0
Employees' Retirement
System
Global Bermuda Limited $1,000,000 $1,000,000 35,714 0
Partnership
Goldman Sachs and $500,000 $500,000 17,857 0
Company
Goodville Mutual $50,000 $50,000 1,785 0
Casualty Company
29
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Grain Dealers Mutual $170,000 $170,000 6,071 0
Insurance
Green Tree Perpetual $250,000 $250,000 8,928 0
Assurance Company
Group Hospitalization $175,000 $175,000 6,250 0
and Medical Services,
Inc.
Guarantee Trust Life $1,000,000 $1,000,000 35,714 0
Insurance Company
Guaranty Income Life $400,000 $400,000 14,285 0
Insurance Company
Gulf Investment $350,000 $350,000 12,500 0
Corporation
Hannover Life $400,000 $400,000 14,285 0
Reassurance Company of
America
HealthNow New York, Inc. $100,000 $100,000 3,571 0
HFR Master Fund LTD $200,000 $200,000 7,142 0
Highbridge $4,000,000 $4,000,000 142,857 0
International LLC
Holy Family Society $100,000 $100,000 3,571 0
ICI American Holdings $650,000 $650,000 23,214 0
Trust
Independence Blue Cross $115,000 $115,000 4,107 0
Indiana Lumbermens $450,000 $450,000 16,071 0
Mutual Insurance Company
Integrity Mutual $300,000 $300,000 10,714 0
30
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Insurance Company
ISBA Mutual Insurance $210,000 $210,000 7,500 0
Company
Jackson County $150,000 $150,000 5,357 0
Employees' Retirement
System
JMG Capital Partners, LP $500,000 $500,000 17,857 0
Kanawha Insurance $1,000,000 $1,000,000 35,714 0
Company
Kerr-McGee Corporation $400,000 $400,000 14,285 0
Lakeshore International $2,000,000 $2,000,000 71,428 0
Ltd.
Landesbank $1,000,000 $1,000,000 35,714 0
Schleswig-Holstein
International S.A.
Landmark Life Insurance $60,000 $60,000 2,142 0
Company
Lebanon Mutual $140,000 $140,000 5,000 0
Insurance Company
Lincoln Memorial Life $225,000 $225,000 8,035 0
Insurance Company
Lions Club $200,000 $200,000 7,142 0
International Foundation
Local Initiatives $60,000 $60,000 2,142 0
Support Corporation
Loyal Christian Benefit $70,000 $70,000 2,500 0
Association
Lutheran Brotherhood $1,000,000 $1,000,000 35,714 0
Lyxor Master Fund $5,000,000 $5,000,000 178,571 0
31
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Macomb County $350,000 $350,000 12,500 0
Employees' Retirement
System
Mainstay Convertible $4,115,000 $4,115,000 146,964 0
Fund
Mainstay VP Convertible $1,045,000 $1,045,000 37,321 0
Portfolio
Marquette Indemnity and $60,000 $60,000 2,142 0
Life Insurance Company
Massachusetts Mutual $1,300,000 $1,300,000 46,428 0
Life Insurance Company
MassMutual Asia Limited $15,000 $15,000 535 0
MassMutual Corporate $220,000 $220,000 7,857 0
Investors
MassMutual Diversified $15,000 $15,000 535 0
Bond Fund
MassMutual High Yield $775,000 $775,000 27,678 0
Partners II LLC
MassMutual $120,000 $120,000 4,285 0
Participation Investors
Medico Life Insurance $800,000 $800,000 28,571 0
Company
MEDMARC Insurance $600,000 $600,000 21,428 0
Company
Merrill Lynch Insurance $284,000 $284,000 10,142 0
Group
Michigan Mutual $850,000 $850,000 30,357 0
Insurance Company
32
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Michigan Professional $100,000 $100,000 3,571 0
Insurance Exchange
Mid America Life $60,000 $60,000 2,142 0
Insurance Company
Middle Cities Risk $200,000 $200,000 7,142 0
Management Trust
Midwest Security Life $260,000 $260,000 9,285 0
Morgan Stanley Dean $2,000,000 $2,000,000 71,428 0
Witter Convertible
Securities Trust
Mutual Protective $1,000,000 $1,000,000 35,714 0
Insurance Company
Nabisco Holdings $34,000 $34,000 1,214 0
Nashville Electric $125,000 $125,000 4,464 0
Service
National Mutual $30,000 $30,000 1,071 0
Insurance Company
NCMIC $500,000 $500,000 17,857 0
New Era Life Insurance $270,000 $270,000 9,642 0
Company
New York Life Insurance $1,200,000 $1,200,000 42,857 0
and Annuity Corporation
New York Life Insurance $3,300,000 $3,300,000 117,857 0
Company
New York Life Separate $555,000 $555,000 19,821 0
Account # 7
NORCAL Mutual Insurance $225,000 $225,000 8,035 0
Company
Oak Casualty $40,000 $40,000 1,428 0
33
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Insurance Company
Ohio Bureau of Workers $149,000 $149,000 5,321 0
Compensation
Ondeo Nalco $200,000 $200,000 7,142 0
Penn Treaty Network $275,000 $275,000 9,821 0
America Insurance
Company
Phico Insurance Company $600,000 $600,000 21,428 0
Physicians Mutual $600,000 $600,000 21,428 0
Insurance Company
Physicians' Reciprocal $1,000,000 $1,000,000 35,714 0
Insurers Account #7
Pioneer Insurance $90,000 $90,000 3,214 0
Company
Premera Blue Cross $1,600,000 $1,600,000 57,142 0
R.J.R. Reynolds $102,000 $102,000 3,642 0
Republic Mutual $15,000 $15,000 535 0
Insurance Company
Shell Pension Trust $217,000 $217,000 7,750 0
Southern Farm Bureau $600,000 $600,000 21,428 0
Life Insurance
Southern Farm Bureau $750,000 $750,000 26,785 0
Life Insurance Company
Standard Mutual $250,000 $250,000 8,928 0
Insurance Company
Starvest Combined $655,000 $655,000 23,392 0
Portfolio
Starvest Managed $60,000 $60,000 2,142 0
34
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Portfolio
State National $100,000 $100,000 3,571 0
Insurance Company
State of Florida $1,575,000 $1,575,000 56,250 0
Division Treasury
State of Florida, $2,000,000 $2,000,000 71,428 0
Office of the Treasurer
State of Oregon/Equity $5,625,000 $5,625,000 200,892 0
State Street Bank $1,655,000 $1,655,000 59,107 0
Custodian for GE
Pension Trust
Syngenta AG $300,000 $300,000 10,714 0
Texas Builders $130,000 $130,000 4,642 0
Insurance Company
Texas Hospital $25,000 $25,000 892 0
Insurance Exchange
The Brakle Foundation $135,000 $135,000 4,821 0
The Cockrell Foundation $75,000 $75,000 2,678 0
The Northwestern Mutual $3,750,000 $3,750,000 133,928 0
Life Insurance Company
The Northwestern Mutual $250,000 $250,000 8,928 0
Life Insurance Company
Group Annuity Separate
Account
Transguard Insurance $900,000 $900,000 32,142 0
Company of America, Inc.
Tuscarora Wayne Mutual $90,000 $90,000 3,214 0
Insurance
35
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Company
UBS O'Connor LLC F/B/O $500,000 $500,000 17,857 0
O'Connor Global
Convertible Portfolio
UBS O'Connor LLC F/B/O/ $3,000,000 $3,000,000 107,142 0
UBS Global equity
Artibrage Master LTD.
United National $700,000 $700,000 25,000 0
Insurance Company
Vesta-Inex Insurance $500,000 $500,000 17,857 0
Exchange IASA
Victory Capital $75,000 $75,000 2,678 0
Management as
Investment Manager for
Health Foundation of
Greater Cincinnati
Victory Capital $645,000 $645,000 23,035 0
Management as Agent for
the Charitable
Convertible Securities
Fund
Victory Capital $105,000 $105,000 3,750 0
Management as Agent for
the Charitable Income
Fund
Victory Capital $670,000 $670,000 23,928 0
Management as Agent for
the EB Convertible
Securities Fund
Victory Capital $35,000 $35,000 1,250 0
Management as Agent for
the Field Foundation of
36
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Illinois
Victory Capital $35,000 $35,000 1,250 0
Management as Agent for
the GenCorp Foundation
Victory Capital $110,000 $110,000 3,928 0
Management as Agent for
the Key Trust
Convertible Securities
Fund
Victory Capital $160,000 $160,000 5,714 0
Management as Agent for
the Key Trust Fixed
Income Fund
Victory Capital $170,000 $170,000 6,071 0
Management as Agent for
the Parker/Key
Convertible
Victory Capital $40,000 $40,000 1,428 0
Management as Agent for
the Union Security Life
Insurance Co
Victory Capital $575,000 $575,000 20,535 0
Management as Agent for
the Victory Convertible
Securities Fdn
Victory Capital $65,000 $65,000 2,321 0
Management as Agent for
the Victory Invest
Quality Bond
Victory Capital $325,000 $325,000 11,607 0
Management as
Investment Manager for
Potlatch
37
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Victory Capital $465,000 $465,000 16,607 0
Management as
Investment Manager for
the California State
Auto Assoc
Inter-Insurance
Victory Capital $75,000 $75,000 2,678 0
Management as
Investment Manager for
the California State
Auto Assoc Retirement
Pension Plan
Victory Capital $700,000 $700,000 25,000 0
Management as
Investment Manager for
the JC Penney Life
Insurance Co.
West Virginia Fire $10,000 $10,000 357 0
Insurance Company
Western Home Insurance $190,000 $190,000 6,785 0
Company
Westward Life Insurance $160,000 $160,000 5,714 0
Company
White River Securities $3,000,000 $3,000,000 107,142 0
L.L.C.
Wisconsin Lawyers $200,000 $200,000 7,142 0
Mutual Insurance Company
Wisconsin Mutual $150,000 $150,000 5,357 0
Insurance Company
World Insurance Company $500,000 $500,000 17,857 0
Zazove Convertible $1,000,000 $1,000,000 35,714 0
Securities Fund Inc.
Zeneca Holdings Trust $430,000 $430,000 15,357 0
38
Amount of Senior Amount of Senior
Convertible Convertible
Selling Security Debentures that Debentures Owned Shares that may be Common Shares Owned
Holder may be Sold Before the Offering Sold Before the Offering
Zurich Institutional $1,000,000 $1,000,000 35,714 0
Benchmarks Master Fund
LTD
* This prospectus may also be used by the donees and pledgees of each named
selling securityholder after the date of this prospectus.
PLAN OF DISTRIBUTION
First American is registering the senior convertible debentures and
the common shares issuable upon conversion of the senior convertible debentures
to permit public secondary trading of such securities by the holders from time
to time after the date of this prospectus. First American has agreed, among
other things, to bear all expenses (other than underwriting discounts and
selling commissions) in connection with the registration and sale of the senior
convertible debentures and the common shares issuable upon conversion of the
senior convertible debentures covered by this prospectus.
First American will not receive any of the proceeds from the offering
of the senior convertible debentures or the common shares issuable upon
conversion of the senior convertible debentures by the selling securityholders.
The senior convertible debentures and common shares issuable upon conversion of
the senior convertible debentures may be sold from time to time directly by any
selling securityholder or, alternatively, through underwriters, broker-dealers
or agents. If senior convertible debentures or common shares issuable upon
conversion of the senior convertible debentures are sold through underwriters or
broker-dealers, the selling securityholder will be responsible for underwriting
discounts or commissions or agents' commissions.
The senior convertible debentures or common shares issuable upon
conversion of the senior convertible debentures may be sold:
o in one or more transactions at fixed prices;
o at prevailing market prices at the time of sale;
o at varying prices determined at the time of sale; or
o at negotiated prices.
Such sales may be effected in transactions (which may involve crosses
or block transactions):
o on any national securities exchange or quotation service on which
the senior convertible debentures or common shares issuable upon
conversion of the senior convertible debentures may be listed or
quoted at the time of sale;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services or
in the over-the-counter market;
o through the writing of options; or
o through other types of transactions.
39
In connection with sales of the senior convertible debentures or
common shares issuable upon conversion of the senior convertible debentures or
otherwise, any selling securityholder may:
o enter into hedging transactions with broker-dealers, which may in
turn engage in short sales of the senior convertible debentures
or common shares issuable upon conversion of the senior
convertible debentures in the course of hedging the positions
they assume;
o sell short and deliver senior convertible debentures or common
shares issuable upon conversion of the senior convertible
debentures to close out such short positions; or
o loan or pledge senior convertible debentures or common shares
issuable upon conversion of the senior convertible debentures to
broker-dealers that in turn may sell such securities.
Our common shares are publicly traded on the New York Stock Exchange.
The senior convertible debentures are a new issue of securities for which there
is currently no trading market. Although the senior convertible debentures have
been declared eligible for trading in the PORTAL market, any convertible senior
debentures sold under this prospectus will no longer trade in the PORTAL market.
We cannot predict whether an active trading market for the senior convertible
debentures will develop or be sustained. If an active market for the senior
convertible debentures fails to develop or be sustained, the trading price of
the senior convertible debentures could fall. If an active trading market were
to develop, the senior convertible debentures could trade at prices that may be
lower than the inital offering price. See "Risk Factors - You may not be able to
sell your senior convertible debentures."
The selling securityholders and any broker-dealers, agents or
underwriters that participate with the selling securityholders in the
distribution of the senior convertible debentures or the common shares issuable
upon conversion of the senior convertible debentures may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commissions received by such broker-dealers, agents or underwriters and any
profits realized by the selling securityholders on the resales of the senior
convertible debentures or the shares may be deemed to be underwriting
commissions or discounts under the Securities Act.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144, Rule 144A or any other available exemption from
registration under the Securities Act may be sold under Rule 144, Rule 144A or
such other available exemption rather than pursuant to this prospectus. There is
no assurance that any selling securityholder will sell any or all of the senior
convertible debentures or common shares issuable upon conversion of the senior
convertible debentures described herein, and any selling securityholder may
transfer, devise or gift such securities by other means not described herein.
We originally sold the senior convertible debentures to the initial
purchasers on April 24, 2001 in a private placement. We agreed to indemnify and
hold the initial purchasers of the senior convertible debentures harmless
against certain liabilities under the Securities Act that could arise in
connection with the sale of the senior convertible debentures by their initial
purchasers. The registration rights agreement provides for us and the selling
securityholders to indemnify each other against certain liabilities arising
under the Securities Act.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission, or SEC, utilizing a "shelf" registration
process. Under the shelf registration process, the selling securityholders may
offer from time to time any combination of the securities described in this
prospectus, either separately or in units. This prospectus provides only a
general description of those securities. It is important for you to analyze the
information in this prospectus and the additional information described under
"Documents Incorporated by Reference" below.
40
We file annual, quarterly and current reports, proxy statements and
other information and documents with 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 any
of its public reference rooms in the following locations:
450 Fifth Street, N.W. Seven World Trade Center Citicorp Center
Washington, D.C. 20549 13th Floor, Suite 1300 500 West Madison Street
New York, NY 10048 14th Floor, Suite 1400
Chicago, IL 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 website.
This prospectus is one part of a registration statement filed on Form
S-3 with the SEC under the Securities Act of 1933, as amended. This prospectus
does not contain all of the information set forth in the registration statement
and the exhibits and schedules thereto. For further information concerning our
company, the senior convertible debentures and the common shares, you should
read the entire registration statement. The registration statement has been
filed electronically and may be obtained in any manner listed above. Any
statements contained herein concerning the provisions of any document are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the registration statement or otherwise
filed with the SEC. Each such statement is qualified in its entirety by such
reference.
You should rely only on information provided in this prospectus, the
information incorporated by reference and the other parts of the registration
statement. We have not authorized any person to disseminate any information or
to make any representations other than those contained or incorporated by
reference in this prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by our
company. This prospectus does not constitute an offer to sell or the
solicitation of an offer to buy such securities in any circumstances in which
such offer or solicitation is unlawful. Neither the delivery of this prospectus,
nor any sale hereunder or thereunder, shall, under any circumstances, create any
implication that there has been no change in our affairs or business since the
date of this prospectus or that the information contained or incorporated by
reference is correct as of any time subsequent to the date of such information.
Unless the context requires otherwise, whenever a reference is made in
this prospectus to the "company" or to "us," "we" or "our," such reference is to
The First American Corporation only and not its subsidiaries.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" certain 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.
This prospectus incorporates by reference the documents set forth below that we
have previously filed with the SEC. These documents contain important business
and financial information about our company, including information concerning
its financial performance.
We incorporate by reference the following documents into this
prospectus:
o annual report on Form 10-K for the fiscal year ended December 31,
2000;
o quarterly report on Form 10-Q for the fiscal quarter ended March
31, 2001;
o current reports on Form 8-K filed with the SEC on April 11, 2001,
April 16, 2001, May 7, 2001, May 8, 2001, May 10, 2001 and May
17, 2001;
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; and
41
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.
We also incorporate by reference into this prospectus all of our
filings with the SEC made pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act after the date of this prospectus but prior to the termination of
any offering made pursuant to this prospectus. Information in this prospectus
and incorporated by reference is only current as of the date it is made.
Information in documents that we subsequently file with the SEC will
automatically update and supersede any previously disclosed information.
You may obtain a copy of our SEC filings at no cost by writing to us
at The First American Corporation, 1 First American Way, Santa Ana, California
92707-5913, Attention: Mark R Arnesen, Esq., Secretary, or by telephoning us at
(714) 800-3000.
SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference contain
"forward-looking statements" within the meaning of the federal securities laws.
These forward-looking statements are based on our management's estimates and
assumptions and take into account only the information available at the time the
forward-looking statements are made. Although we believe these estimates and
assumptions are and will be reasonable, forward-looking statements involve
risks, uncertainties and other factors that could cause our actual results to
differ materially from those suggested in the forward-looking statements.
Our actual results, performance or achievement could differ materially
from those expressed in, or implied by, forward-looking statements and,
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do so,
what impact they will have on the results of our operations and financial
condition. The forward-looking statements speak only as of the date they are
made. We do not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking statements
are made.
The words "anticipates," "estimates," "prospects," "forecasts,"
"goals," "believes," "expects," "intends," and similar expressions are intended
to identify such forward-looking statements. Forward-looking statements are
subject to numerous risks and uncertainties. These risks, uncertainties and
factors include, among other things:
o general volatility of the capital markets and the market price of
our common 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 changes in government regulations that are applicable to our
regulated businesses;
o the degree and nature of our competition;
o an increase in our expenses;
o continued consolidation among our competitors and customers;
o technological changes may be more difficult or expensive than
anticipated;
o legal proceedings commenced by the California attorney general
and related litigation; or
o other factors described in our annual report on Form 10-K for the
fiscal year ended December 31, 2000.
LEGAL MATTERS
Certain legal matters with respect to the legality of the sale and
issuance of the securities offered hereby will be passed upon for First American
by White & Case LLP, 633 West Fifth Street, Los Angeles, California 90071.
42
EXPERTS
The consolidated financial statements of The First American
Corporation appearing in its Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 have been audited by PricewaterhouseCoopers LLP,
independent accountants, as stated in their report included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
* * *
43
================================== ================================
THE
FIRST AMERICAN
CORPORATION
o We have not authorized
anyone to give you any
information that differs $210,000,000 Senior Convertible
from the information in Debentures Due 2008
this prospectus. If you
receive any different 7,500,000 Common Shares
information, you should (subject to adjustment)
not rely on it.
o The delivery of this
prospectus shall not, [First American Logo]
under any circumstances,
create an implication that
THE FIRST AMERICAN
CORPORATION is operating
under the same conditions
that it was operating
under on the date of this
prospectus. Do not assume
that the information ----------------------
contained in this
prospectus is correct at PROSPECTUS
any time past the date
indicated. ----------------------
o This prospectus does not
constitute an offer to
sell, or the solicitation
of an offer to buy, any
securities other than the
securities to which it
relates.
o This prospectus does not
constitute an offer to
sell, or the solicitation
of an offer to buy, the
securities to which it
relates in any
circumstances in which such
offer or solicitation is
unlawful.
DATED , 2001
================================== ================================
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions,
are estimated to be as follows:
Securities and Exchange Commission registration fee.................$ 52,500
Trustee's fees......................................................$ 15,000*
Accounting fees and expenses........................................$ 10,000*
Legal fees and expenses.............................................$ 25,000*
Printing expenses...................................................$ 10,000*
Miscellaneous.......................................................$ 5,000*
Total...............................................................$117,500*
---------
* Estimated.
Item 15. Indemnification of Directors and Officers.
Subject to certain limitations, Section 317 of the California
Corporations Code provides in part that a corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any proceeding (other than an action by or in the right of the corporation to
procure a judgment in its favor) by reason of the fact that the person is or was
an agent (which term includes officers and directors) of the corporation,
against expenses, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with the proceeding if that person acted in
good faith and in a manner the person reasonably believed to be in the best
interests of the corporation and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of the person was unlawful.
The California indemnification statute, as provided in Section 317 of
the California Corporations Code (noted above), is nonexclusive and allows a
corporation to expand the scope of indemnification provided, whether by
provisions in its Bylaws or by agreement, to the extent authorized in the
corporation's articles.
The Restated Articles of Incorporation of the Registrant provide that:
"The liability of the directors of the Corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law." The effect
of this provision is to exculpate directors from any liability to the
Registrant, or anyone claiming on the Registrant's behalf, for breaches of the
directors' duty of care. However, the provision does not eliminate or limit the
liability of a director for actions taken in his capacity as an officer. In
addition, the provision applies only to monetary damages and is not intended to
impair the rights of parties suing on behalf of the Registrant to seek equitable
remedies (such as actions to enjoin or rescind a transaction involving a breach
of the directors' duty of care or loyalty).
The Bylaws of the Registrant provide that, subject to certain
qualifications, "(i) The corporation shall indemnify its Officers and Directors
to the fullest extent permitted by law, including those circumstances in which
indemnification would otherwise be discretionary; (ii) the corporation is
required to advance expenses to its Officers and Directors as incurred,
including expenses relating to obtaining a determination that such Officers and
Directors are entitled to indemnification, provided that they undertake to repay
the amount advanced if it is ultimately determined that they are not entitled to
indemnification; (iii) an Officer or Director may bring suit against the
corporation if a claim for indemnification is not timely paid; (iv) the
corporation may not retroactively amend this Section 1 in a way which is adverse
to its Officers and Directors; (v) the provisions of subsections (i) through
(iv) above shall apply to all past and present Officers and Directors of the
corporation." "Officer" includes the following officers of the Registrant:
Chairman of the Board, President, Vice President, Secretary, Assistant
Secretary, Chief Financial Officer, Treasurer, Assistant Treasurer and such
other officers as the board shall
designate from time to time. "Director" of the Registrant means any person
appointed to serve on the Registrant's board of directors either by its
shareholders or by the remaining board members.
Each of the Registrant's 1996 Stock Option Plan, 1997 Directors' Stock
Plan, 401(k) Savings Plan, Pension Plan, Pension Restoration Plan and Employee
Profit Sharing and Stock Ownership Plan (for purposes of this paragraph, each
individually, the "Plan") provides that, subject to certain conditions, the
Registrant may, through the purchase of insurance or otherwise, indemnify each
member of the Board (or board of directors of any affiliate), each member of the
committee charged with administering the Plan, 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
Registrant'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."
Each of the Registrant's Management Supplemental Benefit Plan and
Executive Supplemental Benefit Plan (for purposes of this paragraph, each
individually, the "Plan") provides that, subject to certain conditions, the
Registrant may, through the purchase of insurance or otherwise, indemnify and
hold harmless, to the extent permitted by law, the members of the board of
directors and any other employees to whom any responsibility with respect to the
administration of the Plan has been delegated against any and all costs,
expenses and liabilities (including attorneys' fees) incurred by such parties in
performing their duties and responsibilities under the Plan, provided that such
party or parties were not guilty of willful misconduct.
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.
Item 16. Exhibits.
Exhibit
Number Description
------ -----------
4.1 Description of First American's capital stock in Article Six of First
American's Restated Articles of Incorporation (incorporated by
reference from Exhibit 3.1 of Amendment No. 1, dated July 28, 1998, to
First American's Registration Statement No. 333-53681 on Form S-4).
4.2 Registration Rights Agreement dated as of April 24, 2001.
-3-
4.3 Indenture dated as of April 24, 2001.
4.4 Form of Senior Convertible Debenture (contained in Exhibit 4.3).
4.5 Rights Agreement (incorporated by reference from Exhibit 4 of First
American's Registration Statement on Form 8-A dated November 7, 1997).
5 Opinion of White & Case LLP.
12 Statement Regarding Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants to
Registrant.
23.2 Consent of White & Case LLP (contained in Exhibit 5).
24 Power of Attorney.
25 Statement of Eligibility of Trustee under the Trust Indenture Act of
1939 on Form T-1.
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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
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;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3 and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the SEC by the Registrant pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference 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.
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The undersigned registrant hereby undertakes 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.
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 described in Item 15 above,
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.
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
* * *
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Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Santa Ana, State of California, on July 16, 2001.
THE FIRST AMERICAN 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: July 16, 2001 By: /s/ D.P. Kennedy
------------------------------------
D. P. Kennedy, Chairman and Director
Date: July 16, 2001 By: /s/ Parker S. Kennedy
-------------------------------------
Parker S. Kennedy, President and Director
Date: July 16, 2001 By: /s/ Thomas A. Klemens
-------------------------------------
Thomas A. Klemens, Executive Vice
President, Chief Financial Officer
(Principal Financial Officer)
Date: July 16, 2001 By: /s/ Max O. Valdes
--------------------------------------
Max O. Valdes, Vice President
(Principal Accounting Officer)
-6-
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: July 16, 2001 By: *
--------------------------------------
George L. Argyros, Director
Date: July 16, 2001 By: *
--------------------------------------
Gary J. Beban, Director
Date: July 16, 2001 By: *
--------------------------------------
J. David Chatham, Director
Date: July 16, 2001 By:
--------------------------------------
Hon. William G. Davis, Director
Date: July 16, 2001 By: *
--------------------------------------
James L. Doti, Director
Date: July 16, 2001 By:
--------------------------------------
Lewis W. Douglas, Jr., Director
Date: July 16, 2001 By: *
--------------------------------------
Paul B. Fay, Jr., Director
Date: July 16, 2001 By: *
--------------------------------------
Frank E. O'Bryan, Director
Date: July 16, 2001 By: *
--------------------------------------
Roslyn B. Payne, Director
Date: July 16, 2001 By: *
--------------------------------------
D. Van Skilling, Director
Date: July 16, 2001 By: *
--------------------------------------
Virginia Ueberroth, Director
*By: /s/ Parker S. Kennedy
--------------------------------------
Parker S. Kennedy
Attorney-in-Fact
-7-
Exhibit Index
Exhibit
Number Description
------ -----------
4.1 Description of First American's capital stock in
Article Six of First American's Restated Articles
of Incorporation (incorporated by reference from
Exhibit 3.1 of Amendment No. 1, dated July 28,
1998, to First American's Registration Statement
No. 333-53681 on Form S-4).
4.2 Registration Rights Agreement dated as of April
24, 2001.
4.3 Indenture dated as of April 24, 2001.
4.4 Form of Senior Convertible Debenture (contained in
Exhibit 4.3).
4.5 Rights Agreement (incorporated by reference from
Exhibit 4 of First American's Registration
Statement on Form 8-A dated November 7, 1997).
5 Opinion of White & Case LLP.
12 Statement Regarding Computation of Ratio of
Earnings to Fixed Charges.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants to Registrant.
23.2 Consent of White & Case LLP (contained in Exhibit
5).
24 Power of Attorney.
25 Statement of Eligibility of Trustee under the
Trust Indenture Act of 1939 on Form T-1.
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