-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LQUdRSJB+r26FDnVzhuTpxC1+MYq6EkzTa0a49lBX6wvlGYpOrs70w6JKI4lwdNx /aiACp2FM4rASwwesPjKow== 0001017062-97-001552.txt : 19970815 0001017062-97-001552.hdr.sgml : 19970815 ACCESSION NUMBER: 0001017062-97-001552 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST AMERICAN FINANCIAL CORP CENTRAL INDEX KEY: 0000036047 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 951068610 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03658 FILM NUMBER: 97661010 BUSINESS ADDRESS: STREET 1: 114 E FIFTH ST CITY: SANTA ANA STATE: CA ZIP: 92701-4699 BUSINESS PHONE: 7145583211 MAIL ADDRESS: STREET 1: 114 E FIFTH STREET CITY: SANTA ANA STATE: CA ZIP: 92701 FORMER COMPANY: FORMER CONFORMED NAME: FIRST AMERICAN TITLE INSURANCE & TRUST C DATE OF NAME CHANGE: 19690515 10-Q 1 FORM 10-Q FOR PERIOD ENDED JUNE 30, 1997 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 ------------- OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ -------------- Commission file number 0-3658 -------------------------------------- THE FIRST AMERICAN FINANCIAL CORPORATION ------------------------------------------- (Exact name of registrant as specified in its charter) Incorporated in California 95-1068610 -------------------------- ------------------ (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 114 East Fifth Street, Santa Ana, California 92701-4699 ------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (714)558-3211 ---------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No -------- ---------- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports to be filed by Section 12,13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No -------- --------- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. $1 par value - 11,565,413 as of August 6, 1997 INFORMATION INCLUDED IN REPORT ------------------------------ Part I: Financial Information Item 1. Financial Statements A. Condensed Consolidated Statements of Income B. Condensed Consolidated Balance Sheets C. Condensed Consolidated Statements of Cash Flows D. Notes to Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II: Other Information Item 6. Exhibits and Reports on Form 8-K Items 1-5 have been omitted because they are not applicable with respect to the current reporting period. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE FIRST AMERICAN FINANCIAL CORPORATION ---------------------------------------- (Registrant) /s/ THOMAS A. KLEMENS ---------------------------------------- Thomas A. Klemens Executive Vice President, Chief Financial Officer (Principal Financial Officer and Duly Authorized to Sign on Behalf of Registrant) Date: August 13, 1997 1 Part I: Financial Information --------------------- Item 1. Financial Statements -------------------- THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Statements of Income ------------------------------------------- (Unaudited)
For the Three Months Ended For the Six Months Ended June 30 June 30 ----------------------------------- ---------------------------------- 1997 1996 1997 1996 --------------- --------------- --------------- --------------- Revenues Operating revenues $ 443,447,000 $ 404,878,000 $ 819,872,000 $ 745,757,000 Investment and other income 6,927,000 8,496,000 13,379,000 14,993,000 --------------- --------------- --------------- --------------- 450,374,000 413,374,000 833,251,000 760,750,000 --------------- --------------- --------------- --------------- Expenses Salaries and other personnel costs 157,812,000 132,742,000 298,599,000 252,982,000 Premiums retained by agents 128,962,000 128,218,000 251,155,000 238,090,000 Other operating expenses 96,198,000 84,011,000 180,668,000 157,475,000 Provision for title losses and other claims 22,457,000 23,488,000 41,049,000 42,463,000 Depreciation and amortization 6,647,000 5,558,000 13,122,000 10,007,000 Interest 2,538,000 1,281,000 3,660,000 2,510,000 Minority interests 983,000 864,000 1,294,000 1,484,000 --------------- --------------- --------------- --------------- 415,597,000 376,162,000 789,547,000 705,011,000 --------------- --------------- --------------- --------------- Income before premium and income taxes 34,777,000 37,212,000 43,704,000 55,739,000 Premium taxes 4,561,000 4,385,000 8,722,000 7,930,000 --------------- --------------- --------------- --------------- Income before income taxes 30,216,000 32,827,000 34,982,000 47,809,000 Income taxes 11,700,000 13,400,000 13,600,000 19,800,000 --------------- --------------- --------------- --------------- Net income $ 18,516,000 $ 19,427,000 $ 21,382,000 $ 28,009,000 =============== =============== =============== =============== Net income per share $ 1.60 $ 1.70 $ 1.85 $ 2.45 =============== =============== =============== =============== Cash dividends per share $ .18 $ .18 $ .36 $ .33 =============== =============== =============== =============== Weighted average number of shares 11,595,000 11,447,000 11,581,000 11,439,000 =============== =============== =============== ===============
2 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Balance Sheets ------------------------------------- (Unaudited)
June 30, 1997 December 31, 1996 ------------- ----------------- Assets Cash and cash equivalents $ 165,429,000 $173,439,000 -------------- ------------ Accounts and accrued income receivable, net 115,514,000 89,355,000 -------------- ------------ Investments: Deposits with savings and loan associations and banks 29,875,000 21,674,000 Debt securities 138,647,000 130,576,000 Equity securities 10,366,000 8,517,000 Other long-term investments 32,028,000 30,414,000 -------------- ------------ 210,916,000 191,181,000 -------------- ------------ Loans receivable 59,781,000 54,256,000 -------------- ------------ Property and equipment, at cost 242,952,000 222,917,000 Less- accumulated depreciation (98,521,000) (92,451,000) -------------- ------------ 144,431,000 130,466,000 -------------- ------------ Title plants and other indexes 96,982,000 94,226,000 -------------- ------------ Assets acquired in connection with claim settlements (net of valuation reserves of $10,199,000 and $10,278,000) 21,664,000 24,270,000 -------------- ------------ Deferred income taxes 36,843,000 38,401,000 -------------- ------------ Goodwill and other intangibles, net 127,270,000 87,189,000 -------------- ------------ Deferred policy acquisition costs 24,472,000 24,753,000 -------------- ------------ Other assets 92,143,000 72,258,000 -------------- ------------ $1,095,445,000 $979,794,000 ============== ============ Liabilities and Stockholders' Equity Demand deposits $ 56,168,000 $ 51,321,000 -------------- ------------ Accounts payable and accrued liabilities 152,269,000 130,325,000 -------------- ------------ Deferred revenue 102,674,000 104,133,000 -------------- ------------ Reserve for known and incurred but not reported claims 246,925,000 245,245,000 -------------- ------------ Income taxes payable 3,906,000 2,554,000 -------------- ------------ Notes and contracts payable 39,846,000 71,257,000 -------------- ------------ Minority interests in consolidated subsidiaries 23,063,000 22,494,000 Commitments and contingencies Guaranteed preferred beneficial interests in Company's junior subordinated deferrable interest debentures 100,000,000 -------------- Stockholders' equity: Preferred stock, $1 par value Authorized - 500,000 shares; outstanding - none Common stock, $1 par value Authorized - 24,000,000 shares Outstanding - 11,562,000 and 11,554,000 shares 11,562,000 11,554,000 Additional paid-in capital 49,634,000 49,420,000 Retained earnings 305,960,000 288,754,000 Net unrealized gain on securities 3,438,000 2,737,000 -------------- ------------ 370,594,000 352,465,000 -------------- ------------ $1,095,445,000 $979,794,000 ============== ============
3 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Condensed Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30 ---------------------------- 1997 1996 ------------ ------------ Cash flows from operating activities: Net income $ 21,382,000 $ 28,009,000 Adjustments to reconcile net income to cash provided by operating activities- Provision for title losses and other claims 41,049,000 42,463,000 Depreciation and amortization 13,122,000 10,007,000 Minority interests in net income 1,294,000 1,484,000 Other, net (434,000) (640,000) Changes in assets and liabilities excluding effects of company acquisitions and noncash transactions- Claims paid, including assets acquired, net of recoveries (36,775,000) (39,077,000) Net change in income tax accounts 7,677,000 11,223,000 Increase in accounts and accrued income receivable (13,877,000) (19,878,000) (Decrease) increase in accounts payable and accrued liabilities (12,503,000) 15,466,000 Decrease in deferred revenue (1,459,000) (1,054,000) Other, net (17,693,000) (7,554,000) ------------ ------------ Cash provided by operating activities 1,783,000 40,449,000 ------------ ------------ Cash flows from investing activities: Net cash effect of company acquisitions (28,505,000) (3,306,000) Net increase in deposits with banks (8,201,000) (5,458,000) Net increase in loans receivable (5,525,000) (5,356,000) Purchases of debt and equity securities (40,963,000) (40,365,000) Proceeds from sales of debt and equity securities 21,691,000 33,451,000 Proceeds from maturities of debt securities 10,427,000 8,031,000 Net decrease in other investments 366,000 147,000 Capital expenditures (21,023,000) (12,474,000) Proceeds from sale of property and equipment 569,000 1,092,000 ------------ ------------ Cash used for investing activities (71,164,000) (24,238,000) ------------ ------------ Cash flows from financing activities: Net change in demand deposits 4,847,000 3,833,000 Proceeds from the issuance of junior subordinated deferrable interest debentures 100,000,000 Repayment of debt (37,337,000) (9,330,000) Purchase of Company shares (2,245,000) (348,000) Cash dividends (4,176,000) (3,784,000) Proceeds from exercise of employee stock options 282,000 ------------ ------------ Cash provided by (used for) financing activities 61,371,000 (9,629,000) ------------ ------------ Net (decrease) increase in cash and cash equivalents (8,010,000) 6,582,000 Cash and cash equivalents - Beginning of year 173,439,000 145,902,000 ------------ ------------ - End of first half $165,429,000 $152,484,000 ============ ============ Supplemental information: Cash paid during the first half for: Interest $ 2,088,000 $ 2,729,000 Premium taxes $ 10,243,000 $ 7,149,000 Income taxes $ 7,197,000 $ 8,760,000 Noncash investing and financing activities: Shares issued for stock bonus plan $ 2,185,000 $ 1,287,000 Liabilities incurred in connection with company acquisitions $ 40,184,000 $ 11,311,000 Net unrealized gain (loss) on securities $ 701,000 $ (2,662,000)
4 THE FIRST AMERICAN FINANCIAL CORPORATION AND SUBSIDIARY COMPANIES ------------------------ Notes to Condensed Consolidated Financial Statements ---------------------------------------------------- (Unaudited) Note 1 - Basis of Condensed Consolidated Financial Statements - ------------------------------------------------------------- The condensed consolidated financial information included in this report has been prepared in conformity with the accounting principles and practices reflected in the consolidated financial statements included in the annual report filed with the Commission for the preceding calendar year. All adjustments are of a normal recurring nature and are, in the opinion of management, necessary to a fair statement of the consolidated results for the interim periods. Any statements in this report looking forward in time involve risks and uncertainties, including but not limited to the following risks: the effect of interest rate fluctuations; changes in the performance of the real estate markets; the effect of changing economic conditions; and the demand for and acceptance of the Company's products. This report should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Note 2 - Junior Subordinated Deferrable Interest Debentures - ----------------------------------------------------------- On April 22, 1997, the Company issued and sold $100 million of 8.5% trust preferred securities, due in 2012, through its wholly owned subsidiary, First American Capital Trust I. For financial reporting purposes, the securities are presented in the consolidated balance sheet of the Company as a separate line item directly above stockholders' equity under the caption "Guaranteed Preferred Beneficial Interests in Company's Junior Subordinated Deferrable Interest Debentures." Distributions payable on the securities are included as interest expense in the Company's consolidated income statement. The Company has used a portion of the proceeds from the sale of these 15-year securities to repay in full the variable rate indebtedness portion of its amended credit agreement, to finance certain acquisitions and for general corporate purposes. Note 3 - Company Acquisition - ---------------------------- On May 13, 1997, the Company acquired all of the operations of Strategic Mortgage Services, Inc. (SMS) other than SMS' flood zone certification business. This acquisition has been accounted for by the purchase method of accounting and, accordingly, the assets acquired and liabilities assumed have been recorded at their estimated fair values at the date of acquisition. Note 4 - Subsequent Event - ------------------------- On July 29, 1997, the Company amended its credit facility to provide for a more favorable pricing option, an increased line of credit and the elimination or relaxation of certain covenants. The line of credit has been increased from $30.0 million to $75.0 million and is currently unused. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations - ------------- RESULTS OF OPERATIONS Three and six months ended June 30: OVERVIEW Mortgage interest rates, which began to increase in the second quarter 1994, peaked in January of 1995 and decreased throughout the remainder of that year and into 1996, helped by an easing of monetary policy by the Federal Reserve Board. This, together with an improved real estate economy (including the beginnings of a modest recovery in California and an increase in refinance activity), contributed to a relatively strong first quarter 1996. These favorable conditions continued throughout 1996 and into 1997, resulting in strong revenues and profits for the Company for 1996, relatively strong revenues for the first quarter 1997 and record revenues for the second quarter 1997. However, profits for the first and second quarters of 1997 were adversely affected by the need for title operations to maintain staffing levels in order to service the record number of title orders opened during the current six month period. Furthermore, the Company's information services operations experienced higher overhead as it integrated acquisitions and added new customers to its systems and continued to build and refine its framework to respond to the present and future needs of its customers. Net income for the second quarter 1997 was $18.5 million, or $1.60 per share, as compared with $19.4 million, or $1.70 per share, for the same period of the prior year. OPERATING REVENUES Set forth below is a summary of operating revenues for each of the Company's segments.
Three Months Ended Six Months Ended June 30 June 30 --------------------------------- ---------------------------------- ($000) ($000) 1997 % 1996 % 1997 % 1996 % -------- --- -------- ---- --------- ----- --------- --- Title Insurance: Direct Operations $186,876 42 $166,748 41 $334,550 41 $304,238 41 Agency Operations 160,660 36 158,104 39 312,766 38 294,468 39 -------- --- -------- --- -------- --- -------- --- 347,536 78 324,852 80 647,316 79 598,706 80 Real Estate Information 79,656 18 66,265 16 141,703 17 120,659 16 Home Warranty 11,214 3 9,761 3 21,282 3 18,500 3 Trust and Banking 5,041 1 4,000 1 9,571 1 7,892 1 -------- --- -------- --- -------- --- -------- --- Total $443,447 100 $404,878 100 $819,872 100 $745,757 100 ======== === ======== === ======== === ======== ===
Title Insurance. Operating revenues from direct title operations increased 12.1% and 10.0% for the three and six months ended June 30, 1997, respectively, when compared with the same periods of the prior year. These increases were primarily attributable to an increase in the number of title orders closed by the Company's direct operations, as well as an increase in the average revenues per order closed. The Company's direct operations closed 229,300 and 410,800 title orders during the three and six months ended June 30,1997, respectively, representing increases of 9.6% and 6.2% when compared with the same periods of the prior year. These increases were due in large part to the factors mentioned above, primarily the resurgence of real estate activity in California, a state heavily concentrated with direct operations, as well as increases in the Company's national market share. The average revenues per order closed were $815 and $814 for the three and six months ended June 30, 1997, respectively, increases of 2.3% and 3.4% when compared with $797 and $787 for the same periods of the prior year. These increases were primarily due to an increased mix of residential resale and commercial activity. Operating revenues from agency operations increased 1.6% and 6.2% for the three and six months ended June 30, 1997, respectively, when compared with the same periods of the prior year. These increases were primarily due to the same factors affecting direct operations mentioned above, compounded by the inherent delay in reporting by agents. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations (continued) - ------------------------- Real Estate Information. Real estate information operating revenues increased 20.2% and 17.4% for the three and six months ended June 30, 1997, respectively, when compared with the same periods of the prior year. These increases were primarily attributable to $13.1 million and $18.9 million of operating revenues contributed by new acquisitions for the respective periods. Home Warranty. Home warranty operating revenues increased 14.9% and 15.0% for the three and six months ended June 30, 1997, respectively, when compared with the same periods of the prior year. These increases were primarily attributable to improvements in the residential resale markets in which this business segment operates. INVESTMENT AND OTHER INCOME Investment and other income decreased 18.5% and 10.8% for the three and six months ended June 30, 1997, respectively, when compared with the same periods of the prior year. These decreases were primarily attributable to $0.5 million of investment losses realized in the current three month period, as compared with investment gains of $2.2 million realized in the same period of the prior year, offset in part by an increase in equity in earnings of unconsolidated subsidiaries and increased investment portfolio yields. TOTAL OPERATING EXPENSES Title Insurance. Salaries and other personnel costs were $120.3 million and $229.1 million for the three and six months ended June 30, 1997, respectively, increases of 16.7% and 15.6% when compared with the same periods of the prior year. These increases were primarily due to costs incurred servicing the high number of more labor intensive residential resale transactions processed during the current three and six month periods (as opposed to a predominate refinance mix in the same periods of the prior year). Also contributing to the increases were $4.0 million and $5.7 million of costs incurred for the three and six months ended June 30, 1997, respectively, related to acquisition activity and modest salary increases. Agents retained $129.0 million and $251.2 million of title premiums generated by agency operations for the three and six months ended June 30, 1997, respectively, which compares with $128.2 million and $238.1 million for the same periods of the prior year. The percentage of title premiums retained by agents ranged from 80.3% to 81.1% due to regional variances (i.e., the agency share varies from region to region and thus the geographical mix of agency revenues causes this variation). Other operating expenses were $58.6 million and $112.3 million for the three and six months ended June 30, 1997, respectively, increases of 5.8% and 6.7% when compared with the same periods of the prior year. These increases were primarily attributable to the impact of certain incremental costs associated with processing the increase in title order volume experienced during the respective periods. The provision for title losses as a percentage of title insurance operating revenues was 3.9% for the six months ended June 30, 1997, and 5.1% for the same period of the prior year. The decrease for the current period was primarily due to an ongoing improvement in the Company's loss experience. Real Estate Information. Real estate information personnel and other operating expenses were $62.7 million and $114.3 million for the three and six months ended June 30, 1997, respectively, increases of 31.5% and 32.9% when compared with the same periods of the prior year. These increases were primarily due to $11.0 million and $23.9 million of costs associated with new acquisitions, as well as slightly higher overhead costs attributable to the integration of the new acquisitions and transitioning new accounts to their systems. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations (continued) - ------------------------- Home Warranty. Home warranty personnel and other operating expenses were $3.2 million and $6.4 million for the three and six months ended June 30, 1997, respectively, increases of 14.2% and 17.1% when compared with the same periods of the prior year. These increases were primarily attributable to costs incurred servicing the increased business volume and expansion into new territories. The provision for home warranty losses expressed as a percentage of home warranty operating revenues was 56.9% and 53.2% for the six months ended June 30, 1997 and 1996, respectively. The increase in loss ratio was primarily due to an increase in the average number of claims per contract. PRETAX PROFITS Set forth below is a summary of pretax profits for each of the Company's segments.
Three Month Ended Six Months Ended June 30 June 30 ---------------------------- ------------------------------ ($000) ($000) 1997 % 1996 % 1997 % 1996 % -------- --- ------- --- -------- --- ------- --- Title Insurance $25,766 61 $23,581 54 29,701 52 $ 31,740 46 Real Estate Information 13,144 31 16,628 38 20,967 37 30,410 45 Home Warranty 2,677 6 2,399 6 4,482 8 4,687 7 Trust and Banking 937 2 838 2 1,852 3 1,617 2 ------- --- ------- --- ------- --- -------- --- Total before corporate 42,524 100 43,446 100 57,002 100 68,454 100 === === === === Corporate (7,747) (6,234) (13,298) (12,715) ------- ------- -------- -------- Total $34,777 $37,212 $ 43,704 $ 55,739 ======== ======= ======== ========
In general, the title insurance business is a lower profit margin business when compared to the Company's other segments. The lower profit margins reflect the high cost of producing title evidence whereas the corresponding revenues are subject to regulatory and competitive pricing restraints. Due to this relatively high proportion of fixed costs, title insurance profit margins generally improve as closed order volumes increase. In addition, title insurance profit margins are affected by the composition (residential or commercial) and type (resale, refinancing or new construction) of real estate activity. Profit margins from resale and new construction transactions are generally higher than from refinancing transactions because in many states there are premium discounts on, and cancellation rates are higher for, refinance transactions. Title insurance profit margins are also affected by the percentage of operating revenues generated by agency operations. Profit margins from direct operations are generally higher than from agency operations due primarily to the large portion of the premium that is retained by the agent. Real estate information pretax profits are generally unaffected by the type of real estate activity but increase as the volume of residential real estate loan transactions increase. PREMIUM TAXES Premium taxes were $8.7 million and $7.9 million for the six months ended June 30, 1997 and 1996, respectively. Premium taxes as a percentage of title insurance operating revenues remained relatively constant at 1.3%. INCOME TAXES The effective income tax rate was 38.9% for the six months ended June 30, 1997, and 41.4% for the same period of the prior year. The decrease in effective rate was primarily attributable to changes in the ratio of permanent differences to income before income taxes, as well as a decrease in state income taxes resulting from the Company's non-insurance subsidiaries decrease in pretax profits. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations (continued) - ------------------------- NET INCOME Net income for the three and six months ended June 30, 1997, was $18.5 million, or $1.60 per share, and $21.4 million, or $1.85 per share, respectively. Net income for the three and six months ended June 30, 1996, was $19.4 million, or $1.70 per share, and $28.0 million, or $2.45 per share, respectively. LIQUIDITY AND CAPITAL RESOURCES Total cash and cash equivalents decreased $8.0 million and increased $46.6 million for the six months ended June 30, 1997 and 1996, respectively. The decrease for the current year period was primarily attributable to the cash effect of company acquisitions, the net purchases of debt and equity securities, capital expenditures and the repayment of debt, offset in part by the proceeds from the issuance of junior subordinated debentures. The increase for the prior year period was primarily due to cash provided by operating activities, offset in part by capital expenditures and the repayment of debt. Effective July 29, 1997, the Company amended its bank credit agreement (see Note 4). The amendment relaxes or eliminates certain covenants and provides for a $75.0 million line of credit which is currently unused. Notes and contracts payable as a percentage of total capitalization decreased to 7.5% at June 30, 1997, from 16.0% at December 30, 1996. This decrease was primarily due to a $100.0 million increase in total capitalization as a result of the Company's junior subordinated deferrable interest debentures (see Note 2), as well as $31.4 million net reduction of debt. Management believes that all of its anticipated cash requirements for the immediate future will be met from internally generated funds and from the remaining proceeds of the junior subordinated debentures. 9 Part II: Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits (4.1) Amendment No. 6 dated as of April 1, 1997 to the Amendment and Restatement dated as of April 28, 1993 of Credit Agreement dated as of April 21, 1992. (4.2) Junior Subordinated Indenture dated as of April 22, 1997. (4.3) Amended and Restated Declaration of Trust dated as of April 22, 1997. (4.4) Amended and Restated Credit Agreement dated as of July 29, 1997 of Credit Agreement dated as of April 21, 1992. (10.1) First American Capital Trust I Registration Rights Agreement dated as of April 22, 1997. (10.2) Guarantee Agreement dated as of April 22, 1997. (10.3) Purchase Agreement dated as of April 17, 1997. (27) Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarterly period covered by this report. 10 EXHIBIT INDEX
Exhibit No. Description ----------- ------------ (4.1) Amendment No. 6 dated as of April 1, 1997 to the Amendment and Restatement dated as of April 28, 1993 of Credit Agreement dated as of April 21, 1992. (4.2) Junior Subordinated Indenture dated as of April 22, 1997. (4.3) Amended and Restated Declaration of Trust dated as of April 22, 1997. (4.4) Amended and Restated Credit Agreement dated as of July 29, 1997 of Credit Agreement dated as of April 21, 1992. (10.1) First American Capital Trust I Registration Rights Agreement dated as of April 22, 1997. (10.2) Guarantee Agreement dated as of April 22, 1997. (10.3) Purchase Agreement dated as of April 17, 1997. (27) Financial Data Schedule
11 EX-4.1 2 AMENDMENT #6 DATED APRIL 1, 1997 EXHIBIT 4.1 Composite Conformed Copy AMENDMENT NO. 6 AMENDMENT NO. 6 dated as of April 1, 1997 to the AMENDMENT AND RESTATEMENT dated as of April 28, 1993 of CREDIT AGREEMENT dated as of April 21, 1992 between THE FIRST AMERICAN FINANCIAL CORPORATION (the "Company"), the ------- lenders party thereto (the "Lenders") and THE CHASE MANHATTAN BANK, as agent ------- (the "Agent") for the Lenders (such Amendment and Restatement, as amended by ----- Amendment No. 1 thereto dated as of June 1, 1994, Amendment No. 2 thereto dated as of November 22, 1994, Amendment No. 3 thereto dated as of March 31, 1995, Amendment No. 4 thereto dated as of June 1, 1995 and Amendment No. 5 thereto dated as of February 16, 1996, being herein called the "Credit ------ Agreement"). - --------- The Company has requested that the Lenders agree to certain amendments of the Credit Agreement. The Lenders are willing to do so on the terms and conditions contained herein, Accordingly, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement shall have the ----------- same meanings when used herein. SECTION 2. AMENDMENTS OF CREDIT AGREEMENT. Effective ------------------------------- as of the date, and subject to the conditions, set forth in Section 3 hereof, the Credit Agreement is hereby amended as follows: A. Section 1.01 of the Credit Agreement is amended by inserting the following new defined term in the appropriate alphabetical order: "Capital Securities" shall mean preferred securities issued by a ------------------ Subsidiary of the Company organized as a Delaware business trust that are redeemable, at the option of such issuer, ten years or more after the issuance thereof, which securities are guaranteed by the Company and the proceeds of which are invested in junior subordinated securities of the Company. B. The definition of "Indebtedness" in Section 1.01 of the Credit Agreement is amended by inserting in clause (a) thereof, in the eighth line at the end of the parenthetical clause contained therein, the following words: ", but excluding any Capital Securities permitted under Section 8.07(p) hereof". C. The definition of "Stockholders' Equity" in Section 1.01 of the Credit Agreement is amended by inserting, at the end of such definition immediately prior to the period, the following words : ", provided that -------- stockholders' equity shall not include any Capital Securities". -2- D. Section 8.07 of the Credit Agreement is amended by (i) deleting the word "and" at the end of clause (n) thereof, (ii) replacing the period at the end of clause (o) thereof with a semi-colon followed by the word "and", and (iii) inserting a new clause (p) to read as follows: " (p) Capital Securities up to but not exceeding $100,000,000 at any one time outstanding." E. Each reference in the Credit Agreement to the Credit Agreement (including references such as "herein", "hereunder" and the like) is amended to refer to the Credit Agreement as amended hereby and (unless the context otherwise requires) to this Amendment. F. Except as hereby expressly amended, the Credit Agreement shall remain in full force and effect. SECTION 3. EFFECTIVENESS OF AMENDMENTS. The amendments provided for by --------------------------- Section 2 hereof shall become effective as of the date hereof upon the satisfaction of the following conditions precedent: (a) the execution and delivery by the Agent of a counterpart of this Amendment and the receipt by the Agent of counterparts of this Amendment executed and delivered by the Company and the Majority Lenders; and (b) the receipt by the Agent of a certificate of a senior officer of the Company to the effect that no Default under the Credit Agreement (as amended hereby) has occurred and is counting. The Agent will advise the Company and the Lenders when such conditions have been so satisfied. Section 4. EXPENSES. The Company hereby confirms its obligations under -------- Section 11.03(a)(ii) of the Credit Agreement with respect to the reasonable out-of-pocket costs and expenses of the Agent (including, without limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy) in connection with the negotiation, preparation, execution and delivery of this Amendment). Section 5. COUNTERPARTS. This Amendment may be executed in any number of ------------ counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Amendment by executing any such counterpart. SECTION 6. NEW YORK LAW. This Amendment shall be governed by and ------------ construed in accordance with the laws of the state of New York. -3- IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first above written. THE FIRST AMERICAN FINANCIAL CORPORATION By /s/ THOMAS A. KLEMENS ----------------------------- Title: E.V.P./C.F.O. By /s/ MARK R ARNESEN ---------------------------- Title: V.P./Secretary -4- THE CHASE MANHATTAN BANK By /s/ DEBORAH VAN ZIJL ------------------------------------- Title: Vice President WELLS FARGO BANK, N.A. By /s/ MICHAEL SULLIVAN ------------------------------------- Title: Michael Sullivan Vice President IMPERIAL BANK By /s/ MICHAEL SNOW ------------------------------------- Title: Vice President SANWA BANK CALIFORNIA By /s/ ART DUNBAR ------------------------------------- Title: Vice President UNION BANK By /s/ D S LAMBELL ------------------------------------- Title: Vice President NBD BANK By /s/ ANN H. CHUDACOFF ------------------------------------- Title: Vice President THE CANADA LIFE ASSURANCE COMPANY CUMMINGS & CO., as Nominee for The Canada Life Assurance Company By /s/ WILFREDO CUEVAS ------------------------------------- Title: Wilfredo Cuevas, A.V.P. -5- THE CHASE MANHATTAN BANK as Agent By /s/ DEBORAH VAN ZIJL --------------------------- Title: Vice President EX-4.2 3 JUNIOR SUBORDINATED DEBENTURE 4-22-97 EXHIBIT 4.2 Composite Conformed Copy - -------------------------------------------------------------------------------- THE FIRST AMERICAN FINANCIAL CORPORATION to WILMINGTON TRUST COMPANY Trustee _____________________________ JUNIOR SUBORDINATED INDENTURE Dated as of April 22, 1997 _____________________________ - -------------------------------------------------------------------------------- THE FIRST AMERICAN FINANCIAL CORPORATION Reconciliation and tie between the Trust Indenture Act of 1939 (including cross-references to provisions of Sections 310 to and including 317) and the Junior Subordinated Indenture, dated as of April 22, 1997.
Trust Indenture Indenture Act Section Section - --------------- --------- (S) 310 (a) (1), (2) and (5).......................... 6.9 (a) (3)........................................... Not Applicable (a) (4)........................................... Not Applicable (b)............................................... 6.8 .................................................. 6.10 (c)............................................... Not Applicable (S) 311 (a)........................................... 6.13(a) (b)........................................... 6.13(b) (b) (2)....................................... 7.3(a) (2) .............................................. 7.3(a) (2) (S) 312 (a)........................................... 7.1 .............................................. 7.2(a) (b)........................................... 7.2(b) (c)........................................... 7.2(c) (S) 313 (a)........................................... 7.3(a) (b)........................................... 7.3(b) (c)........................................... 7.3(a), 7.3(b) (d)........................................... 7.3(c) (S) 314 (a) (1), (2) and (3).......................... 7.4 (a) (4)....................................... 10.5 (b)........................................... Not Applicable (c) (1)....................................... 1.2 (c) (2)....................................... 1.2 (c) (3)....................................... Not Applicable (d)........................................... Not Applicable (e)........................................... 1.2 (f)........................................... Not Applicable (S) 315 (a)........................................... 6.1(a) (b)........................................... 6.2 .............................................. 7.3(a) (6) (c)........................................... 6.1(b) (d)........................................... 6.1(c)
Trust Indenture Indenture Act Section Section - ---------------- ---------- (d) (1)........................................ 6.1(a) (1) (d) (2)........................................ 6.1(c) (2) (d) (3)........................................ 6.1(c) (3) (e)............................................ 5.14 (S) 316 (a)............................................ 1.1 (a) (1) (A).................................... 5.12 (a) (1) (B).................................... 5.13 (a) (2)........................................ Not Applicable (b)............................................ 5.8 (c)............................................ 1.4(f) (S) 317 (a) (1)........................................ 5.3 (a) (2)........................................ 5.4 (b)............................................ 10.3 (S) 318 (a)............................................ 1.7
- -------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Junior Subordinated Indenture. Trust Indenture Indenture Act Section Section - --------------- ---------
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...... 1 Section 1.1. Definitions............................................. 1 Section 1.2. Compliance Certificate and Opinions..................... 9 Section 1.3. Forms of Documents Delivered to Trustee................. 9 Section 1.4. Acts of Holders......................................... 10 Section 1.5. Notices, Etc. to Trustee and Company.................... 12 Section 1.6. Notice to Holders; Waiver............................... 12 Section 1.7. Conflict with Trust Indenture Act....................... 12 Section 1.8. Effect of Headings and Table of Contents................ 13 Section 1.9. Successors and Assigns.................................. 13 Section 1.10. Separability Clause..................................... 13 Section 1.11 Benefits of Indenture................................... 13 Section 1.12. Governing Law........................................... 13 Section 1.13. Non-Business Days....................................... 13 ARTICLE II SECURITY FORMS........................... 14 Section 2.1. Forms Generally......................................... 14 Section 2.2. Legends................................................. 15 Section 2.3. Form of Face of Security................................ 17 Section 2.4. Form of Reverse of Security............................. 20 Section 2.4. Form of Trustee's Certificate of Authentication......... 24 ARTICLE III THE SECURITIES.......................... 24 Section 3.1. Title and Terms......................................... 24 Section 3.2. Denominations........................................... 27 Section 3.3. Execution, Authentication, Delivery and Dating.......... 27 Section 3.4. Temporary Securities.................................... 28 Section 3.5. Registration, Transfer and Exchange..................... 29 Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities........ 33 Section 3.7. Payment of Interest; Interest Rights Preserved.......... 34 Section 3.8. Persons Deemed Owners................................... 35 Section 3.9. Cancellation............................................ 36 Section 3.10. Computation of Interest................................. 36 Section 3.11. Deferrals of Interest Payment Dates..................... 36 Section 3.12. Right of Set-Off........................................ 37 Section 3.13. Agreed Tax Treatment.................................... 37
Trust Indenture Indenture Act Section Section - --------------- ---------
Section 3.14. Shortening of Stated Maturity............................................. 38 Section 3.15. CUSIP Numbers............................................................. 38 ARTICLE IV SATISFACTION AND DISCHARGE....................................... 38 Section 4.1. Satisfaction and Discharge of Indenture................................... 38 Section 4.2. Application of Trust Money................................................ 39 ARTICLE V REMEDIES.............................................. 40 Section 5.1. Events of Default......................................................... 40 Section 5.2. Acceleration of Maturity; Rescission and Annulment........................ 41 Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee........... 42 Section 5.4. Trustee May File Proofs of Claim.......................................... 43 Section 5.5. Trustee May Enforce Claims Without Possession of Securities............... 44 Section 5.6. Application of Money Collected............................................ 44 Section 5.7. Limitation on Suits....................................................... 44 Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities.......................... 45 Section 5.9. Restoration of Rights and Remedies........................................ 45 Section 5.10. Rights and Remedies Cumulative............................................ 46 Section 5.11. Delay or Omission Not Waiver.............................................. 46 Section 5.12. Control by Holders........................................................ 46 Section 5.13. Waiver of Past Defaults................................................... 46 Section 5.14. Undertaking for Costs..................................................... 47 Section 5.15. Waiver of Usury, Stay or Extension Laws................................... 47 ARTICLE VI THE TRUSTEE............................................ 48 Section 6.1. Certain Duties and Responsibilities....................................... 48 Section 6.2. Notice of Defaults........................................................ 49 Section 6.3. Certain Rights of Trustee................................................. 49 Section 6.4. Not Responsible for Recitals or Issuance of Securities.................... 50 Section 6.5. May Hold Securities....................................................... 50 Section 6.6. Money Held in Trust....................................................... 51 Section 6.7. Compensation and Reimbursement............................................ 51 Section 6.8. Disqualification; Conflicting Interests................................... 51 Section 6.9. Corporate Trustee Required; Eligibility................................... 52 Section 6.10. Resignation and Removal; Appointment of Successor......................... 52 Section 6.11. Acceptance of Appointment by Successor.................................... 54 Section 6.12. Merger, Conversion, Consolidation or Succession to Business............... 55
Trust Indenture Indenture Act Section Section - --------------- ---------
Section 6.13. Preferential Collection of Claims Against Company........... 55 Section 6.14. Appointment of Authenticating Agent......................... 55 ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY............. 57 Section 7.1. Company to Furnish Trustee Names and Addresses of Holders... 57 Section 7.2. Preservation of Information, Communications to Holders...... 57 Section 7.3. Reports by Trustee.......................................... 57 Section 7.4. Reports by Company.......................................... 58 ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........... 58 Section 8.1. Company May Consolidate, Etc., Only on Certain Terms........ 58 Section 8.2. Successor Corporation Substituted........................... 59 ARTICLE IX SUPPLEMENTAL INDENTURES........................ 60 Section 9.1. Supplemental Indentures without Consent of Holders.......... 60 Section 9.2. Supplemental Indentures with Consent of Holders............. 61 Section 9.3. Execution of Supplemental Indentures........................ 62 Section 9.4. Effect of Supplemental Indentures........................... 62 Section 9.5. Conformity with Trust Indenture Act......................... 62 Section 9.6. Reference in Securities to Supplemental Indentures.......... 63 ARTICLE X COVENANTS................................ 63 Section 10.1. Payment of Principal, Premium and Interest.................. 63 Section 10.2. Maintenance of Office or Agency............................. 63 Section 10.3. Money for Security Payments to be Held in Trust............. 64 Section 10.4. Statement as to Compliance.................................. 65 Section 10.5. Waiver of Certain Covenants................................. 65 Section 10.6. Payment of Trust Costs and Expenses......................... 65 Section 10.7. Additional Covenants........................................ 66 Section 10.8. Calculation of Original Issue Discount...................... 67 ARTICLE XI REDEMPTION OF SECURITIES......................... 67 Section 11.1. Applicability of This Article............................... 67 Section 11.2. Election to Redeem; Notice to Trustee....................... 67
Trust Indenture Indenture Act Section Section - --------------- ---------
Section 11.4. Notice of Redemption.................................................. 68 Section 11.5. Deposit of Redemption Price........................................... 69 Section 11.6. Payment of Securities Called for Redemption........................... 69 ARTICLE XII SINKING FUNDS........................................ 70 Section 12.1. Applicability of Article.............................................. 70 Section 12.2. Satisfaction of Sinking Fund Payments with Securities................. 70 Section 12.3. Redemption of Securities for Sinking Fund............................. 70 ARTICLE XIII SUBORDINATION OF SECURITIES.................................. 72 Section 13.1. Securities Subordinate to Senior Indebtedness......................... 72 Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc........................ 72 Section 13.3. Prior Payment to Senior Indebtedness Upon Acceleration of Securities.. 73 Section 13.4. No Payment When Senior Indebtedness in Default........................ 74 Section 13.5. Payment Permitted If No Default....................................... 74 Section 13.6. Subrogation to Rights of Holders of Senior Indebtedness............... 75 Section 13.7. Provisions Solely to Define Relative Rights........................... 75 Section 13.8. Trustee to Effectuate Subordination................................... 75 Section 13.9. No Waiver of Subordination Provisions................................. 76 Section 13.10. Notice to Trustee..................................................... 76 Section 13.11. Reliance on Judicial Order or Certificate of Liquidating Agent........ 77 Section 13.12. Trustee Not Fiduciary for Holders of Senior Indebtedness.............. 77 Section 13.13. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights...................................................... 77 Section 13.14. Article Applicable to Paying Agents................................... 78 Section 13.15. Certain Conversions or Exchanges Deemed Payment....................... 78 Section 13.16. Trust Moneys Not Subordinated......................................... 78 EXHIBITS Exhibit A Transferrees Letter of Representation ANNEXES Annex A Declaration of Trust Annex B Amended and Restated Declaration of Trust Annex C Guarantee Agreement
JUNIOR SUBORDINATED INDENTURE, dated as of April 22, 1997, between THE FIRST AMERICAN FINANCIAL CORPORATION, a California corporation (hereinafter called the "Company") having its principal office at 114 East Fifth Street, Santa Ana, CA 92701, and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee (hereinafter called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured junior subordinated debt securities in one or more series (hereinafter called the "Securities") of substantially the tenor hereinafter provided, including, without limitation, Securities issued to evidence loans made to the Company of the proceeds from the issuance from time to time by one or more business trusts (each a "Trust," and, collectively, the "Trusts") of preferred interests in such Trusts (the "Preferred Securities") and common interests in such Trusts (the "Common Securities" and, collectively with the Preferred Securities, the "Trust Securities"), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered. All things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. NOW THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION Section 1.1. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) The terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) All other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; 2 (3) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles which are generally accepted at the date or time of such computation; provided, that when two or more principles are so generally accepted, it shall mean that set of principles consistent with those in use by the Company; (4) The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (5) The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation"; (6) Whenever the context may require, any gender shall be deemed to include the others; and (7) Unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture. "Act" when used with respect to any Holder has the meaning specified in Section 1.4. "Additional Interest" means the interest, if any, that shall accrue on any interest on the Securities of any series the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security from the applicable Interest Payment Date. "Additional Taxes" means the sum of any additional taxes, duties and other governmental charges to which a Trust has become subject from time to time as a result of a Tax Event. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, no Trust to which Securities have been issued shall be deemed to be an Affiliate of the Company. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent Members" has the meaning set forth in Section 2.1. "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.14 to act on behalf of the Trustee to authenticate Securities of one or more series. "Board of Directors" means either the board of directors of the Company or any committee of that board duly authorized to act hereunder. 3 "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors, or such committee of the Board of Directors or officers of the Company to which authority to act on behalf of the Board of Directors has been delegated, and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee, or, with respect to the Securities of a series initially issued to a Trust, the corporate trust office of the Property Trustee under the related Declaration, is closed for business. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities" has the meaning specified in the first recital of this Indenture. "Common Stock" means the common stock, par value $1.00 per share, of the Company. "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. "Company Request" and "Company Order" mean, respectively, the written request or order signed in the name of the Company by the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, its President or a Vice President, and by its principal financial officer, its Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which at the date hereof is Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration. "corporation" includes a corporation, association, company, joint-stock company or business trust. "Covenant Defeasance" has the meaning specified in Section 4.3. "Declaration", with respect to a Trust, means a Declaration of Trust substantially in the form attached hereto as Annex A, as amended by an Amended and Restated Declaration of Trust substantially in the form attached hereto as Annex B, or substantially in such form as may be 4 specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Defaulted Interest" has the meaning specified in Section 3.7. "Definitive Securities" has the meaning set forth in Section 2.1. "Depositary" means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, the Person designated as Depositary by the Company pursuant to Section 3.1 with respect to such series (or any successor thereto). "Discount Security" means any security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2. "Distributions" means, with respect to the Trust Securities issued by a Trust, amounts payable in respect of such Trust Securities as provided in the related Declaration and referred to therein as "Distributions." "Dollar" means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts. "Event of Default" unless otherwise specified in the supplemental indenture creating a series of Securities has the meaning specified in Article V. "Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time. "Expiration Date" has the meaning specified in Section 1.4(f). "Extension Period" has the meaning specified in Section 3.11. "Global 144A Security" has the meaning set forth in Section 2.1. "Global Registered Security" has the meaning set forth in Section 2.1. "Global Securities Legend" has the meaning set forth in Section 2.2. "Global Security" has the meaning set forth in Section 2.1. "Guarantee", with respect to the Trust Securities issued by a Trust, means the guarantee by the Company of Distributions on such Trust Securities to the extent provided in the Guarantee Agreement. 5 "Guarantee Agreement", with respect to the Trust Securities issued by a Trust, means the Guarantee Agreement substantially in the form attached hereto as Annex C, or substantially in such form as may be specified as contemplated by Section 3.1 with respect to the Securities of any series, in each case as amended from time to time. "Holder" means a Person in whose name a Security is registered in the Securities Register. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of each particular series of Securities established as contemplated by Section 3.1. "Interest Payment Date" means as to each series of Securities the Stated Maturity of an installment of interest on such Securities. "Investment Company Event" means, with respect to a Trust, the receipt by such Trust of an opinion of counsel, rendered by a law firm having a recognized national securities practice, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), such Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"), which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Preferred Securities of such Trust. "Junior Subordinated Payment" has the meaning specified in Section 13.2. "Legal Defeasance" has the meaning specified in Section 4.2. "Maturity" when used with respect to any Security means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Notice of Default" means a written notice of the kind specified in Section 5.1(3). "Non-Global Purchasers" has the meaning set forth in Section 2.1. "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors , a Vice Chairman of the Board of Directors, the President or a Vice President, and by the principal financial officer, the Secretary or an Assistant Secretary (or any person expressly authorized by any of the foregoing persons) of the Company, and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be acceptable to the Trustee. 6 "Original Issue Date" means the date of issuance specified as such in each Security. "Outstanding" means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment or redemption price money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; and (iii) Securities in substitution for or in lieu of which other Securities have been authenticated and delivered or which have been paid pursuant to Section 3.6, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company; provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. Upon the written request of the Trustee, the Company shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Securities, if any, known by the Company to be owned or held by or for the account of the Company or any other obligor on the Securities or any Affiliate of the Company or such obligor, and, subject to the provisions of Section 6.1(b), the Trustee shall be entitled to accept such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination. "Paying Agent" means the Trustee or any Person authorized by the Company to pay the principal of (or premium, if any) or interest on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means, with respect to the Securities of any series, the place or places where the principal of (and premium, if any) and interest on the Securities of such series are payable pursuant to Sections 3.1 and 3.11. 7 "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or stolen Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Security. "Preferred Securities" has the meaning specified in the first recital of this Indenture. "Proceeding" has the meaning specified in Section 13.2. "Property Trustee" means, in respect of any Trust, the banking corporation, commercial bank or trust company identified as the "Property Trustee" in the related Declaration, solely in its capacity as Property Trustee of such Trust under such Declaration and not in its individual capacity, or its successor in interest in such capacity, or any successor property trustee appointed as therein provided. "QIB" means any "qualified institutional buyer" (as defined under the Securities Act). "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price" means, when used with respect to any Security to be redeemed, the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date with respect to the Securities of a series means, unless otherwise provided pursuant to Section 3.1 with respect to Securities of a series, (i) if the Securities of a series are represented by one or more Global Securities, the Business Day next preceding such Interest Payment Date and (ii) if any of the Securities of a series are not represented by one or more Global Securities, the date which is fifteen days next preceding such Interest Payment Date (whether or not a Business Day). "Regular Trustee" means, in respect of any Trust, each Person identified as a "Regular Trustee" in the related Declaration of Trust, solely in such Person's capacity as Regular Trustee of such Trust under such Declaration of Trust and not in such Person's individual capacity, or any successor trustee appointed as therein provided. "Responsible Officer" when used with respect to the Trustee means any officer of the Trustee within the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Restricted Securities Legend" has the meaning set forth in Section 2.2. 8 "Rights Plan" means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of Common Stock or any class or series of preferred stock of the Company, which rights (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of Common Stock, in each case until the occurrence of a specified event or events. "Rule 144A" has the meaning set forth in Section 2.1. "Securities" or "Security" has the meaning set forth in the first recital of this Indenture. "Securities Act" means the Securities Act of 1933, as amended. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 3.5. "Senior Indebtedness" means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) every obligation of such Person for claims (as defined in Section 101(4) of the United States Bankruptcy Code of 1978, as amended) in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; and (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; provided that Senior Indebtedness shall not include (a) any obligations of the Company which, by their terms, are expressly stated to rank pari passu in right of payment with, or to not be superior in right of payment to the Securities, (b) any obligations of the Company which, when incurred and without respect to any election under Section 1111(b) of the Bankruptcy Code of 1978, as amended, was without recourse to the Company, (c) any indebtedness of the Company to any of its Subsidiaries, (d) indebtedness to any employee of the Company incurred (i) as the deferred purchase price of property acquired by the Company and (ii) at the time of such acquisition, such person was not an employee of the Company or (e) any indebtedness in respect of debt securities issued to any trust, or a trustee of such trust, partnership or other entity affiliated with the Company that is a financing entity of the Company in connection with the issuance of such financing entity of securities that are similar to the Securities. "Special Event" shall mean a Tax Event or an Investment Company Event. 9 "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7. "Stated Maturity" when used with respect to any Security or any installment of principal thereof or interest thereon means the date specified pursuant to the terms of such Security as the date on which the principal of such Security or such installment of interest is due and payable, as such date, in the case of such principal, may be shortened or extended as provided pursuant to the terms of such Security and this Indenture. "Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency. "Tax Event" means, with respect to a series of Securities or a Trust, the receipt by such the Company of an Opinion of Counsel (as defined in the relevant Declaration) experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which proposed change, pronouncement or decision is announced on or after the Original Issue Date of the Securities of such series, there is more than an insubstantial risk that (i) such Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to United States federal income tax with respect to income received or accrued on the corresponding series of Securities issued by the Company to such Trust, (ii) interest payable by the Company on such series of Securities is not, or within 90 days of the date of such Opinion of Counsel, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes or (iii) such Trust is, or will be within 90 days of the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Transfer Restricted Securities" Securities that bear or are required to bear the Restricted Securities Legend set forth in Section 2.2 hereof. "Trust" has the meaning specified in the first recital of this Indenture. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder and, if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. 10 "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S.C. (S) 77aaa-77bbb), as amended and as in effect on the date as of this Indenture, except as provided in Section 9.5. "Trust Securities" has the meaning specified in the first recital of this Indenture. "U.S. Government Obligations" has the meaning specified in Section 4.4. "Vice President", when used with respect to the Company means any duly appointed vice president, whether or not designated by a number or a word or words added before or after the title "vice president." Section 1.2. Compliance Certificate and Opinions. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent (including covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action or request have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitute a condition precedent), if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such Officers' Certificate and Opinion of Counsel is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificates provided pursuant to Section 10.4) shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made or caused to be made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. 11 Section 1.3. Forms of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer or counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel rendering such Opinion of Counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions, or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Section 1.4. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent or proxy duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent or proxy shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where 12 such execution is by a Person acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine. (d) The ownership of Securities shall be proved by the Securities Register. (e) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (f) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of the relevant Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of the relevant Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of the relevant Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of the relevant Securities in the manner set forth in Section 1.6. The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.2, (iii) any request to institute proceedings referred to in Section 5.7(2) or (iv) any direction referred to in Section 5.12, in each case with respect to the relevant Securities. If any record date is set pursuant to this paragraph, the Holders of the relevant Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders 13 remain Holders after such record date, provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of the relevant Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of the relevant Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of the relevant Securities in the manner set forth in Section 1.6. With respect to any record date set pursuant to this Section, the party hereto which sets such record dates may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day, provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of the relevant Outstanding Securities in the manner set forth in Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. (g) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Section 1.5. Notices, Etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder, any holder of Preferred Securities or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, or (2) the Company by the Trustee, any Holder or any holder of Preferred Securities shall be sufficient for every purpose (except as otherwise provided in Section 5.1) hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at the address of 14 its principal office specified in the first paragraph of this instrument or at any other address subsequently furnished in writing to the Trustee by the Company. Section 1.6. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Securities Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Section 1.7. Conflict with Trust Indenture Act. At such time, if any, as this Indenture is qualified under the Trust Indenture Act, if any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the Trust Indenture Act through operation of Section 318(c) thereof, such imposed duties shall control. Section 1.8. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.9. Successors and Assigns. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. Section 1.10. Separability Clause. In case any provision of this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 1.11 Benefits of Indenture. 15 Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Indebtedness, the Holders of the Securities and, to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1, 9.2 and 10.5 the holders of Preferred Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF. Section 1.13. Non-Business Days. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day (and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day (in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity). ARTICLE II SECURITY FORMS Section 2.1. Forms Generally. The Securities of each series and the Trustee's certificate of authentication shall be in substantially the forms set forth in this Article, or in such other form or forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with applicable tax laws or the rules of any securities exchange or automated quotation system on which the Securities may be listed or traded or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary 16 of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 with respect to the authentication and delivery of such Securities. Securities registered under the Securities Act, shall be issued initially in the form of one or more permanent global Securities in definitive, fully registered form without interest coupons with the Global Securities Legend set forth in Section 2.2 hereof (each, a "Global Registered Security"), which -------------------------- shall be duly executed by the Company and authenticated by the Trustee as hereinafter provided. Securities that are not registered under the Securities Act and are offered and sold to QIBs in reliance on Rule 144A under the Securities Act ("Rule 144A"), shall be issued initially in the form of one or more permanent --------- global Securities in definitive, fully registered form without interest coupons with the Global Securities Legend and Restricted Securities Legend set forth in Section 2.2 hereof (each, a "Global 144A Security"; and when referred to herein -------------------- with a Global Registered Security, a "Global Security"), which shall be duly --------------- executed by the Company and authenticated by the Trustee as hereinafter provided. This paragraph shall apply only to Global Securities. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under ------------- this Indenture with respect to any Global Security held on their behalf by the Depositary or by the Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. Except as provided in Section 3.5, owners of beneficial interests in Global Securities will not be entitled to receive Definitive Securities (as hereinafter defined). Securities that are not registered under the Securities Act and are offered and sold to Persons who are not QIBs (referred to herein as the "Non-Global Purchasers") shall be issued initially to such Persons in the --------------------- form of certificated Securities bearing the Restricted Securities Legend set forth in Section 2.2 below ("Definitive Securities"); provided, however, that --------------------- -------- ------- upon transfer of such Definitive Securities to a QIB, such Definitive Securities will, unless the Global Security has previously been exchanged, be exchanged for an interest in a Global Security pursuant to the provisions of Section 3.5 hereof. Definitive Securities will bear the Restricted Securities Legend set forth in Section 2.2 unless removed in accordance with Section 2.2 hereof. The Securities shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods, if required by any securities exchange or automated quotation system on which the Securities may be listed or traded, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities 17 exchange or automated quotation system on which the Securities may be listed or traded, all as determined by the officers executing such Securities, as evidenced by their execution of such securities. Section 2.2. Legends. Each Security certificate evidencing Global Securities (and all Securities issued in exchange therefor or substitution thereof) shall bear a legend in substantially the following form ("Global Securities Legend"): "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF." Each Security certificate evidencing Global 144A Securities and Definitive Securities (and all Securities issued in exchange therefor or substitution thereof) shall bear a legend substantially the following form ("Restricted Securities Legend"): "THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, 18 ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE ISSUER OF THIS SECURITY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OF THIS SECURITY OR ANY AFFILIATE OF THE ISSUER OF THIS SECURITY WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSES (II)(D) AND (E) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND SUBSTANCE." Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global 144A Security) pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act: (a) in the case of any Transfer Restricted Security that is a Definitive Security, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Security that does not bear the Restricted Securities Legend set forth above and rescind any restriction on the transfer of such Security; and (b) in the case of any such Transfer Restricted Security represented by a Global 144A Security, such Transfer Restricted Security shall not be required to bear the Restricted Securities Legend, although it shall continue to be subject to the provisions of Section 3.5 hereof; provided, -------- however, that with respect to any request for an exchange of a Transfer ------- Restricted Security that is represented by a Global 144A Security for a Definitive Security that does not bear the Restricted Securities Legend, which request is made in reliance upon Rule 144, the Holder thereof shall certify in writing to the Trustee that such request is 19 being made pursuant to Rule 144 (such certification to be in the form set forth on the reverse of the Security). Section 2.3. Form of Face of Security. THE FIRST AMERICAN FINANCIAL CORPORATION CUSIP ____ __% Junior Subordinated Deferrable Interest Debentures No. $ THE FIRST AMERICAN FINANCIAL CORPORATION, a corporation organized and existing under the laws of the state of California (hereinafter called the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of Dollars on __________ __, ____[; provided that the Company may, subject to certain conditions set forth herein, shorten the Stated Maturity of the principal of this Security to a date not earlier than __________]. The Company further promises to pay interest on said principal sum from , or from the most recent interest payment date (each such date, an "Interest Payment Date") on which interest has been paid or duly provided for, [monthly] [quarterly] [semi-annually] [if applicable, insert - (subject to deferral as set forth herein)] in arrears on [insert applicable Interest Payment Dates] of each year, commencing , , at the rate of % per annum, until the principal hereof shall have become due and payable, [if applicable, insert plus Additional Interest, if any,] until the principal hereof is paid or duly provided for or made available for payment [if applicable, insert -and on any overdue principal and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the rate of % per annum, compounded [monthly] [quarterly] [semi- annually]]. The amount of interest payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year. The amount of interest payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Security is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. A "Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee [if applicable, insert, or the corporate trust office of the Property Trustee under the applicable Declaration,] is closed for business. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities is registered at the close of business on the Regular Record Date for such interest installment, which shall be the [insert definition of Regular Record Dates]. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable 20 to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities of this series may be listed or traded, and upon such notice as may be required by such exchange or self-regulatory organization, all as more fully provided in said Indenture. [If applicable, insert - So long as no Event of Default has occurred and is continuing, the Company shall have the right at any time during the term of this Security to defer payment of interest on this Security, at any time or from time to time, for up to consecutive [monthly] [quarterly] [semi- annual] interest payment periods with respect to each deferral period (each an "Extension Period"), during which Extension Periods the Company shall have the right to make partial payments or no payments of interest on any Interest Payment Date, and at the end of which the Company shall pay all interest then accrued and unpaid (together with Additional Interest thereon to the extent permitted by applicable law); provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of this Security; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock, (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu with or junior to this Securities or (iii) make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to this Security other than (a) dividends or distributions in Common Stock of the Company or warrants, options or other rights where the Company's Common Stock is issuable upon the exercise thereof, (b) payments under the Guarantee with respect to this Security, (c) any declaration of a dividend in connection with the implementation of a Rights Plan, or the issuance of stock under any such Rights Plan in the future, or the redemption or repurchase of any such rights pursuant to a Rights Plan, (d) as a result of an exchange or conversion (x) of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or (y) of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (e) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, and (f) purchases of Common Stock related to the issuance of Common Stock or rights under any employment agreement, benefit plan or similar agreement for the directors, officers, employees and consultants of the Company and its subsidiaries, related to the issuance of Common Stock or rights under a dividend reinvestment and stock purchase plan or related to the issuance of Common Stock (or securities convertible into or exchangeable for Common Stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period shall exceed consecutive [months] [quarters] 21 [semi-annual] periods or extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period except at the end thereof. The Company shall give the Holder of this Security and the Trustee notice of its election to begin any Extension Period at least one Business Day prior to the record date for the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral [if applicable, insert -or, with respect to the Securities issued to a Trust, so long as such Securities are held by such Trust, prior to the earlier of (i) the next succeeding date on which Distributions on the Preferred Securities would be payable but for such deferral or (ii) the date the Regular Trustees are required to give notice to any securities exchange or other applicable self-regulatory organization or to holders of such Preferred Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date]]. Payment of principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the United States, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [if applicable, insert -; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated in writing at least 15 days before the relevant Interest Payment Date by the Person entitled thereto as specified in the Securities Register]. The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and subject in right of payments to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. 22 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. THE FIRST AMERICAN FINANCIAL CORPORATION By: ------------------------------------- [President or Vice President] Attest: - --------------------------------------- [Secretary or Assistant Secretary] Section 2.4. Form of Reverse of Security. This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under a Junior Subordinated Indenture, dated as of April 22, 1997 (herein called the "Indenture"), between the Company and Wilmington Trust Company, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $ ]. All terms used in this Security that are defined in the Indenture [if applicable, insert -or in the Amended and Restated Declaration of Trust, dated as of _______ __, 19__, as amended (the "Declaration"), for First American Capital Trust __ among The First American Financial Corporation, as Sponsor, and the Trustees named therein, shall have the meanings assigned to them in the Indenture [if applicable, insert -or the Declaration, as the case may be]. [If applicable, insert--The Company may at any time, at its option, on or after _________, ____, and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a redemption price equal to the following prices, expressed in percentages of the principal amount, plus accrued and unpaid interest [if applicable, insert -including Additional Interest, if any] to but excluding the Redemption Date. If redeemed during the 12-month period beginning _____ __: 23
Redemption Year Price ---- ----------- 20__ % 20__ 20__ 20__ 20__ 20__ 20__ 20__ 20__ 20__
and at 100% on or after _________ __, 20__.] [If applicable, insert -Upon the occurrence and during the continuation of a Tax Event and in the opinion of counsel to the Company experienced in such matters, there would in all cases, after effecting the termination of the Trust and the distribution of the Securities of this series to the holders of the Preferred Securities in exchange therefor, be more than an insubstantial risk that a Tax Event would continue to exist, then the Company shall have the right (a) to shorten the Stated Maturity of the Securities of this series to the minimum extent required, but in any event to a date not earlier than ________, 20__ (the action referred to in this clause (a) being herein referred to as a "Maturity Advancement"), such that, in the opinion of counsel to the Company experienced in such matters, after such Maturity Advancement interest paid on the Securities of this Series will be deductible for United States federal income tax purposes or (b) if, in the opinion of counsel to the Company experienced in such matters, there would in all cases after effecting a Maturity Advancement, be more than an insubstantial risk that a Tax Event would continue to exist, to redeem the Securities of this series, in whole but not in part, at any time within 90 days following the occurrence of the Tax Event at a Redemption Price equal to 100% of the principal amount thereof plus accrued and unpaid interest, including Additional Interest, if any, to the Redemption Date.] [If applicable, insert -Upon the occurrence and during the continuation of an Investment Company Event and in the opinion of counsel to the Company experienced in such matters, there would in all cases, after effecting the termination of the Trust and the distribution of the Securities of this series to the holders of the Preferred Securities in exchange therefor, be more than an insubstantial risk that an Investment Company Event would continue to exist, then the Company shall have the right to redeem the Securities of this series, in whole but not in part, at any time within 90 days following the occurrence of the Investment Company Event at a Redemption Price equal to 100% of the principal amount thereof plus accrued and unpaid interest, including Additional Interest, if any, to the Redemption Date.] The Indenture contains provisions for satisfaction and discharge of the entire indebtedness of this Security upon compliance by the Company with certain conditions set forth in the Indenture. 24 The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of all series to be affected by such supplemental indenture. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities of all series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. [If the Security is not a Discount Security, -As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series may declare the principal amount of all the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of this series issued to a Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII of the Indenture.] [If the Security is a Discount Security, -As provided in and subject to the provisions of the Indenture, if an Event of Default with respect to the Securities of this series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than such portion of the principal amount as may be specified in the terms of this series may declare an amount of principal of the Securities of this series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of this series issued to a Trust, if upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of this series fails to declare the principal of all the Securities of this series to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the Preferred Securities then outstanding shall have such right by a notice in writing to the Company and the Trustee. Such amount shall be equal to - insert formula for determining the amount. Upon any such declaration, such amount of the principal of and the accrued interest (including any Additional Interest) on all the Securities of this series shall become immediately due and payable, 25 provided that the payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII of the Indenture.] Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and interest, if any, on this Security shall terminate. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained under Section 10.2 of the Indenture duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Securities of this series are issuable only in registered form without coupons in denominations of $ and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of such series of a different authorized denomination, as requested by the Holder surrendering the same. The Company and, by its acceptance of this Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that for United States federal, state and local tax purposes it is intended that this Security constitute indebtedness. THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF. 26 Section 2.5. Form of Trustee's Certificate of Authentication. This is one of the Securities referred to in the within mentioned Indenture. Dated: -------------------------- as Trustee By: ----------------------- Authorized Signatory ARTICLE III THE SECURITIES Section 3.1. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued from time to time in one or more series. The following matters shall be established in or pursuant to a Board Resolution, and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of a series: (a) the title of the Securities of such series, which shall distinguish the Securities of the series from all other Securities; (b) the limit, if any, upon the aggregate principal amount of the Securities of such series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any Securities which, pursuant to the last paragraph of Section 3.3, are deemed never to have been authenticated and delivered hereunder); provided, however, that the authorized aggregate principal amount of such series may be increased above such amount by a Board Resolution to such effect; (c) the Stated Maturity or Maturities on which the principal of the Securities of such series is payable or the method of determination thereof and the right of the Company to shorten or extend the Stated Maturity or Maturities; (d) the rate or rates, if any, at which the Securities of such series shall bear interest, if any, the rate or rates and extent to which Additional Interest, if any, shall be payable in respect 27 of any Securities of such series, the Interest Payment Dates on which such interest shall be payable, the right, pursuant to Section 3.11 or as otherwise set forth therein, of the Company to defer or extend an Interest Payment Date, and the Regular Record Date for the interest payable on any Interest Payment Date or the method by which any of the foregoing shall be determined; (e) the place or places where the principal of (and premium, if any) and interest on the Securities of such series shall be payable, the place or places where the Securities of such series may be presented for registration of transfer or exchange, and the place or places where notices and demands to or upon the Company in respect of the Securities of such series may be made; (f) the period or periods within which, or the date or dates on which, if any, the price or prices at which and the terms and conditions upon which the Securities of such series may be redeemed, in whole or in part, at the option of the Company; (g) the obligation or the right, if any, of the Company to redeem, repay or purchase the Securities of such series pursuant to any sinking fund, amortization or analogous provisions or upon the happening of a specified event, or at the option of a Holder thereof, and the period or periods within which, the price or prices at which, the currency or currencies (including currency unit or units) in which and the other terms and conditions upon which Securities of the series shall be redeemed, repaid or purchased, in whole or in part, pursuant to such obligation; (h) the denominations in which any Securities of such series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof; (i) if other than Dollars, the currency or currencies (including currency unit or units) in which the principal of (and premium, if any) and interest, if any, on the Securities of the series shall be payable, or in which the Securities of the series shall be denominated; (j) the additions, modifications or deletions, if any, in the Events of Default or covenants of the Company set forth herein with respect to the Securities of such series; (k) if other than the principal amount thereof, the portion of the principal amount of Securities of such series that shall be payable upon declaration of acceleration of the Maturity thereof; (l) the additions or changes, if any, to this Indenture with respect to the Securities of such series as shall be necessary to permit or facilitate the issuance of the Securities of such series in bearer form, registrable or not registrable as to principal, and with or without interest coupons; (m) any index or indices used to determine the amount of payments of principal of and premium, if any, on the Securities of such series or the manner in which such amounts will be determined; 28 (n) whether the Securities of the series, or any portion thereof, shall initially be issuable in the form of a temporary Global Security representing all or such portion of the Securities of such series and provisions for the exchange of such temporary Global Security for definitive Securities of such series; (o) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 2.2 and any circumstances in addition to or in lieu of those set forth in Section 3.5 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof; (p) the appointment of any Paying Agent or Agents for the Securities of such series; (q) the terms of any right to convert or exchange Securities of such series into any other securities or property of the Company, and the additions or changes, if any, to this Indenture with respect to the Securities of such series to permit or facilitate such conversion or exchange; (r) the form or forms of the Declaration of Trust, Amended and Restated Declaration of Trust and Guarantee Agreement, if different from the forms attached hereto as Annexes A, B and C, respectively; (s) the terms of any right to convert or exchange Securities of such series into any other securities or property of the Company, and the additions or changes, if any, to this Indenture with respect to the Securities of such series to permit or facilitate such conversion or exchange; (t) the additions, modifications or deletions, if any, in the Events of Default that apply to any Securities of the series and any change in the right of the Trustee or the requisite Holder of such Securities to declare the principal amount thereof due and payable pursuant to Section 5.2; (u) the relative degree, if any, to which the Securities of the series shall be senior to or be subordinated to other series of Securities in right of payment, whether such other series of Securities are Outstanding or not; and (v) any other terms of the Securities of such series (which terms shall not be inconsistent with the provisions of this Indenture). All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided herein or in or pursuant to such Board Resolution and set forth in such Officers' Certificate or in any such indenture supplemental hereto. If any of the terms of the Securities of any series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the 29 Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series. The Securities shall be subordinated in right of payment to Senior Indebtedness as provided in Article XIII. Section 3.2. Denominations. The Securities of each series shall be in registered form without coupons and shall be issuable in denominations of $1,000 and any integral multiple thereof, unless otherwise specified as contemplated by Section 3.1. Section 3.3. Execution, Authentication, Delivery and Dating. The Securities shall be executed on behalf of the Company by its President or one of its Vice Presidents under its corporate seal reproduced or impressed thereon and attested by its Secretary or one of its Assistant Secretaries. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and make such Securities available for delivery. If the form or terms of the Securities of the series have been established by or pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating, (1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 2.1, that such form has been established in conformity with the provisions of this Indenture; (2) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 3.1, that such terms have been established in conformity with the provisions of this Indenture; (3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company 30 enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; and (4) that all requirements of New York, California and Federal law in respect of the execution and delivery by the Company of such Securities, and all covenants and conditions set forth in this Indenture which are conditions precedent hereto, have been complied with. If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued. Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.9, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall not be entitled to the benefits of this Indenture. Section 3.4. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and make available for delivery, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities of such series in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. 31 If temporary Securities of any series are issued, the Company will cause Definitive Securities of such series to be prepared without unreasonable delay. After the preparation of Definitive Securities, the temporary Securities shall be exchangeable for Definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge (except for tax or other governmental charges, if applicable) to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor one or more definitive Securities of the same series, of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series. Section 3.5. Registration, Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. Such register is herein sometimes referred to as the "Securities Register." The Trustee is hereby appointed "Securities Registrar" for the purpose of registering Securities and transfers and exchanges of Securities as herein provided. Upon surrender for registration of transfer of any Security at the office or agency of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms. At the option of the Holder, Securities may be exchanged for other Securities of the same series of any authorized denominations, of a like aggregate principal amount, of the same Original Issue Date and Stated Maturity and having the same terms, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and make available for delivery, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Securities Registrar) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. 32 No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities. The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities: (1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture. (2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act at a time when the Depositary is required to be so registered to act as depositary, in either case unless the Company has approved a successor Depositary within 90 days, (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security, (C) the Company in its sole discretion determines that such Global Security will be so exchangeable or transferable or (D) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 3.1. (3) Subject to Clause (2) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct. (4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Section, Section 3.4, 3.6, 9.6 or 11.6 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof. The provisions of Clause (1) below shall only apply to transfers and exchanges of Definitive Securities: (1) When Definitive Securities are presented by a Holder to the Securities Registrar with a request: (a) to register the transfer of such Definitive Securities; or 33 (b) to exchange such Definitive Securities for an equal principal amount of Definitive Securities of other authorized denominations, the Securities Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that: -------- ------- (i) such Definitive Securities shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Securities Registrar, duly executed by such Holder or his attorney duly authorized in writing; and (ii) if such Definitive Securities are Transfer Restricted Securities, such Definitive Securities shall also be accompanied by the following additional information and documents, as applicable: (A) if such Transfer Restricted Securities are being delivered to the Securities Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse of the Security); or (B) if such Transfer Restricted Securities are being transferred (x) to the Company or to a QIB in accordance with Rule 144A under the Securities Act or (y) pursuant to an effective registration statement under the Securities Act, a certification from such Holder to that effect (in the form set forth on the reverse of the Security); or (C) if such Transfer Restricted Securities are being transferred (w) pursuant to an exemption from registration in accordance with Rule 144 or Regulation S under the Securities Act; or (x) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is acquiring the security for its own account, or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the Securities of $100,000 for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act; or (y) in reliance on another exemption from the registration requirements of the Securities Act: (i) a certification to that effect from such Holder (in the form set forth on the reverse of the Security), (ii) if the Company or the Trustee so requests, an Opinion of Counsel reasonably acceptable to the Company and to the Trustee to the effect that such transfer is in compliance with the Securities Act and (iii) in the case of clause (x), a signed letter from the transferee substantially in the form of Exhibit A hereto. 34 The provisions of Clause (1) below shall only apply to transfers and exchanges of a Definitive Security for a beneficial interest in a Global Security. (1) A Definitive Security may not be exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with: (a) certification, in the form set forth on the reverse of the Security, to the effect that such Definitive Security is being transferred to a QIB in accordance with Rule 144A under the Securities Act; and (b) written instructions from the Holder thereof directing the Trustee to make, or to direct the Securities Registrar to make, an endorsement on the Global Security to reflect an increase in the aggregate principal amount of the Securities represented by the Global Security, then the Trustee shall cancel such Definitive Security and cause, or direct the Securities Registrar to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Registrar, the aggregate principal amount of Securities represented by the Global Security to be increased accordingly. If no Global Securities are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Global Security in the appropriate principal amount. The Trustee shall deliver copies of each certification and instruction received by it pursuant to clauses (a) and (b) above to the Depositary and, upon receipt thereof, the Depositary shall make appropriate adjustments to its books and records to reflect exchange of such Definitive Security for an interest in the Global Security in accordance with this Section 3.5. The provisions in Clauses (1) and (2) below shall only apply to the transfer and exchange of a beneficial interest in a Global Security for a Definitive Security. (1) Any person having a beneficial interest in a Global Security may upon request exchange such beneficial interest for a Definitive Security of the same aggregate principal amount; provided that such request is -------- accompanied by the information specified below. Upon receipt by the Trustee of written instructions (or such other form of instructions as is customary for the Depositary) from the Depositary or its nominee on behalf of any Person having a beneficial interest in a Global Security and, in the case of a Transfer Restricted Security, the following additional information and documents (all of which may be submitted by facsimile): (a) if such beneficial interest is being transferred to the Person designated by the Depositary as being the owner of a beneficial interest in a Global 35 Security, a certification from such Person to that effect (in the form set forth on the reverse of the Security); or (b) if such beneficial interest is being transferred (x) to a QIB in accordance with Rule 144A under the Securities Act or (y) pursuant to an effective registration statement under the Securities Act, a certification from such person to that effect (in the form set forth on the reverse of the Security); or (c) if such beneficial interest is being transferred (w) pursuant to an exemption from registration in accordance with Rule 144 or Regulation S under the Securities Act; or (x) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is acquiring the security for its own account, or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the Securities of $100,000 for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act; or (y) in reliance on another exemption from the registration requirements of the Securities Act: (i) a certification to that effect from the transferee (in the form set forth on the reverse of the Security), (ii) if the Company or the Trustee so requests, an Opinion of Counsel reasonably acceptable to the Company and to the Trustee to the effect that such transfer is in compliance with the Securities Act, and (iii) in the case of clause (x), a signed letter from the transferee in the form of Exhibit A hereto; then the Securities Registrar, at the direction of the Trustee, will cause, in accordance with the standing instructions and procedures existing between the Depositary and the Securities Registrar, the aggregate principal amount of the Global Security to be reduced accordingly and, following such reduction, the Company will execute and the Trustee will authenticate and deliver to the transferee one or more Definitive Securities in accordance with clause (2) below. (2) Definitive Securities issued in exchange for a beneficial interest in a Global Security pursuant to this Section 3.5 shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee in writing. The Trustee shall deliver such Definitive Securities to the Persons in whose names such Securities are so registered in accordance with the instructions of the Depositary. Neither the Company nor the Trustee shall be required, pursuant to the provisions of this Section, (a) to issue, transfer or exchange any Security of any series during a period beginning at the opening of business 15 days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of notice of redemption or (b) to transfer or exchange any Security so selected for redemption in whole or in part, except, in the case of any Security to be redeemed in part, any portion thereof not to be redeemed. 36 Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save each of them harmless, the Company shall execute and the Trustee shall authenticate and make available for delivery in exchange therefor a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity and bearing the same interest rate as such mutilated Security, and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security, and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and make available for delivery, in lieu of any such destroyed, lost or stolen Security, a new Security of the same issue and series of like tenor and principal amount, having the same Original Issue Date and Stated Maturity and bearing the same interest rate as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. 37 Section 3.7. Payment of Interest; Interest Rights Preserved. Interest on any Security of any series which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest in respect of Securities of such series, except that, unless otherwise provided in the Securities of such series, interest payable on the Stated Maturity of the principal of a Security shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security of any series which is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security or in the Board Resolution pursuant to Section 3.1 with respect to the related series of Securities. At the option of the Company, interest on any series of Securities may be paid (i) by check mailed to the address of the Person entitled thereto as it shall appear on the Securities Register of such series or (ii) by wire transfer in immediately available funds at such place and to such account as designated by the Person entitled thereto as specified in the Securities Register of such series. Any interest on any Security which is payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities of such series (herein called "Defaulted Interest"), shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series in respect of which interest is in default (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Upon such deposit, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security of such series at the address of such Holder as it appears in the Securities Register not less than 10 days prior to such Special Record Date. The Trustee may (but shall have no duty to), in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in a newspaper, customarily published in the English language on each Business Day and of general circulation in the Borough of Manhattan, The City 38 of New York, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities of the series in respect of which interest is in default may be listed or traded and, upon such notice as may be required by such exchange (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Trustee. Any interest on any Security which is deferred or extended pursuant to Section 3.11 shall not be Defaulted Interest for the purposes of this Section 3.7. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. Section 3.8. Persons Deemed Owners. The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and (subject to Section 3.7) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. Section 3.9. Cancellation. All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Securities shall be returned by the Trustee to the Company and destroyed by the Company. 39 Section 3.10. Computation of Interest. Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series for any period shall be computed on the basis of a 360-day year of twelve 30-day months and interest on the Securities of each series for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Section 3.11. Deferrals of Interest Payment Dates. If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of a particular series, so long as no Event of Default has occurred and is continuing, the Company shall have the right, at any time during the term of such series, from time to time to defer the payment of interest on such Securities for such period or periods as may be specified as contemplated by Section 3.1 (each, an "Extension Period") during which Extension Periods the Company shall have the right to make partial payments or no payments of interest on any Interest Payment Date. No Extension Period shall end on a date other than an Interest Payment Date. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities (together with Additional Interest thereon, if any, at the rate specified for the Securities of such series to the extent permitted by applicable law) to the Persons in whose names such Securities are registered at the close of business on the Regular Record Date with respect to the Interest Payment Date at the end of such Extension Period; provided, however, that no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities of such series; provided, further, that during any such Extension Period, the Company shall not, and shall not permit any Subsidiary to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock, (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu with or junior to such Securities or (iii) make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to such Securities other than (a) dividends or distributions in Common Stock of the company or warrants, options or other rights where the Company's Common Stock is issuable upon exercise thereof, (b) payments under the Guarantee with respect to such Security, (c) any declaration of a dividend in connection with the implementation of a Rights Plan, or the issuance of stock under any such Rights Plan in the future, or the redemption or repurchase of any such rights pursuant to a Rights Plan, (d) as a result of an exchange or conversion (x) of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or (y) of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (e) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, and (f) purchases of Common Stock related to the issuance of Common Stock or rights under any employment agreement, benefit plan or similar agreement for the directors, officers, employees and consultants 40 of the Company and its subsidiaries, related to the issuance of Common Stock or rights under a dividend reinvestment and stock purchase plan or related to the issuance of Common Stock (or securities convertible into or exchangeable for Common Stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest, provided that no Extension Period shall exceed the period or periods specified in such Securities or extend beyond the Stated Maturity of the principal of such Securities. Upon termination of any Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof. The Company shall give the Holders of the Securities of such series and the Trustee written notice of its election to begin any such Extension Period at least one Business Day prior to the record date for the next succeeding Interest Payment Date on which interest on Securities of such series would be payable but for such deferral. The Trustee, upon receipt of notice thereof from the Company, shall promptly give notice, in the name and at the expense of the Company, of the Company's election to begin any such Extension Period to the Holders of the Outstanding Securities of such series. Section 3.12. Right of Set-Off. With respect to the Securities of a series issued to a Trust, notwithstanding anything to the contrary in the Indenture, the Company shall have the right to set-off any payment it is otherwise required to make thereunder in respect of any such Security to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the Guarantee relating to such Security or under Section 5.8 of the Indenture. Section 3.13. Agreed Tax Treatment. Each Security issued hereunder shall provide that the Company and, by its acceptance of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Security intend that such Security constitutes indebtedness and agree to treat such Security as indebtedness for United States federal, local and state tax purposes. Section 3.14. Shortening of Stated Maturity. If specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of a particular series, the Company shall have the right, subject to certain conditions, if any are specified as contemplated by Section 2.1 or Section 3.1 with respect to the Securities of such series, to shorten the Stated Maturity of the principal of the Securities of such series at any time to any date not earlier than the fifteenth anniversary of the Original Issue Date of the Securities of such series. In the event the Company elects to shorten the Stated Maturity of the Securities of such series, it shall give written notice to the Trustee, and the Trustee shall give notice of such 41 shortening to the Holders, no less than 30 and no more than 60 days prior to the effectiveness thereof. Section 3.15. CUSIP Numbers. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. ARTICLE IV SATISFACTION AND DISCHARGE Section 4.1. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, on written demand of and at the expense of the Company, shall execute instruments supplied by the Company acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, or (ii) will become due and payable at their Maturity within one year, or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as funds in trust for such purpose in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Maturity or Redemption Date, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company 42 to the Trustee under Section 6.7 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 4.5 and the last paragraph of Section 10.3 shall survive. Section 4.2. Legal Defeasance. In addition to discharge of this Indenture pursuant to Section 4.1, in the case of any Securities with respect to which the exact amount described in subparagraph A of Section 4.4 can be determined at the time of making the deposit referred to in such subparagraph A, the Company shall be deemed to have paid and discharged the entire indebtedness on all the Securities as provided in this Section on and after the date the conditions set forth in Section 4.4 are satisfied, and the provisions of this Indenture with respect to the Securities shall no longer be in effect (except as to (i) rights of registration of transfer and exchange of Securities, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of Holders of Securities to receive, solely from the trust fund described in subparagraph A of Section 4.4, payments of principal thereof and interest, if any, thereon upon the original stated due dates therefor (but not upon acceleration), (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) this Section 4.2 and (vi) the rights of the Holders of Securities as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them) (hereinafter called "Legal Defeasance"), and the Trustee, at the cost and expense of the Company, shall execute proper instruments supplied by the Company acknowledging the same. Section 4.3. Covenant Defeasance. In the case of any Securities with respect to which the exact amount described in subparagraph A of Section 4.4 can be determined at the time of making the deposit referred to in such subparagraph A, (i) the Company shall be released from its obligations under any covenants specified in or pursuant to this Indenture (except as to (i) rights of registration of transfer and exchange of Securities, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of Holders of Securities to receive, solely from the trust fund described in subparagraph A of Section 4.4, payments of principal thereof and interest, if any, thereon upon the original stated due dates therefor (but not upon acceleration), (iv) the rights, obligations, duties and immunities of the Trustee hereunder, (v) this Section 4.3 and (vi) the rights of the Holders of Securities as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and (b) the occurrence of any event specified in Section 5.1(3) (with respect to any of the covenants specified in or pursuant to this Indenture) shall be deemed not to be or result in an Event of Default, in each case with respect to the Outstanding Securities as provided in this Section on and after the date the conditions set forth in Section 4.4 are satisfied (hereinafter called "Covenant Defeasance"), and the Trustee, at the cost and expense of the Company, shall execute proper instruments supplied by the Company acknowledging the same. For this purpose, such Covenant Defeasance means that the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant (to the extent so specified in the case of Section 5.1(3)), whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such 43 covenant to any other provision herein or in any other document, but the remainder of this Indenture and the Securities shall be unaffected thereby. Section 4.4. Conditions to Legal Defeasance or Covenant Defeasance. The following shall be the conditions to application of either Section 4.2 or 4.3 to the Outstanding Securities: A. with reference to Section 4.2 or 4.3, the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee as funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Securities (i) cash in an amount, (ii) direct obligations of the United States of America, backed by its full faith and credit or obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America (collectively, "U.S. Government Obligations"), maturing as to principal and interest, if any, at such times and in such amounts as will ensure the availability of cash, or (iii) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the principal of and interest, if any, on all Securities on each date that such principal or interest, if any, is due and payable; B. in the case of Legal Defeasance under Section 4.2, the Company has delivered to the Trustee an Opinion of Counsel based on the fact that (x) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (y), since the date hereof, there has been a change in the applicable United States federal income tax law, in either case to the effect that, and such opinion shall confirm that, the Holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and Legal Defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and Legal Defeasance had not occurred; C. in the case of Covenant Defeasance under Section 4.3, the Company has delivered to the Trustee an Opinion of Counsel to the effect that, and such opinion shall confirm that, the Holders of the Securities will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and Covenant Defeasance and will be subject to federal income tax on the same amount in the same manner and at the same times as would have been the case if such deposit and Covenant Defeasance had not occurred; D. such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any agreement or instrument to which the Company is a party or by which it is bound; and 44 E. the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent contemplated by this provision have been complied with. Section 4.5. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.3, all money and U.S. Government Obligations deposited with the Trustee pursuant to Section 4.1 and Section 4.4 shall be held in trust and such money and all money from such U.S. Government Obligations shall be applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and interest for whose payment such money and U.S. Government Obligations has been deposited with the Trustee. Section 4.6. Indemnity for U.S. Government Obligations. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 4.4 or the principal or interest received in respect of such obligations other than any such tax, fee or other charge that by law is for the account of the Holders of Outstanding Securities. ARTICLE V REMEDIES Section 5.1. Events of Default. "Event of Default", wherever used herein with respect to the Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Security of that series, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of 30 days (subject to the deferral of any interest payment date in the case of an Extension Period); or (2) default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity; or (3) default in the performance, or breach, in any material respect, of any covenant or warranty of the Company in this Indenture with respect to that series (other than a covenant or 45 warranty a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied; or (4) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (5) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit for creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt, or the taking of corporate action by the Company in furtherance of any such action; or (6) any other Event of Default provided with respect to Securities of that series. Section 5.2. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than an Event of Default specified in Section 5.1(4) or 5.1(5)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided that, in the case of the Securities of a series issued to a Trust, if, upon an Event of Default, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of that series fail to declare the principal amount (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of all the Securities of that series to be immediately due and payable, the holders of at least 25% in aggregate liquidation amount of the corresponding series of Preferred Securities then outstanding shall have 46 such right by a notice in writing to the Company and the Trustee; and upon any such declaration such principal amount (or specified portion thereof) of and the accrued interest (including any Additional Interest) on all the Securities of such series shall become immediately due and payable. Payment of principal and interest (including any Additional Interest) on such Securities shall remain subordinated to the extent provided in Article XIII notwithstanding that such amount shall become immediately due and payable as herein provided. If an Event of Default specified in Section 5.1(4) or 5.1(5) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if the Securities of that series are Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms of that series) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable. At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be specified in the terms of that series) of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum sufficient to pay: (A) all overdue installments of interest (including any Additional Interest) on all Securities of that series, (B) the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration, and (C) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which has become due solely by such acceleration, have been cured or waived as provided in Section 5.13; provided that, in the case of Securities of a series held by a Trust, if the Holders of at least a majority in principal amount of the Outstanding Securities of that series fails to rescind and annul such declaration and its consequences, the holders of a majority in aggregate liquidation amount of the related series of Preferred Securities then outstanding shall have such right by written notice to the Company and the Trustee, subject to the satisfaction of the conditions set forth in Clauses (1) and (2) above of this Section 5.2. No such rescission shall affect any subsequent default or impair any right consequent thereon. 47 Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if: (1) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (2) default is made in the payment of the principal of (and premium, if any, on) any Security at the Maturity thereof, the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal, including any sinking fund payment or analogous obligations (and premium, if any) and interest (including any Additional Interest); and, in addition thereto, all amounts owing the Trustee under Section 6.7. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon the Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated. If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. Section 5.4. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, (a) the Trustee (irrespective of whether the principal of the Securities of any series shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal (and premium, if any) or interest (including any Additional Interest)) shall 48 be entitled and empowered (but shall have no duty), to the fullest extent permitted by law, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (or, if the Securities of that series are Discount Securities, such portion of the principal amount as may be due and payable pursuant to a declaration in accordance with Section 5.2) (and premium, if any) and interest (including any Additional Interest) owing and unpaid in respect to the Securities and to file such other papers or documents as may be necessary or advisable and, at such time, if any, as this Indenture is qualified under the Trust Indenture Act, to take any and all actions as are authorized under the Trust Indenture Act in order to have the claims of the Holders and any predecessor to the Trustee under Section 6.7 allowed in any such judicial proceedings; and (ii) in particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same in accordance with Section 5.6; and (b) any custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee for distribution in accordance with Section 5.6, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it and any predecessor Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. Section 5.5. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of all the amounts owing the Trustee and any predecessor Trustee under Section 6.7, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. 49 Section 5.6. Application of Money Collected. Any money or property collected or to be applied by the Trustee with respect to a series of Securities pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal (or premium, if any) or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee and any predecessor Trustee under Section 6.7; SECOND: Subject to Article XIII, to the payment of the amounts then due and unpaid upon such series of Securities for principal (and premium, if any), interest (including any Additional Interest), in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such series of Securities for principal (and premium, if any) and interest (including any Additional Interest), respectively; and THIRD: The balance, if any, to the Person or Persons entitled thereto. Section 5.7. Limitation on Suits. No Holder of any Securities of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series; (2) the Holders of not less than 25% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (3) such Holder or Holders have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of security or indemnity has failed to institute any such proceeding; and 50 (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders. Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and (subject to Section 3.7 and Section 3.11) interest (including any Additional Interest) on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. In the case of Securities of a series held by a Trust, any holder of the corresponding series of Preferred Securities held by such Trust shall have the right, upon the occurrence of an Event of Default described in Section 5.1(1) or 5.1(2), to institute a suit directly against the Company for enforcement of payment to such holder of principal of (premium, if any) and (subject to Section 3.7 and Section 3.11) interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate liquidation amount of such Preferred Securities of the corresponding series held by such holder. Section 5.9. Restoration of Rights and Remedies. If the Trustee, any Holder or any holder of Preferred Securities has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, such Holder or such holder of Preferred Securities, then and in every such case the Company, the Trustee, the Holders and such holder of Preferred Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, the Holders and the holders of Preferred Securities shall continue as though no such proceeding had been instituted. 51 Section 5.10. Rights and Remedies Cumulative. Except as otherwise provided in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee, any Holder of any Security or any holder of any Preferred Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders and the right and remedy given to the holders of Preferred Securities by Section 5.8 may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, the Holders or the holders of Preferred Securities, as the case may be. Section 5.12. Control by Holders. The Holders of not less than of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture, (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction, and 52 (3) subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability. Section 5.13. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities of any series and, in the case of any Securities of a series issued to a Trust, the holders of a majority in liquidation amount of Preferred Securities issued by such Trust may waive any past default hereunder and its consequences with respect to such series except a default: (1) in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series (unless all Events of Default with respect to Securities of that series, other than the non- payment of the principal of Securities of that series which has become due solely by such acceleration, have been cured or annulled as provided in Section 5.3 and the Company has paid or deposited with the Trustee a sum sufficient to pay all overdue installments of interest (including any Additional Interest) on all Securities of that series, the principal of (and premium, if any, on) any Securities of that series which have become due otherwise than by such declaration of acceleration, and all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel), or (2) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected. Any such waiver shall be deemed to be on behalf of the Holders of all the Securities of such series or, in the case of a waiver by holders of Preferred Securities issued by such Trust, by all holders of Preferred Securities issued by such Trust. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. 53 Section 5.14. Undertaking for Costs. All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security on or after the respective Stated Maturities expressed in such Security. Section 5.15. Waiver of Usury, Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE VI THE TRUSTEE Section 6.1. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the 54 case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not on their face they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of Holders pursuant to Section 5.12 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (e) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. Section 6.2. Notice of Defaults. Within 90 days after actual knowledge by a Responsible Officer of the Trustee of the occurrence of any default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail to all Holders of Securities of such series, as their names and addresses appear in the Securities Register, notice of such default, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest (including any Additional Interest) on any Security of such series, 55 the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of Securities of such series; and provided, further, that, in the case of any default of the character specified in Section 5.1(3), no such notice to Holders of Securities of such series shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series. Section 6.3. Certain Rights of Trustee. Subject to the provisions of Section 6.1: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, Security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, Security or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; 56 (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture. Section 6.4. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof. Section 6.5. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent. Section 6.6. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. Section 6.7. Compensation and Reimbursement. The Company, as borrower, agrees (1) to pay to the Trustee from time to time such compensation as shall be agreed in writing between the Company and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and 57 counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify each of the Trustee and any predecessor Trustee for, and to hold it harmless against, any and all loss, liability, damage, claim or expense (including the reasonable compensation and the expenses and disbursements of its agents and counsel) incurred without negligence or bad faith, arising out of or in connection with the acceptance or administration of this trust or the performance of its duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. This indemnification shall survive the termination of this Agreement and the resignation or removal of the Trustee hereunder. To secure the Company's payment obligations in this Section, the Company and the Holders agree that the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee. Such lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 5.1(4) or (5) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under the Bankruptcy Code of 1978, as amended, or any successor statute. Section 6.8. Disqualification; Conflicting Interests. (a) The Trustee for the Securities of any series issued hereunder shall be subject to the provisions of Section 310(b) of the Trust Indenture Act. Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the second to last paragraph of said Section 310(b). (b) The Declaration and the Guarantee Agreement with respect to each Trust shall be deemed to be specifically described in this Indenture for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. Section 6.9. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be (a) a corporation organized and doing business under the laws of the United States of America or of any state or territory or the District of Columbia, authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal, state, territorial or District of Columbia authority, or (b) a corporation or other Person organized and doing business under the laws of a foreign government that is permitted to act as Trustee pursuant to a rule, regulation or order of the 58 Commission, authorized under such laws to exercise corporate trust powers, and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees, in either case, having securities rated in one of the three highest rating categories by a nationally recognized statistical rating organization and having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by federal or state authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then, for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Neither the Company nor any Person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Trustee for the Securities of any series issued hereunder. Section 6.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.11. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after such removal, the Trustee being removed may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (d) If at any time: (1) the Trustee shall fail to comply with Section 6.8 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder, or 59 (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company, acting pursuant to the authority of a Board Resolution, may remove the Trustee with respect to all Securities, or (ii) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee with respect to the Securities of that or those series. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee with respect to the Securities of such series and supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Security for at least six months may, subject to Section 5.14, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Securities of such series as their names and addresses appear in the Securities Register. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office. 60 Section 6.11. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of all amounts due to it under Section 6.7, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts, and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee, upon payment of all amounts due to it under Section 6.7, shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be. 61 (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 6.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have. Section 6.13. Preferential Collection of Claims Against Company. If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor). Section 6.14. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any state or territory or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal, or state, territorial or District of Columbia authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of 62 condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.6 to all Holders of Securities of the series with respect to which such Authenticating Agent will serve. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provision of this Section. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: This is one of the Securities referred to in the within mentioned Indenture. Dated: /s/ -------------------------------- As Trustee By: ----------------------------- As Authenticating Agent 63 By: ----------------------------------- Authorized Officer ARTICLE VII HOLDER'S LISTS AND REPORTS BY TRUSTEE AND COMPANY Section 7.1. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee: (a) semi-annually, not more than 15 days after January 15 and July 15 in each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such January 1 and July 1, and (b) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, excluding from any such list names and addresses received by the Trustee in its capacity as Securities Registrar. Section 7.2. Preservation of Information, Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act. Section 7.3. Reports by Trustee. (a) The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture 64 Act, the Trustee shall, within sixty days after each May 15 following the date of this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). (b) If this Indenture shall have been qualified under the Trustee Indenture Act, a copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed and also with the Commission. The Company will promptly notify the Trustee when any Securities are listed on any stock exchange. Section 7.4. Reports by Company. The Company shall file with the Trustee and with the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided in the Trust Indenture Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is required to be filed with the Commission. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder or a beneficial owner of a Security, the Company shall promptly furnish the information specified in Rule 144A (d) (4) of the Securities Act (or any successor provision), or cause such information to be furnished, to such Holder or beneficial owner in order to permit compliance by such Holder or beneficial owner with Rule 144A under the Securities Act; provided, however, that the Company shall not be required to furnish such information at any time to a prospective purchaser located outside the United States who is not a "U.S. person" within the meaning of Regulation S under the Securities Act. If this Indenture shall have been qualified under the Trustee Indenture Act, the Company also shall comply with the other provisions of Trust Indenture Act Section 314(a). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 8.1. Company May Consolidate, Etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: 65 (1) the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation, partnership or trust organized and existing under the laws of the United States of America or any State or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have happened and be continuing; (3) in the case of the Securities of a series held by a Trust, such consolidation, merger, conveyance, transfer or lease is permitted under the related Declaration and Guarantee and does not give rise to any breach or violation of the related Declaration or Guarantee; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and any such supplemental indenture complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee, subject to Section 6.1, may rely upon such Officers' Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1. Section 8.2. Successor Corporation Substituted. Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance, transfer or lease the Company shall be discharged from all obligations and covenants under the Indenture and the Securities and may be dissolved and liquidated. Such successor Person may cause to be signed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the written order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall make available for delivery any Securities which previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication pursuant to such provisions and any Securities 66 which such successor Person thereafter shall cause to be signed and delivered to the Trustee on its behalf for the purpose pursuant to such provisions. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof. In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate. ARTICLE IX SUPPLEMENTAL INDENTURES Section 9.1. Supplemental Indentures without Consent of Holders. Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities contained; or (2) to convey, transfer, assign, mortgage or pledge any property to or with the Trustee or to surrender any right or power herein conferred upon the Company; or (3) to establish the form or terms of Securities of any series as permitted by Sections 2.1 or 3.1; or (4) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; or (5) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or (6) to change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall (a) become effective only when there is no Security Outstanding of any series created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision or (b) not apply to any Outstanding Securities; or 67 (7) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this clause (7) shall not adversely affect the interest of the Holders of Securities of any series in any material respect or, in the case of the Securities of a series issued to a Trust and for so long as any of the corresponding series of Preferred Securities issued by such Trust shall remain outstanding, the holders of such Preferred Securities; or (8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or (9) at such time, if any, as this Indenture is qualified under the Trust Indenture Act, to comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act. Section 9.2. Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (1) except to the extent permitted by Section 3.11 or Section 3.14 or as otherwise specified as contemplated by Section 2.1 or Section 3.1 with respect to the deferral of the payment of interest on the Securities of any series, change the Stated Maturity of the principal of, or any installment of interest (including any Additional Interest) on, any Security, or reduce the principal amount thereof or the rate of interest thereon or reduce any premium payable upon the redemption thereof, or reduce the amount of principal of a Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or (2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or 68 (3) modify any of the provisions of this Section, Section 5.13 or Section 10.5, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security affected thereby; or (4) modify the provisions in Article XIII of this Indenture with respect to the subordination of Outstanding Securities of any series in a manner adverse to the Holders thereof; provided, further, that, in the case of the Securities of a series issued to a Trust, so long as any of the corresponding series of Preferred Securities issued by such Trust remains outstanding, (i) no such amendment shall be made that adversely affects the holders of such Preferred Securities in any material respect, and no termination of this Indenture shall occur, and no waiver of any Event of Default or compliance with any covenant under this Indenture shall be effective, without the prior consent of the holders of at least a majority of the aggregate liquidation amount of such Preferred Securities then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and, subject to Section 3.7 and Section 3.11, unpaid interest (including any Additional Interest) thereon have been paid in full and (ii) no amendment shall be made to Section 5.8 of this Indenture that would impair the rights of the holders of Preferred Securities provided therein without the prior consent of the holders of each Preferred Security then outstanding unless and until the principal (and premium, if any) of the Securities of such series and all accrued and (subject to Section 3.7 and Section 3.11) unpaid interest (including any Additional Interest) thereon have been paid in full. A supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities or Preferred Securities, or which modifies the rights of the Holders of Securities or holders of Preferred Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities or holders of Preferred Securities of any other series. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Section 9.3. Execution of Supplemental Indentures. In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. 69 Section 9.4. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 9.5. Conformity with Trust Indenture Act. At such time, if any, as this Indenture is qualified under the Trust Indenture Act, every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. Section 9.6. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and made available for delivery by the Trustee in exchange for Outstanding Securities of such series. ARTICLE X COVENANTS Section 10.1. Payment of Principal, Premium and Interest. The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of (and premium, if any) and interest (including Additional Interest) on the Securities of that series in accordance with the terms of such Securities and this Indenture. 70 Section 10.2. Maintenance of Office or Agency. The Company will maintain in each Place of Payment for any series of Securities, an office or agency where Securities of that series may be presented or surrendered for payment and an office or agency where Securities of that series may be surrendered for transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company initially appoints the Trustee, acting through its Corporate Trust Office, as its agent for said purposes. The Company will give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all of such purposes, and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency. Section 10.3. Money for Security Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of (and premium, if any) or interest (including Additional Interest) on any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee of its failure so to act. Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m. New York City time on each due date of the principal of or interest (including Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest (including Additional Interest) so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal and premium (if any) or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act. The Company will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: 71 (1) hold all sums held by it for the payment of the principal of (and premium, if any) or interest (including Additional Interest) on Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Securities) in the making of any payment of principal (and premium, if any) or interest (including Additional Interest); (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; and (4) at such time, if any, as this Indenture is qualified under the Trust Indenture Act, comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by the Company or any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest (including Additional Interest) on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the direction and expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. Section 10.4. Statement as to Compliance. The Company shall deliver to the Trustee, within 120 days after the end of each calendar year of the Company ending after the date hereof, an Officers' Certificate, one of the signatories 72 of which shall be the principal executive, principal financial or principal accounting officer of the Company, covering the preceding calendar year, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance, observance or fulfillment of or compliance with any of the terms, provisions, covenants and conditions of this Indenture, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. For the purpose of this Section 10.4, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. Section 10.5. Waiver of Certain Covenants. Subject to the rights of holders of Preferred Securities specified in Section 9.2, the Company may omit in any particular instance to comply with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or 9.1(4) with respect to the Securities of any series, if before or after the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect. Section 10.6. Payment of Trust Costs and Expenses. Since each Trust is being formed solely to facilitate an investment in the Securities, the Company, in its capacity as the issuer of the Securities, hereby covenants to pay all debts and obligations (other than with respect to the Preferred Securities and Common Securities) and all costs and expenses of each Trust (including, but not limited to, all costs and expenses relating to the organization of the Trust, the fees and expenses of the Trustees and all costs and expenses relating to the operation of the Trust) and to pay any and all taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed on the Trust by the United States, or any other taxing authority, so that the net amounts received and retained by the Trust and the Property Trustee after paying such expenses will be equal to the amounts the Trust and the Property Trustee would have received had no such costs or expenses been incurred by or imposed on the Trust. The obligations of the Company to pay all debts, obligations, costs and expenses of each Trust (other than with respect to the Preferred Securities and Common Securities) shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture. Section 10.7. Additional Covenants. The Company covenants and agrees with each Holder of Securities of each series that it shall not, and it shall not permit any Subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's capital stock, (ii) make any payment of principal, interest or 73 premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu with or junior to this Securities or (iii) make any guarantee payments with respect to any guarantee by the Company of the debt securities of any Subsidiary of the Company if such guarantee ranks pari passu with or junior in interest to this Security (other than (a) dividends or distributions in Common Stock or warrants, options or other rights where Common Stock is issuable upon the exercise thereof, (b) payments under the Guarantee with respect to this Security, (c) any declaration of a dividend in connection with the implementation of a Rights Plan, or the issuance of stock under any such Rights Plan in the future, or the redemption or repurchase of any such rights pursuant to a Rights Plan, (d) as a result of an exchange or conversion (x) of any class or series of the Company's capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company's capital stock or (y) of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (e) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (f) purchases of Common Stock related to the issuance of Common Stock or rights under any employment agreement, benefit plan or similar agreement for the directors, officers, employees and consultants of the Company and its subsidiaries, related to the issuance of Common Stock or rights under a dividend reinvestment and stock purchase plan or related to the issuance of Common Stock (or securities convertible into or exchangeable for Common Stock) as consideration in an acquisition transaction that was entered into prior to the commencement of such Extension Period) if at such time (x) there shall have occurred any event of which the Company has actual knowledge that (A) with the giving of notice or the lapse of time or both, would constitute an Event of Default with respect to the Securities of such series and (B) in respect of which the Company shall not have taken reasonable steps to cure, (y) if the Securities of such series are held by a Trust, the Company shall be in default with respect to its payment of any obligations under the Guarantee relating to the Preferred Securities issued by such Trust or (z) the Company shall have given notice of its election to begin an Extension Period with respect to the Securities of such series as provided herein and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing. The Company also covenants with each Holder of Securities of a series issued to a Trust (i) to maintain directly or indirectly 100% ownership of the Common Securities of such Trust; provided, however, that any permitted successor of the Company hereunder may succeed to the Company's ownership of such Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate such Trust, except (a) in connection with a distribution of the Securities of such series to the holders of the Trust Securities of such Trust in liquidation of such Trust or (b) in connection with certain mergers, consolidations or amalgamations permitted by the related Declaration and (iii) to use its reasonable efforts, consistent with the terms and provisions of such Declaration, to cause such Trust to remain classified as a grantor trust and not an association taxable as a corporation for United States federal income tax purposes. Section 10.8. Calculation of Original Issue Discount. 74 The Company shall file with the Trustee promptly at the end of each calendar year a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Securities as of the end of such year, if any. ARTICLE XI REDEMPTION OF SECURITIES Section 11.1. Applicability of This Article. Redemption of Securities of any series (whether by operation of a sinking fund or otherwise) as permitted or required by any form of Security issued pursuant to this Indenture shall be made in accordance with such form of Security and this Article; provided, however, that if any provision of any such form of Security shall conflict with any provision of this Article, the provision of such form of Security shall govern. Except as otherwise set forth in the form of Security for such series, each Security of such series shall be subject to partial redemption only in the amount of $1,000 or, in the case of the Securities of a series issued to a Trust, $1,000, or integral multiples thereof. Section 11.2. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of the Securities, the Company shall, not less than 45 nor more than 60 days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such date and of the principal amount of Securities of that series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities, the Company shall furnish the Trustee with an Officers' Certificate and an Opinion of Counsel evidencing compliance with such restriction. Section 11.3. Selection of Securities to be Redeemed. If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by lot or such other method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series, provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. If less than all the Securities of such series 75 and of a specified tenor are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series and specified tenor not previously called for redemption in accordance with the preceding sentence. The Trustee shall promptly notify the Company in writing of the Securities selected for partial redemption and the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed. If the Company shall so direct, Securities registered in the name of the Company, any Affiliate or any Subsidiary thereof shall not be included in the Securities selected for redemption. Section 11.4. Notice of Redemption. Notice of redemption shall be given by first-class mail, postage prepaid, mailed not later than the thirtieth day, and not earlier than the sixtieth day, prior to the Redemption Date, to each Holder of Securities to be redeemed, at the address of such Holder as it appears in the Securities Register. With respect to Securities of each series to be redeemed, each notice of redemption shall identify the Securities to be redeemed (including CUSIP number, if a CUSIP number has been assigned to such Securities of such Series) and shall state: (a) the Redemption Date; (b) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, an estimate of the Redemption Price together with a statement that it is an estimate and the actual Redemption Price will be calculated on the third Business Day prior to the Redemption Date (and, if such an estimate of the Redemption Price is given, a subsequent notice shall be given as set forth above on the date that such Redemption Price is calculated setting forth the actual Redemption Price); (c) if less than all Outstanding Securities of such particular series and having the same terms are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed; (d) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that interest thereon, if any, shall cease to accrue on and after said date; (e) the place or places where such Securities are to be surrendered for payment of the Redemption Price; 76 (f) that the redemption is for a sinking fund, if such is the case; and (g) such other provisions as may be required in respect of the terms of a particular series of Securities. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall be revocable. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security. Section 11.5. Deposit of Redemption Price. Prior to 10:00 a.m. New York City time on the Redemption Date specified in the notice of redemption given as provided in Section 11.4, the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including Additional Interest) on, all the Securities which are to be redeemed on that date. Section 11.6. Payment of Securities Called for Redemption. If any notice of redemption has been given as provided in Section 11.4, the Securities or portion of Securities shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price. On presentation and surrender of such Securities at a Place of Payment in said notice specified, the said Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 3.1, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 3.7. Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the Holder thereof, at the expense of the Company, a new Security or Securities of the same series, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms. If a Global Security is so surrendered, such new Security will also be a new Global Security. 77 If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and premium, if any, on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security. Section 11.7. Right of Redemption of Securities Initially Issued to Trust. In the case of Securities of a series initially issued to a Trust, except as otherwise specified as contemplated by Section 3.1, the Company, at its option, may redeem such Securities upon the occurrence and during the continuation of a Special Event at any time within 90 days following the occurrence and during the continuation of such Special Event, in whole (but not in part), in each case at the Redemption Price specified in such Security, together with accrued interest (including any Additional Interest) to the Redemption Date. If less than all the Securities of any such series are to be redeemed, the aggregate principal amount of such Securities remaining Outstanding after giving effect to such redemption shall be sufficient to satisfy any provisions of the Declaration relating to the Trust to which such Securities were issued, including any requirement in such Declaration as to the minimum liquidation amount of Preferred Securities that may be held by a holder of Preferred Securities thereunder. ARTICLE XII SINKING FUNDS Section 12.1. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 3.1 for such Securities. The minimum amount of any sinking fund payment provided for by the terms of any Securities of any series is herein referred to as a "mandatory sinking fund payment", and any sinking fund payment in excess of such minimum amount which is permitted to be made by the terms of such Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of any Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of such Securities. Section 12.2. Satisfaction of Sinking Fund Payments with Securities. In lieu of making all or any part of a mandatory sinking fund payment with respect to any Securities of a series in cash, the Company may at its option, at any time no more than 16 months and no less than 30 days prior to the date on which such sinking fund payment is due, deliver to 78 the Trustee Securities of such series (together with the unmatured coupons, if any, appertaining thereto) theretofore purchased or otherwise acquired by the Company, except Securities of such series that have been redeemed through the application of mandatory or optional sinking fund payments pursuant to the terms of the Securities of such series, accompanied by a Company Order instructing the Trustee to credit such obligations and stating that the Securities of such series were originally issued by the Company by way of bona fide sale or other negotiation for value; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the Redemption Price for such Securities, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. Section 12.3. Redemption of Securities for Sinking Fund. Not less than 30 days prior to each sinking fund payment date for any series of Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash in the currency in which the Securities of such series are payable (except as provided pursuant to Section 3.1) and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 12.2 and will also deliver to the Trustee any Securities to be so delivered. Such Officers' Certificate shall be irrevocable and upon its delivery the Company shall be obligated to make the cash payment or payments therein referred to, if any, on or before the succeeding sinking fund payment date. In the case of the failure of the Company to deliver such Officers' Certificate (or, as required by this Indenture, the Securities and coupons, if any, specified in such Officers' Certificate), the sinking fund payment due on the succeeding sinking fund payment date for such series shall be paid entirely in cash and shall be sufficient to redeem the principal amount of the Securities of such series subject to a mandatory sinking fund payment without the right to deliver or credit Securities as provided in Section 12.2 and without the right to make the optional sinking fund payment with respect to such series at such time. Any sinking fund payment or payments (mandatory or optional) made in cash plus any unused balance of any preceding sinking fund payments made with respect to the Securities of any particular series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent) on the sinking fund payment date on which such payment is made (or, if such payment is made before a sinking fund payment date, on the sinking fund payment date immediately following the date of such payment) to the redemption of Securities of such series at the Redemption Price specified in such Securities with respect to the sinking fund. Any sinking fund moneys not so applied or allocated by the Trustee (or, if the Company is acting as its own Paying Agent, segregated and held in trust by the Company as provided in Section 10.3) for such series and together with such payment (or such amount so segregated) shall be applied in accordance with the provisions of this Section 12.3. Any and all sinking fund moneys with respect to the Securities of any particular series held by the Trustee (or if the Company is acting as its own Paying Agent, segregated and held in trust as provided in Section 10.3) on the last sinking fund 79 payment date with respect to Securities of such series and not held for the payment or redemption of particular Securities of such series shall be applied by the Trustee (or by the Company if the Company is acting as its own Paying Agent), together with other moneys, if necessary, to be deposited (or segregated) sufficient for the purpose, to the payment of the principal of the Securities of such series at Maturity. The Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6. On or before each sinking fund payment date, the Company shall pay to the Trustee (or, if the Company is acting as its own Paying Agent, the Company shall segregate and hold in trust as provided in Section 10.3) in cash a sum in the currency in which Securities of such series are payable (except as provided pursuant to Section 3.1) equal to the principal and any interest accrued to the Redemption Date for Securities or portions thereof to be redeemed on such sinking fund payment date pursuant to this Section 12.3. Neither the Trustee nor the Company shall redeem any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund for such series during the continuance of a default in payment of interest, if any, on any Securities of such series or of any Event of Default (other than an Event of Default occurring as a consequence of this paragraph) with respect to the Securities of such series, except that if the notice of redemption shall have been provided in accordance with the provisions hereof, the Trustee (or the Company, if the Company is then acting as its own Paying Agent) shall redeem such Securities if cash sufficient for that purpose shall be deposited with the Trustee (or segregated by the Company) for that purpose in accordance with the terms of this Article XII. Except as aforesaid, any moneys in the sinking fund for such series at the time when any such default or Event of Default shall occur and any moneys thereafter paid into such sinking fund shall, during the continuance of such default or Event of Default, be held as security for the payment of the Securities and coupons, if any, of such series; provided, however, that in case such default or Event of Default shall have been cured or waived herein, such moneys shall thereafter be applied on the next sinking fund payment date for the Securities of such series on which such moneys may be applied pursuant to the provisions of this Section 12.3. 80 ARTICLE XIII SUBORDINATION OF SECURITIES Section 13.1. Securities Subordinate to Senior Indebtedness. The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article, the payment of the principal of (and premium, if any) and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. Section 13.2. Payment Over of Proceeds Upon Dissolution, Etc. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other similar judicial proceeding relative to the Company (each such event, if any, herein sometimes referred to as a "Proceeding"), then the holders of Senior Indebtedness shall be entitled to receive payment in full of all amounts due or to become due on such Senior Indebtedness before the Holders of the Securities are entitled to receive or retain any payment or distribution of any kind or character, whether in cash, property or securities (including any payment or distribution which may be payable or deliverable by reason of the payment of any other obligations of the Company (including any series of the Securities) subordinated to the payment of the Securities, such payment or distribution being hereinafter referred to as a "Junior Subordinated Payment"), on account of principal of (or premium, if any) or interest (including any Additional Interest) on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary and to that end the holders of Senior Indebtedness shall be entitled to receive, for application to the payment thereof, any payment or distribution of any kind or character, whether in cash, property or securities, including any Junior Subordinated Payment, which may be payable or deliverable in respect of the Securities in any such Proceeding. In the event that, notwithstanding the foregoing provisions of this Section, the Trustee or the Holder of any Security shall have received any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, including any Junior Subordinated Payment, before all amounts due or to become due on all Senior Indebtedness are paid in full or payment thereof is provided for in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Company for application to the payment of all amounts due or to become due on all Senior Indebtedness remaining unpaid, to the extent necessary to pay all amounts due or to become due on all Senior Indebtedness in full, after 81 giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. For purposes of this Article only, the words "any payment or distribution of any kind or character, whether in cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment which securities are subordinated in right of payment to all then outstanding Senior Indebtedness to substantially the same extent as the Securities are so subordinated as provided in this Article. The consolidation of the Company with, or the merger of the Company into, another Person or the liquidation or dissolution of the Company following the sale of all or substantially all of its properties and assets as an entirety to another Person upon the terms and conditions set forth in Article VIII shall not be deemed a Proceeding for the purposes of this Section if the Person formed by such consolidation or into which the Company is merged or the Person which acquires by sale such properties and assets as an entirety, as the case may be, shall, as a part of such consolidation, merger, or sale comply with the conditions set forth in Article VIII. Section 13.3. Prior Payment to Senior Indebtedness Upon Acceleration of Securities. In the event that any Securities are declared due and payable before their Stated Maturity, then and in such event the holders of the Senior Indebtedness outstanding at the time such Securities so become due and payable shall be entitled to receive payment in full of all amounts due on or in respect of such Senior Indebtedness (including any amounts due upon acceleration) before the Holders of the Securities are entitled to receive any payment or distribution of any kind or character, whether in cash, properties or securities (including any Junior Subordinated Payment) by the Company on account of the principal of (or premium, if any) or interest (including any Additional Interest) on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary; provided, however, that nothing in this Section shall prevent the satisfaction of any sinking fund payment in accordance with this Indenture or as otherwise specified as contemplated by Section 3.1 for the Securities of any series by delivering and crediting pursuant to Section 12.2 or as otherwise specified as contemplated by Section 3.1 for the Securities of any series Securities which have been acquired (upon redemption or otherwise) prior to such declaration of acceleration. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Company. The provisions of this Section shall not apply to any payment with respect to which Section 13.2 would be applicable. Section 13.4. No Payment When Senior Indebtedness in Default. 82 (a) In the event and during the continuation of any default in the payment of principal of (or premium, if any) or interest on any Senior Indebtedness, or in the event that any event of default with respect to any Senior Indebtedness shall have occurred and be continuing and shall have resulted in such Senior Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, unless and until such event of default shall have been cured or waived or shall have ceased to exist and such acceleration shall have been rescinded or annulled, or (b) in the event any judicial proceeding shall be pending with respect to any such default in payment or such event or default, then no payment or distribution of any kind or character, whether in cash, properties or securities (including any Junior Subordinated Payment) shall be made by the Company on account of principal of (or premium, if any) or interest (including any Additional Interest), if any, on the Securities or on account of the purchase or other acquisition of Securities by the Company or any Subsidiary, in each case unless and until all amounts due or to become due on such Senior Indebtedness are paid in full; provided, however, that nothing in this Section shall prevent the satisfaction of any sinking fund payment in accordance with this Indenture or as otherwise specified as contemplated by Section 3.1 for the Securities of any series by delivering and crediting pursuant to Section 12.2 or as otherwise specified as contemplated by Section 3.1 for the Securities of any series Securities which have been acquired (upon redemption or otherwise) prior to such default in payment or event of default. In the event that, notwithstanding the foregoing, the Company shall make any payment to the Trustee or the Holder of any Security prohibited by the foregoing provisions of this Section, and if such fact shall, at or prior to the time of such payment, have been made known to the Trustee or, as the case may be, such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Company. The provisions of this Section shall not apply to any payment with respect to which Section 13.2 would be applicable. Section 13.5. Payment Permitted If No Default. Nothing contained in this Article or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time except during the pendency of any Proceeding referred to in Section 13.2 or under the conditions described in Sections 13.3 and 13.4, from making payments at any time of principal of (and premium, if any) or interest (including Additional Interest) on the Securities, or (b) the application by the Trustee of any money deposited with it hereunder to the payment of or on account of the principal of (and premium, if any) or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, a Responsible Officer of the Trustee did not have actual knowledge that such payment would have been prohibited by the provisions of this Article. 83 Section 13.6. Subrogation to Rights of Holders of Senior Indebtedness. Subject to the payment in full of all amounts due or to become due on all Senior Indebtedness, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Indebtedness, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Article (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to Senior Indebtedness of the Company to substantially the same extent as the Securities are subordinated to the Senior Indebtedness and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Indebtedness) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Indebtedness, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Indebtedness. Section 13.7. Provisions Solely to Define Relative Rights. The provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Indebtedness on the other hand. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of (and premium, if any) and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms; or (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture including, without limitation, filing and voting claims in any Proceeding, subject to the rights, if any, under this Article of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder. 84 Section 13.8. Trustee to Effectuate Subordination. Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article and appoints the Trustee his or her attorney-in-fact for any and all such purposes. Section 13.9. No Waiver of Subordination Provisions. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with. Without in any way limiting the generality of the immediately preceding paragraph, the holders of Senior Indebtedness may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to the Holders of the Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Holders of the Securities to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (iii) release any Person liable in any manner for the collection of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company and any other Person. Section 13.10. Notice to Trustee. The Company shall give prompt written notice to the Trustee of any fact known to the Company which would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until the Trustee shall have received written notice thereof from the Company or a holder of Senior Indebtedness or from any trustee, agent or representative therefor; provided, however, that if the Trustee shall not have received the notice provided for in this Section at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies 85 and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date. Subject to the provisions of Section 6.1, the Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 13.11. Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article. Section 13.12. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants or obligations as are specifically set forth in this Article and no implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Trustee. 86 Section 13.13. Rights of Trustee as Holder of Senior Indebtedness; Preservation of Trustee's Rights. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. Nothing in this Article shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.7. Section 13.14. Article Applicable to Paying Agents. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee. Section 13.15. Certain Conversions or Exchanges Deemed Payment. For the purposes of this Article only, (a) the issuance and delivery of junior securities upon conversion or exchange of Securities shall not be deemed to constitute a payment or distribution on account of the principal of (or premium, if any) or interest (including any Additional Interest) on Securities or on account of the purchase or other acquisition of Securities, and (b) the payment, issuance or delivery of cash, property or securities (other than junior securities) upon conversion or exchange of a Security shall be deemed to constitute payment on account of the principal of such security. For the purposes of this Section, the term "junior securities" means (i) shares of any stock of any class of the Company and (ii) securities of the Company which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. Section 13.16. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary, payments from money held in trust under Article IV by the Trustee for the payment of principal of, premium, if any, and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness of the Company or subject to the restrictions set forth in this Article XIII and none of the Holders or the Trustee shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness of the Company or any other creditor of the Company. 87 * * * * This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written. THE FIRST AMERICAN FINANCIAL CORPORATION By: /s/ THOMAS A. KLEMENS ------------------------------------- Name: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer WILMINGTON TRUST COMPANY as Trustee By: /s/ EMMETT R. HARMON ------------------------------------- Name: Emmett R. Harmon Title: Vice President 88 EXHIBIT A Transferee Letter of Representation The First American Financial Corporation Wilmington Trust Company, as Trustee Dear Sirs: This certificate is delivered to request a transfer of $ principal amount of the ________% Junior Subordinated Debentures (the "Restricted Securities") of The First American Financial Corporation ("Company"). Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows: Name: ___________________________________ Address: ________________________________ Taxpayer ID Number: _____________________ The undersigned represents and warrants to you that: 1. We are an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional Accredited Investor") that is purchasing Restricted Securities with a principal amount of at least $100,000, and if the Restricted Securities are to be purchased for one or more accounts ("investor accounts") for which we are acting as fiduciary or agent, each such account is an Institutional Accredited Investor that is purchasing Restricted Securities with a principal amount of at least $100,000. In the normal course of our business, we invest in or purchase securities similar to the Restricted Securities and we have such knowledge and experience in financial business matters as to be capable of evaluating the merits and risks of purchasing the Restricted Securities. We are aware that we (or any investor account) may be required to bear the economic risk of an investment in the Restricted Securities for an indefinite period of time and we are (or such account is) able to bear such risk for an indefinite period. 2. We acknowledge that none of the Company or the Initial Purchasers (as defined in the Offering Memorandum), or any person representing the Company or the Initial Purchasers, has made any representation to us with respect to the Company or the offering of the 89 Restricted Securities, other than the Offering Memorandum dated April , 1997 (the "Offering Memorandum"), a copy of which has been delivered to us and upon which we are relying in making our investment decision with respect to the Restricted Securities. Accordingly, we acknowledge that no representation or warranty is made by the Initial Purchasers as to the accuracy or completeness of such materials. We have had access to such financial and other information concerning the Company and the Restricted Securities as we deemed necessary in connection with our decision to purchase the Restricted Securities, including an opportunity to ask questions and request information from the Company and the Initial Purchasers. We acknowledge that we have read and agreed to the matters stated under the caption "Transfer Restrictions" in such Offering Memorandum and the restrictions on duplication and circulation of such Offering Memorandum. 3. We understand that any subsequent transfer of the Restricted Securities is subject to certain restrictions and conditions set forth in the Offering Memorandum under the caption "Transfer Restrictions" and we agree to be bound by, and not to resell, pledge or otherwise transfer the Restricted Securities except in compliance with such restrictions and conditions and the Securities Act of 1933, as amended (the "Securities Act"). 4. We understand and hereby acknowledge that prior to the effectiveness of a registration statement filed with the Securities and Exchange Commission relating to the Restricted Securities, the Restricted Securities have not been registered under the Securities Act, and may not be sold except as permitted in the following sentence. We agree to offer, sell or otherwise transfer such Restricted Securities prior to the date which is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Restricted Securities (or any predecessor thereto) (the "Resale Restriction Termination Date") only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) for so long as the Restricted Securities are eligible for resale pursuant to Rule 144A under the Securities Act, to a person we reasonable believe is qualified institutional buyer under Rule 144A ("QIB") that purchases for its own account or for the account of a QIB to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the Securities Act or (e) pursuant to any other available exemption from the registration requirements of the Securities Act, and, in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction and subject to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control. The foregoing restriction on resale will not apply subsequent to the Resale Restriction Termination Date. We acknowledge that the Company and the Trustee reserve the right prior to any offer, sale or other transfer prior to the Resale Restriction Termination Date of the Restricted Securities pursuant to clause (d) or (e) above to require the delivery of an opinion of counsel, certifications or other information acceptable to the Company and the Trustee in form and substance. We acknowledge that the Restricted Securities purchased by us will be in the form of definitive physical certificates and will bear a legend reflecting the substance of this paragraph 4. 90 5. Prior to any proposed transfer of the Restricted Securities (other than pursuant to an effective registration statement) occurring before the Resale Restriction Termination Date, we must check the appropriate box set forth on the reverse of the certificate(s) evidencing such Restricted Securities relating to the manner of such transfer and submit such certificate(s) to the Property Trustee. We understand that the Trustee will not be required to accept any Restricted Securities for registration of transfer, except upon presentation of evidence satisfactory to the Company and to the Trustee that the foregoing restrictions on transfer have been complied with. 6. We are acquiring the Restricted Securities for our own account or for one or more accounts (each of which is an "institutional accredited investor") as to each of which we exercise sole investment discretion. 7. We are not acquiring the Restricted Securities with a view to, or for offer or sale in connection with, any Distribution in violation of the Securities Act. 8. We shall provide to any person purchasing any Restricted Securities from us a notice advising such purchaser that transfers of the Restricted Securities are restricted as set forth herein. We acknowledge that you and others will rely upon our confirmations, acknowledgments and agreements set forth herein, and we agree to notify you promptly in writing if any of our representations or warranties herein ceases to be accurate and complete. You are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW. TRANSFEREE:_____________________ BY______________________________ EX-4.3 4 AMENDED & RESTATED DECLARATION OF TRUST -- APRIL 22 EXHIBIT 4.3 Composite Conformed Copy - -------------------------------------------------------------------------------- AMENDED AND RESTATED DECLARATION OF TRUST First American Capital Trust I Dated as of April 22, 1997 - -------------------------------------------------------------------------------- TABLE OF CONTENTS -----------------
Page ---- ARTICLE 1 INTERPRETATION AND DEFINITIONS.......................... 1 Section 1.1 Interpretation and Definitions................................ 1 Affiliate.......................................................... 2 Authorized Officer................................................. 2 Bankruptcy Event................................................... 2 Business Day....................................................... 3 Business Trust Act................................................. 3 Capital Security................................................... 3 Capital Securities Beneficial Owner................................ 3 Capital Securities Certificate..................................... 3 Certificate........................................................ 3 Certificate of Trust............................................... 3 Closing Date....................................................... 3 Code............................................................... 3 Commission......................................................... 4 Common Securities Holder........................................... 4 Common Security.................................................... 4 Common Security Certificate........................................ 4 Capital Securities................................................. 4 Distribution Date.................................................. 4 Corporate Trust Office............................................. 4 Covered Person..................................................... 4 Debenture Issuer................................................... 4 Debenture Issuer Indemnified Person................................ 4 Debenture Trustee.................................................. 4 Debentures......................................................... 4 Delaware Trustee................................................... 5 Depositary......................................................... 5 Distribution....................................................... 5 DTC................................................................ 5 Exchange Act....................................................... 5 Exchange Offer..................................................... 5 Fiduciary Indemnified Person....................................... 5 Fiscal Year........................................................ 5 Global Security.................................................... 5 Guarantee.......................................................... 5 Holder............................................................. 5 Indemnified Person................................................. 5 Indenture.......................................................... 5
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Page ---- Indenture Event of Default....................................... 5 Initial Purchasers............................................... 6 Institutional Accredited Investor................................ 6 Investment Company............................................... 6 Investment Company Act........................................... 6 Investment Company Event......................................... 6 Legal Action..................................................... 6 Liquidation Date................................................. 6 List of Holders.................................................. 6 Majority in Liquidation Amount................................... 6 New Capital Securities........................................... 6 Officers' Certificate............................................ 6 Paying Agent..................................................... 7 Payment Amount................................................... 7 Person........................................................... 7 Private Placement Legend......................................... 7 Property Account................................................. 7 Property Trustee................................................. 7 Pro Rata......................................................... 7 Qualified Institutional Buyer.................................... 7 Quorum........................................................... 7 Redemption Price................................................. 7 Registration Rights Agreement.................................... 7 Regular Trustee.................................................. 8 Regulation S..................................................... 8 Related Party.................................................... 8 Responsible Officer.............................................. 8 Capital Securities............................................... 8 Restricted Global Security....................................... 8 Restricted Security.............................................. 8 Rule 144A........................................................ 8 Securities....................................................... 8 Securities Act................................................... 8 Security Register................................................ 8 Security Registrar............................................... 8 Special Event.................................................... 8 Sponsor.......................................................... 8 Successor Delaware Trustee....................................... 8 Successor Entity................................................. 9 Successor Property Trustee....................................... 9 Successor Securities............................................. 9 Super Majority................................................... 9 Tax Event........................................................ 9 10% in Liquidation Amount........................................ 9
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Page ---- Transfer Restricted Securities................................... 9 Treasury Regulations............................................. 9 Trust Enforcement Event.......................................... 9 Trust Indenture Act.............................................. 9 Trustee" or "Trustees............................................ 10 Trustees' Authorization Certificate.............................. 10 ARTICLE 2 TRUST INDENTURE ACT........................... 10 Section 2.1 Trust Indenture Act; Application......................... 10 Section 2.2 Lists of Holders of Securities........................... 10 Section 2.3 Reports by the Property Trustee.......................... 11 Section 2.4 Periodic Reports to the Property Trustee................. 11 Section 2.5 Evidence of Compliance with Conditions Precedent......... 11 Section 2.6 Trust Enforcement Events; Waiver......................... 11 Section 2.7 Trust Enforcement Event; Notice.......................... 13 ARTICLE 3 ORGANIZATION............................... 14 Section 3.1 Name and Organization.................................... 14 Section 3.2 Office................................................... 14 Section 3.3 Purpose.................................................. 14 Section 3.4 Authority................................................ 14 Section 3.5 Title to Property of the Trust........................... 15 Section 3.6 Powers and Duties of the Regular Trustees................ 15 Section 3.7 Prohibition of Actions by the Trust and the Trustees..... 18 Section 3.8 Powers and Duties of the Property Trustee................ 19 Section 3.9 Certain Duties and Responsibilities of the Property Trustee.................................................. 21 Section 3.10 Certain Rights of Property Trustee....................... 23 Section 3.11 Delaware Trustee......................................... 25 Section 3.12 Execution of Documents................................... 25 Section 3.13 Not Responsible for Recitals or Issuance of Securities... 26 Section 3.14 Duration of Trust........................................ 26 Section 3.15 Mergers.................................................. 26 Section 3.16 Property Trustee May File Proofs of Claim................ 28 ARTICLE 4 SPONSOR................................. 28 Section 4.1 Responsibilities of the Sponsor.......................... 28 Section 4.2 Indemnification and Expenses of the Trustee.............. 29
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Page ---- ARTICLE 5 TRUST COMMON SECURITIES HOLDER..................... 29 Section 5.1 Debenture Issuer's Purchase of Common Securities........ 29 Section 5.2 Covenants of the Common Securities Holder............... 30 ARTICLE 6 TRUSTEES................................. 30 Section 6.1 Number of Trustees...................................... 30 Section 6.2 Delaware Trustee........................................ 30 Section 6.3 Property Trustee; Eligibility........................... 31 Section 6.4 Certain Qualifications of Regular Trustees and Delaware Trustee Generally.......................... 32 Section 6.5 Initial Trustees........................................ 32 Section 6.6 Appointment, Removal and Resignation of Trustees........ 32 Section 6.7 Vacancies among Trustees................................ 33 Section 6.8 Effect of Vacancies..................................... 34 Section 6.9 Meetings................................................ 34 Section 6.10 Delegation of Power..................................... 34 Section 6.11 Merger, Conversion, Consolidation or Succession to Business................................................ 35 ARTICLE 7 THE SECURITIES.............................. 35 Section 7.1 General Provisions Regarding Securities.................. 35 Section 7.2 Distributions............................................ 37 Section 7.3 Redemption of Securities................................. 38 Section 7.4 Redemption Procedures.................................... 38 Section 7.5 Voting Rights of Capital Securities...................... 40 Section 7.6 Voting Rights of Common Securities....................... 42 Section 7.7 Paying Agent............................................. 43 Section 7.8 Transfer of Securities................................... 44 Section 7.9 Mutilated, Destroyed, Lost or Stolen Certificates........ 45 Section 7.10 Deemed Security Holders.................................. 45 Section 7.11 Form and Dating.......................................... 46 Section 7.12 Transfer Procedures and Restrictions..................... 47 Section 7.13 CUSIP Numbers............................................ 54 ARTICLE 8 DISSOLUTION AND TERMINATION OF TRUST................... 55 Section 8.1 Terminating Events....................................... 55 Section 8.2 Termination.............................................. 55
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Page ---- Section 8.3 Liquidation............................................. 55 ARTICLE 9 LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS............ 57 Section 9.1 Liability............................................... 57 Section 9.2 Exculpation............................................. 57 Section 9.3 Fiduciary Duty.......................................... 58 Section 9.4 Indemnification......................................... 59 Section 9.5 Outside Businesses...................................... 61 ARTICLE 10 ACCOUNTING.............................. 61 Section 10.1 Fiscal Year............................................ 61 Section 10.2 Certain Accounting Matters............................. 62 Section 10.3 Banking................................................ 62 Section 10.4 Withholding............................................ 62 ARTICLE 11 AMENDMENTS AND MEETINGS........................ 63 Section 11.1 Amendments............................................. 63 Section 11.2 Meetings of the Holders of Securities; Action by Written Consent........................................ 65 ARTICLE 12 REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE.......................... 66 Section 12.1 Representations and Warranties of the Property Trustee. 66 Section 12.2 Representations and Warranties of the Delaware Trustee. 67 ARTICLE 13 MISCELLANEOUS............................. 68 Section 13.1 Notices................................................ 68 Section 13.2 Governing Law.......................................... 69 Section 13.3 Intention of the Parties............................... 69 Section 13.4 Headings............................................... 69 Section 13.5 Successors and Assigns................................. 69 Section 13.6 Partial Enforceability................................. 69 Section 13.7 Counterparts........................................... 70
v Page ---- EXHIBITS Exhibit A Capital Security Certificate Exhibit B Common Security Certificate Exhibit C Trustee's Authorization Certificate vi AMENDED AND RESTATED DECLARATION OF TRUST THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated as of April 22, 1997 among The First American Financial Corporation, a California corporation, as Sponsor, and Thomas A. Klemens and Parker S. Kennedy, the initial Regular Trustees, Wilmington Trust Company, as the initial Property Trustee and Wilmington Trust Company, as the initial Delaware Trustee, not in their individual capacities but solely as Trustees, and the holders, from time to time, of undivided beneficial ownership interests in the assets of Trust to be issued pursuant to this Declaration. WHEREAS, the Delaware Trustee, Thomas A. Klemens and the Sponsor established First American Capital Trust I (the "Trust"), a business trust under the Business Trust Act pursuant to a Declaration of Trust dated as of April 11, 1997 (the "Original Declaration") and a Certificate of Trust (the "Certificate of Trust") filed with the Secretary of State of the State of Delaware on April 11, 1997; and WHEREAS, the sole purpose of the Trust shall be to issue and sell certain securities representing undivided beneficial ownership interests in the assets of the Trust, to invest the gross proceeds from such sales in the Debentures issued by the Debenture Issuer and to engage in only those activities necessary or incidental thereto; and WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration. NOW, THEREFORE, it being the intention of the parties hereto that the Trust constitute a business trust under the Business Trust Act and that this Declaration constitute the governing instrument of the Trust, the Trustees hereby declare that all assets contributed to the Trust be held in trust for the benefit of the Holders, from time to time, of the Securities representing undivided beneficial ownership interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. ARTICLE I. INTERPRETATION AND DEFINITIONS Section A. Interpretation and Definitions. Unless the context otherwise requires: 1. capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1; 2 2. a term defined anywhere in this Declaration has the same meaning throughout; 3. all references to "this Declaration" are to this Declaration as modified, supplemented or amended from time to time; 4. all references in this Declaration to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Declaration unless otherwise specified; 5. a term defined in the Trust Indenture Act has the same meaning when used in this Declaration unless otherwise defined in this Declaration or unless the context otherwise requires; 6. a reference to the singular includes the plural and vice versa and a reference to any gender form of a term shall include the other form of a term, as applicable; 7. all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles which are generally accepted at the date or time of such computation; provided, that when two or more principles are so generally accepted, it shall mean that set of principles consistent with those in use by the applicable Person; 8. the words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation"; and 9. the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder. "Authorized Officer" of a Person means any Person that is expressly authorized by such Person to bind such Person. "Bankruptcy Event" means, with respect to any Person: (a) the entry of a decree or order by a court having jurisdiction in the premises judging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjudication or composition of or in respect of such Person under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a receiver, liquidator, assignee, 3 trustee, sequestrator (or other similar official) of such Person or of any substantial part of its property or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (b) the institution by such Person of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or similar official) of such Person or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt, or the taking of corporate action by such Person in furtherance of any such action. "Business Day" means any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Property Trustee, or the corporate trust office of the Debenture Trustee, under the Indenture, is closed for business. "Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time, or any successor legislation. "Capital Security" has the meaning specified in Section 7.1. "Capital Security Beneficial Owner" means each Person who is the beneficial owner of an interest in a Global Security as reflected in the records of the Depositary or, if a Depositary participant is not the beneficial owner, then as reflected in the records of a Person maintaining an account with the Depositary (directly or indirectly, in accordance with the rules of the Depositary). "Capital Security Certificate" means a certificate evidencing ownership of a Capital Security, substantially in the form attached as Exhibit A. "Certificate" means a Common Security Certificate or a Capital Security Certificate. "Certificate of Trust" has the meaning specified in the recitals hereto. 4 "Closing Date" means the date on which the Capital Securities are issued and sold. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation. A reference to a specific section of the Code refers not only to such specific section but also to any corresponding provision of any federal tax statute enacted after the date of this Declaration, as such specific section or corresponding provision is in effect on the date of application of the provisions of this Declaration containing such reference. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities Holder" means The First American Financial Corporation in its capacity as purchaser and holder of all of the Common Securities issued by the Trust. "Common Security" has the meaning specified in Section 7.1 "Common Security Certificate" means a definitive certificate in fully registered form representing a Common Security, substantially in the form attached as Exhibit B. "Compounded Distribution" has the meaning specified in Section 7.2(a). "Corporate Trust Office" means the office of the Property Trustee at which the corporate trust business of the Property Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Declaration is located at Rodney Square North, 1100 North Market Street, Wilmington, DE 19890-0001 Attention: Corporate Trust Administration. "Covered Person" means (a) any officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) the Trust's Affiliates; and (b) any Holder. "Debenture Issuer" means The First American Financial Corporation in its capacity as issuer of the Debentures under the Indenture. "Debenture Issuer Indemnified Person" means (a) any Regular Trustee; (b) any Affiliate of any Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees or agents of any Regular Trustee or any Affiliate thereof; or (d) any officer, employee or agent of the Trust or its Affiliates. 5 "Debenture Trustee" means Wilmington Trust Company, in its capacity as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee. "Debentures" means the Securities (as defined in the Indenture) to be issued by the Debenture Issuer and to be held by the Property Trustee. "Definitive Capital Securities" has the meaning specified in Section 7.11(c). "Delaware Trustee" has the meaning set forth in Section 6.2. "Depositary" means, with respect to Securities issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities. "Distribution" means a distribution payable to Holders in accordance with Section 7.2. "Distribution Date" means the date on which Distributions are made to Holders in accordance with Section 7.2. "DTC" means The Depository Trust Company, the initial Depositary. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation. "Exchange Agent" has the meaning specified in Section 7.7. "Exchange Offer" means the offer that may be made pursuant to the Registration Rights Agreement. "Fiduciary Indemnified Person" has the meaning set forth in Section 9.4(b). "Fiscal Year" has the meaning set forth in Section 10.1. "Global Security" means a Security, ownership and transfers of which shall be made through book entries by the Depositary as described in Section 7.11. "Guarantee" means the guarantee agreement of the Sponsor in respect of the Capital Securities and the Common Securities. "Holder" means a Person in whose name a Certificate is registered, such Person being a beneficial owner within the meaning of the Business Trust Act; provided, however, that in determining whether the Holders of the requisite liquidation amount of Capital 6 Securities have voted on any matter provided for in this Declaration, then for the purpose of such determination only (and not for any other purpose hereunder), if the Capital Securities remain in the form of one or more Global Securities, the term "Holders" shall mean the holder of the Global Security acting at the direction of the Capital Security Beneficial Owners. "Indemnified Person" means a Debenture Issuer Indemnified Person or a Fiduciary Indemnified Person. "Indenture" means the Junior Subordinated Indenture dated as of April 22, 1997, among the Debenture Issuer and the Debenture Trustee, and any indenture supplemental thereto pursuant to which the Debentures are to be issued. "Indenture Event of Default" means an "Event of Default" as defined in the Indenture. "Initial Purchasers" means Chase Securities Inc. and UBS Securities LLC. "Institutional Accredited Investor" means an institution that is an "accredited investor" as the term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Investment Company" means an investment company as defined in the Investment Company Act and the regulations promulgated thereunder. "Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation. "Investment Company Event" means the receipt by the Trust of an opinion of counsel, rendered by a law firm having a recognized national securities practice, to the effect that, as a result of the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or will be considered an Investment Company, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Capital Securities. "Legal Action" has the meaning set forth in Section 3.6(g). "Liquidation Date" has the meaning specified in Section 8.3(a). "List of Holders" has the meaning specified in Section 2.2(a). "Majority in Liquidation Amount" means, except as provided in the terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities, voting together as a single class, or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities, voting separately as a class, who are 7 the record owners of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "New Capital Securities" has the meaning specified in Section 7.1. "Officers' Certificate" means, with respect to any Person (other than Regular Trustees who are natural persons), a certificate signed by any Authorized Officer of such Person on behalf of such Person. Any Officers' Certificate delivered by the Trust shall be signed by at least one Regular Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Declaration shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer on behalf of such Person in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer and on behalf of such Person, such condition or covenant has been complied with. The term "Officers' Certificate", when used with reference to Regular Trustees who are natural persons shall mean a certificate signed by two of the Regular Trustees which otherwise satisfies the foregoing requirements. "Paying Agent" has the meaning specified in Section 7.7. "Payment Amount" has the meaning specified in Section 7.2(a). "Person" or "person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof or any other entity of whatever nature. "Private Placement Legend" has the meaning specified in Section 7.12(i). "Property Account" has the meaning specified in Section 3.8(c). 8 "Property Trustee" means the Trustee meeting the eligibility requirements set forth in Section 6.3. "Pro Rata" means pro rata to each Holder according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities outstanding. "Qualified Institutional Buyer" or "QIB" has the meaning specified in Rule 144A under the Securities Act. "Quorum" means a majority of the Regular Trustees or, if there are only two Regular Trustees, both of them. "Redemption Price" has the meaning specified in Section 7.3. "Registration Rights Agreement" means the Registration Rights Agreement dated the date hereof between the Sponsor, the Trust and the Initial Purchasers for the benefit of themselves and the Holders as the same may be amended from time to time in accordance with the terms thereof. "Regular Trustee" means any Trustee other than the Property Trustee and the Delaware Trustee. "Regulation S" means Regulation S under the Securities Act or any successor regulation thereto. "Related Party" means, with respect to the Sponsor, any direct or wholly owned subsidiary of the Sponsor or any Person that owns, directly or indirectly, 100% of the outstanding voting securities of the Sponsor. "Responsible Officer" means, with respect to the Property Trustee, any officer within the Corporate Trust Office of the Property Trustee with direct responsibility for the administration of this Declaration and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Restricted Definitive Capital Securities" has the meaning specified in Section 7.11(c). "Restricted Global Security" means any Global Security or Global Securities evidencing Securities that are to be traded pursuant to Rule 144A. "Restricted Security" has the meaning assigned to such term in Rule 144(a)(3) of the Securities Act. 9 "Rule 144A" means Rule 144A under the Securities Act or any successor rule thereunder. "Securities" means the Common Securities and the Capital Securities. "Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation. "Securities Register" has the meaning specified in Section 7.7. "Security Registrar and Securities Registrar" each has the meaning specified in Section 7.7. "Special Event" means an Investment Company Event or a Tax Event. "Sponsor" means The First American Financial Corporation, a California corporation, or any successor entity in a merger, consolidation or amalgamation, in its capacity as sponsor of the Trust. "Successor Delaware Trustee" has the meaning specified in Section 6.6(b). "Successor Entity" has the meaning specified in Section 3.15(b)(i). "Successor Property Trustee" has the meaning specified in Section 6.6(b). "Successor Securities" has the meaning specified in Section 3.15(b)(i)b. "Super Majority" has the meaning set forth in Section 2.6(a)(ii). "Tax Event" means the receipt by the Sponsor of an opinion of counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which proposed change, pronouncement or decision is announced on or after the Closing Date, there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date of such opinion, subject to the United States federal income tax with respect to income received or accrued on the Debentures, (ii) interest payable by the Debenture Issuer on the Debentures is not, or within 90 days of the date of such opinion, will not be deductible by the Debenture Issuer, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. 10 "10% in Liquidation Amount" means, except as provided in the terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities, voting together as a single class, or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities, voting separately as a class, who are the record owners of 10% or more of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "Transfer Restricted Securities" has the meaning specified in Section 7.1. "Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Trust Enforcement Event" in respect of the Securities means an Indenture Event of Default has occurred and is continuing in respect of the Debentures. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended from time to time, or any successor legislation. "Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder. "Trustees' Authentication Order" means a written certificate, in the form attached as Exhibit C hereto, signed by the Sponsor for the purpose of establishing the terms and form of the Capital Securities and the Common Securities as determined by the Regular Trustees. ARTICLE II. TRUST INDENTURE ACT Section A. Trust Indenture Act; Application. 1. At such time, if any, as this Declaration is qualified under the Trust Indenture Act, this Declaration will be subject to the provisions of the Trust Indenture Act that are required to be part of this Declaration and shall, to the extent applicable, be governed by such provisions. 11 2. The Property Trustee shall be the only Trustee, which, at such time, if any, as this Declaration is qualified under the Trust Indenture Act, is the "Trustee" for the purposes of the Trust Indenture Act. 3. At such time, if any, as this Declaration is qualified under the Trust Indenture Act, if and to the extent that any provision of this Declaration conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. 4. The application of the Trust Indenture Act to this Declaration shall not affect the Trust's classification as a grantor trust for United States Federal income tax purposes and shall not affect the nature of the Securities as equity securities representing undivided beneficial ownership interests in the assets of the Trust. Section B. Lists of Holders of Securities. 1. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the Property Trustee with a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Holders of the Securities ("List of Holders"), (i) semi-annually, not more than 15 days after January 15 and July 15 in each year and as of January 1 and July 1 and (ii) at any other time, within 30 days of receipt by the Trust of a written request from the Property Trustee for a List of Holders as of a date no more than 15 days before such List of Holders is given to the Property Trustee; provided that neither the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Property Trustee by the Sponsor and the Regular Trustees on behalf of the Trust. The Property Trustee shall preserve, in as current a form as is reasonably practicable, all information contained in Lists of Holders given to it or which it receives in the capacity as Paying Agent (if acting in such capacity), provided that the Property Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. 2. The Property Trustee shall comply with its obligations under, and shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act. Section C. Reports by the Property Trustee. Within 60 days after May 15 of each year (commencing in the year of the first anniversary of the issuance of the Capital Securities), the Property Trustee shall provide to the Holders of the Capital Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Property Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. Section D. Periodic Reports to the Property Trustee. 12 Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as are required by Section 314 of the Trust Indenture Act (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Section E. Evidence of Compliance with Conditions Precedent. Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Declaration that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers' Certificate. Section F. Trust Enforcement Events; Waiver. 1. The Holders of a Majority in Liquidation Amount of the Capital Securities may, by vote or written consent, on behalf of the Holders of all of the Capital Securities, waive any past Trust Enforcement Event in respect of the Capital Securities and its consequences, provided that, if the underlying Indenture Event of Default: a. is not waivable under the Indenture, the Trust Enforcement Event under this Declaration shall also not be waivable; or b. requires the consent or vote of greater than a majority in principal amount of the holders of the Debentures (a "Super Majority") to be waived under the Indenture, the Trust Enforcement Event under this Declaration may only be waived by the vote or written consent of the Holders of at least the proportion in aggregate liquidation amount of the Capital Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. The foregoing provisions of this Section 2.6(a) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such default shall cease to exist, and any Trust Enforcement Event with respect to the Capital Securities arising therefrom shall be deemed to have been cured, for every purpose of this Declaration and the Capital Securities, but no such waiver shall extend to any subsequent or other Trust Enforcement Event with respect to the Capital Securities or impair any right consequent thereon. Any waiver by the Holders of the Capital Securities of a Trust Enforcement Event with respect to the Capital Securities shall also be deemed to constitute a waiver by the Holders of the Common Securities of any such Trust Enforcement Event with respect to the Common Securities for all purposes of this Declaration without any further act, vote, or consent of the Holders of the Common Securities. 13 2. The Holders of a Majority in Liquidation Amount of the Common Securities may, by vote or written consent, on behalf of the Holders of all of the Common Securities, waive any past Trust Enforcement Event in respect of the Common Securities and its consequences, provided that, if the underlying Indenture Event of Default: a. is not waivable under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Trust Enforcement Event under this Declaration as provided below in this Section 2.6(b), the Trust Enforcement Event under this Declaration shall also not be waivable; or b. requires the consent or vote of a Super Majority to be waived under the Indenture, except where the Holders of the Common Securities are deemed to have waived such Trust Enforcement Event under this Declaration as provided below in this Section 2.6(b), the Trust Enforcement Event under this Declaration may only be waived by the vote or written consent of the Holders of at least the proportion in aggregate liquidation amount of the Common Securities that the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding; provided further, each Holder of Common Securities will be deemed to have waived any Trust Enforcement Event and all Trust Enforcement Events with respect to the Common Securities and the consequences thereof until all Trust Enforcement Events with respect to the Capital Securities have been cured, waived or otherwise eliminated, and until such Trust Enforcement Events with respect to the Capital Securities have been so cured, waived or otherwise eliminated, the Property Trustee will be deemed to be acting solely on behalf of the Holders of the Capital Securities and only the Holders of the Capital Securities will have the right to direct the Property Trustee in accordance with the terms of the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon such waiver, any such default shall cease to exist and any Trust Enforcement Event with respect to the Common Securities arising therefrom shall be deemed to have been cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other Trust Enforcement Event with respect to the Common Securities or impair any right consequent thereon. 3. A waiver of an Indenture Event of Default by the Property Trustee at the direction of the Holders of the Capital Securities constitutes a waiver of the corresponding Trust Enforcement Event with respect to the Capital Securities under this Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act. Section G. Trust Enforcement Event; Notice. 14 1. The Property Trustee shall, within 90 days after the occurrence of a Trust Enforcement Event actually known to the Property Trustee, transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of all defaults with respect to the Securities actually known to a Responsible Officer of the Property Trustee, unless such defaults have been cured before the giving of such notice (the term "defaults" for the purposes of this Section 27 being hereby defined to be an Indenture Event of Default, not including any periods of grace provided for therein and irrespective of the giving of any notice provided therein); provided that, except for a default in the payment of principal of or interest on any of the Debentures, the Property Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Securities. 2. The Property Trustee shall not be deemed to have knowledge of any default except: a. a default under Sections 5.1(1) (other than the payment of Additional Interest) and 5.1(2) of the Indenture; or b. any default as to which the Property Trustee shall have received written notice or of which a Responsible Officer of the Property Trustee charged with the administration of this Declaration shall have actual knowledge. ARTICLE III. ORGANIZATION Section A. Name and Organization. The trust hereby continued is named "First American Capital Trust I" as such name may be modified from time to time by the Regular Trustees following written notice to the Delaware Trustee, the Property Trustee and the Holders of Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Regular Trustees. Section B. Office. The address of the principal office of the Trust is c/o The First American Financial Corporation, 114 East Fifth Street, Santa Ana, California 90271. On 10 Business Days' written notice to the Holders of Securities, the Regular Trustees may designate another principal office for the Trust. Section C. Purpose. 15 The exclusive purposes and functions of the Trust are (a) to issue and sell Securities and use the gross proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein, to engage in only those other activities necessary or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, mortgage, pledge any of its assets or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified as a grantor trust for United States Federal income tax purposes or the Trust to register as an Investment Company. By the acceptance of this Trust, none of the Trustees, the Sponsor, the Holders of the Capital Securities or Common Securities or the Capital Securities Beneficial Owners will take any position for United States Federal income tax purposes which is contrary to the classification of the Trust as a grantor trust. Section D. Authority. Subject to the limitations provided in this Declaration and to the specific duties of the Property Trustee, the Regular Trustees shall have exclusive authority to carry out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their powers shall constitute the act of and serve to bind the Trust and an action taken by the Property Trustee on behalf of the Trust in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration. 1. Except as otherwise expressly set forth in this Declaration and except if a meeting of the Regular Trustees is called with respect to any matter over which the Regular Trustees have power to act, any power of the Regular Trustees may be exercised by, or at the direction of, any one such Regular Trustee; 2. Unless otherwise determined by the Regular Trustees, and except as otherwise required by the Business Trust Act or applicable law, any Regular Trustee is authorized to execute and deliver on behalf of the Trust any documents which the Regular Trustees have the power and authority to cause the Trust to execute pursuant to Section 3.6, provided, that any registration statements referred to in Section 3.6(b)(i), including any amendments thereto, shall be signed by or on behalf of a majority of the Regular Trustees; and 3. a Regular Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purposes of signing any documents which the Regular Trustees have power and authority to cause the Trust to execute pursuant to Section 3.6. Section E. Title to Property of the Trust. 16 Except as provided in Section 3.8 with respect to the Debentures and the Property Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial ownership interest in the assets of the Trust. Section F. Powers and Duties of the Regular Trustees. The Regular Trustees shall have the exclusive power, duty and authority, and are hereby authorized and directed, to cause the Trust to engage in the following activities: 1. to establish the terms and form of the Capital Securities and the Common Securities in the manner specified in Section 7.1 and execute, deliver, issue and sell the Capital Securities and the Common Securities in accordance with this Declaration; provided, however, that the Trust may issue no more than two series of Capital Securities (which will consist exclusively of the Transfer Restricted Securities and the New Capital Securities) and no more than one series of Common Securities, and, provided further, that there shall be no interests in the Trust other than the Securities, and the issuance of Securities shall be limited to a one-time, simultaneous issuance of both Transfer Restricted Securities and Common Securities on the Closing Date and a one-time issuance of New Capital Securities pursuant to an exchange offer required pursuant to the Registration Rights Agreement; 2. in connection with the issue and sale of the Capital Securities, at the direction of the Sponsor, to: a. execute and file with the Commission one or more registration statements on the applicable forms prepared by the Sponsor, including any amendments thereto, pertaining to the Capital Securities, the Guarantee and the Debentures; b. if deemed necessary or desirable by the Sponsor, execute and file an application, prepared by the Sponsor, to the New York Stock Exchange, Inc. or any other national stock exchange or the Nasdaq National Market for listing of any Capital Securities, the Guarantee and the Debentures; c. if deemed necessary or desirable by the Sponsor, execute and file with the Commission a registration statement on Form 8-A, including any amendments thereto, prepared by the Sponsor, relating to the registration of the Capital Securities, the Guarantee and the Debentures under Section 12(b) or 12(g) of the Exchange Act; d. execute and file any documents prepared by the Sponsor, or take any acts as determined by the Sponsor to be necessary, in order to 17 qualify or register all or part of the Capital Securities in any State in which the Sponsor has determined to qualify or register such Capital Securities for sale; e. execute and deliver or enter into a purchase agreement and other related agreements providing for the sale of the Capital Securities to the Initial Purchasers; and f. execute and deliver or enter into the Registration Rights Agreement. 3. to acquire the Debentures with the proceeds of the sale of the Capital Securities and the Common Securities; provided, however, that the Regular Trustees shall cause legal title to the Debentures to be held of record in the name of the Property Trustee for the benefit of the Holders of the Capital Securities and the Holders of the Common Securities; 4. to give the Sponsor and the Property Trustee prompt written notice of the occurrence of a Special Event; provided that the Regular Trustees shall consult with the Sponsor and the Property Trustee before taking or refraining from taking any action in relation to any such Special Event; 5. to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including and with respect to, for the purposes of Section 316(c) of the Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Capital Securities and Holders of Common Securities as to such actions and applicable record dates; 6. to take all actions and perform such duties as may be required of the Regular Trustees pursuant to the terms of this Declaration and the Securities; 7. to bring or defend, pay, collect, compromise, arbitrate, resort to legal action or otherwise adjust claims or demands of or against the Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has the exclusive power to bring such Legal Action; 8. to employ or otherwise engage employees and agents (who may be designated as officers with titles) and managers, contractors, advisors and consultants to conduct only those services that the Regular Trustees have authority to conduct directly, and to and pay reasonable compensation for such services; 9. to cause the Trust to comply with the Trust's obligations under the Trust Indenture Act, if any; 18 10. to give the certificate required by Section 314(a)(4) of the Trust Indenture Act to the Property Trustee, which certificate may be executed by any Regular Trustee; 11. to incur expenses that are necessary or incidental to carry out any of the purposes of the Trust; 12. to act as, or appoint another Person to act as, registrar and transfer agent for the Securities; 13. to give prompt written notice to the Property Trustee and the Holders of the Securities of any notice received from the Debenture Issuer of its election to defer payments of interest on the Debentures by extending the interest payment period under the Debentures as authorized by the Indenture; 14. to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Capital Securities and the Holders of the Common Securities or to enable the Trust to effect the purposes for which the Trust was created; 15. to take any action, not inconsistent with applicable law, that the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the purposes and functions of the Trust as set out in Section 3.3 or the activities of the Trust as set out in this Section 3.6, including, but not limited to: a. causing the Trust not to be deemed to be an Investment Company required to be registered under the Investment Company Act; b. causing the Trust to be classified as a grantor trust for United States Federal income tax purposes; and c. cooperating with the Debenture Issuer to ensure that the Debentures will be treated as indebtedness of the Debenture Issuer for United States Federal income tax purposes; 16. to take all action necessary to consummate the Exchange Offer or otherwise cause the Capital Securities to be registered pursuant to an effective registration statement in accordance with the provisions of the Registration Rights Agreement; 17. to take all action necessary to cause all applicable tax returns and tax information reports that are required to be filed with respect to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of the Trust; and 19 18. to execute all documents or instruments, perform all duties and powers, and do all things for and on behalf of the Trust in all matters necessary or incidental to the foregoing. The Regular Trustees shall exercise the powers set forth in this Section 3.6 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular Trustees shall have no power to, and shall not, take any action that is inconsistent with the purposes and functions of the Trust set forth in Section 3.3. Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the authority of the Property Trustee set forth in Section 3.8. Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed by the Debenture Issuer. Section G. Prohibition of Actions by the Trust and the Trustees. 1. The Trust shall not, and the Trustees (including the Property Trustee) shall not, engage in any activity other than as required or authorized by this Declaration. In particular, the Trust shall not and the Trustees shall not: a. invest any proceeds received by the Trust from holding the Debentures, but shall distribute all such proceeds to Holders of Securities pursuant to the terms of this Declaration and of the Securities; b. acquire any assets other than the Debentures (and any interest or proceeds received thereon); c. possess Trust property for other than a Trust purpose; d. make any loans or incur any indebtedness other than loans represented by the Debentures; e. possess any power or otherwise act in such a way as to vary the Trust assets; f. possess any power or otherwise act in such a way as to vary the terms of the Securities in any way whatsoever (except to the extent expressly authorized in this Declaration or by the terms of the Securities); g. issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities; or 20 h. other than as provided in this Declaration or by the terms of the Securities, (A) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee or exercising any trust or power conferred upon the Debenture Trustee with respect to the Debentures, (B) waive any past default that is waivable under the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Debentures shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required unless, in each case, the Trust shall have received an opinion of counsel to the effect that such amendment, modification or termination will not cause more than an insubstantial risk that the Trust will be deemed an Investment Company required to be registered under the Investment Company Act, or the Trust will not be classified as a grantor trust for United States Federal income tax purposes; or i. take any action inconsistent with the status of the Trust as a grantor trust for United States Federal income tax purposes. Section H. Powers and Duties of the Property Trustee. 1. The legal title to the Debentures shall be owned by and held of record in the name of the Property Trustee in trust for the benefit of the Trust and the Holders of the Securities. The right, title and interest of the Property Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Property Trustee in accordance with Section 6.6. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Debentures have been executed and delivered. 2. The Property Trustee shall not transfer its right, title and interest in the Debentures to the Regular Trustees or to the Delaware Trustee (if the Property Trustee does not also act as Delaware Trustee). 3. The Property Trustee shall: a. establish and maintain a segregated non-interest bearing trust account (the "Property Account") in the name of and under the exclusive control of the Property Trustee on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Debentures held by the Property Trustee, deposit such funds into the Property Account and make payments to the Holders of the Capital Securities and Holders of the Common Securities from the Property Account in accordance with Section 7.2. Funds in the Property Account shall be held uninvested until disbursed in accordance with this Declaration. The Property Account shall be an account that is maintained with a banking institution the rating on whose long-term unsecured indebtedness is at least equal to the rating assigned to the Capital Securities by a "nationally recognized statistical rating organization", as that term is defined for purposes of Rule 436(g)(2) under the Securities Act; 21 b. engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Capital Securities and the Common Securities to the extent the Debentures are redeemed or mature; c. upon written notice of distribution issued by the Regular Trustees in accordance with the terms of the Securities, engage in such ministerial activities as so directed and as shall be necessary or appropriate to effect the distribution of the Debentures to Holders of Securities upon the occurrence of a Special Event; and d. execute and deliver a Letter of Representation, dated on or about the Closing Date, to DTC in such form as may be approved by any Regular Trustee, such approval to be exclusively evidenced by the execution of such document by a Regular Trustee on behalf of the Trust, together with such riders and other statements as may be affixed thereto. 4. The Property Trustee shall take all actions and perform such duties as may be specifically required of the Property Trustee pursuant to the terms of this Declaration and the Securities. 5. The Property Trustee shall take any Legal Action which arises out of or in connection with a Trust Enforcement Event of which a Responsible Officer of the Property Trustee has actual knowledge or the Property Trustee's duties and obligations under this Declaration or the Trust Indenture Act. 6. The Property Trustee shall continue to serve as a Trustee until either: a. the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of Securities pursuant to the terms of the Securities; or b. a Successor Property Trustee has been appointed and has accepted that appointment in accordance with Section 6.6. 7. Subject to such limitations as are necessary to ensure compliance with Section 3.3, the Property Trustee shall have the legal power to exercise all of the rights, powers and privileges of a holder of Debentures under the Indenture and, if a Trust Enforcement Event actually known to a Responsible Officer of the Property Trustee occurs and is continuing, the Property Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the Debentures subject to the rights of the Holders pursuant to the terms of this Declaration and the Securities. 8. The Property Trustee shall be authorized to undertake any actions set forth in Section 317(a) of the Trust Indenture Act. 22 9. For such time as the Property Trustee is the Paying Agent, the Property Trustee may authorize one or more Persons to act as additional Paying Agents to pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect to all Securities and any such Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. While the Property Trustee is so acting as Paying Agent, any such additional Paying Agent may be removed by the Property Trustee and a successor Paying Agent or additional Paying Agents may be (but are not required to be) appointed at any time by the Property Trustee. In the event the Capital Securities do not remain in the form of one or more Global Securities, the Property Trustee will act as Paying Agent and may designate an additional or substitute Paying Agent at any time. 10. Subject to this Section 3.8, the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6. The Property Trustee shall exercise the powers set forth in this Section 3.8 in a manner that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Property Trustee shall have no power to, and shall not, take any action that is inconsistent with the purposes and functions of the Trust set out in Section 3.3. Section I. Certain Duties and Responsibilities of the Property Trustee. 1. The Property Trustee, before the occurrence of any Trust Enforcement Event and after the curing or waiving of all Trust Enforcement Events that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and no implied covenants shall be read into this Declaration against the Property Trustee. In case a Trust Enforcement Event has occurred (that has not been cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Property Trustee has actual knowledge, the Property Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. 2. No provision of this Declaration shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: a. prior to the occurrence of a Trust Enforcement Event and after the curing of all such Trust Enforcement Events that may have occurred: (1) the duties and obligations of the Property Trustee shall be determined solely by the express provisions of this Declaration and the Property Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Declaration and in the Securities, and no implied covenants or obligations shall be read into this Declaration against the Property Trustee; and 23 (2) in the absence of bad faith on the part of the Property Trustee, the Property Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Property Trustee and conforming to the requirements of this Declaration; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Property Trustee, the Property Trustee shall be under a duty to examine the same to determine whether or not on their face they conform to the requirements of this Declaration; b. the Property Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; c. the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it without gross negligence, in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Declaration; d. no provision of this Declaration shall require the Property Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Declaration or indemnity reasonably satisfactory to the Property Trustee against such risk or liability is not reasonably assured to it; e. the Property Trustee's sole duty with respect to the custody, safe-keeping and physical preservation of the Debentures and the Property Account shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Declaration and the Trust Indenture Act; f. the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Debentures or the payment of any taxes or assessments levied thereon or in connection therewith; g. the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree with the Sponsor. Money held by the Property Trustee need not be segregated from other funds held by it except in 24 relation to the Property Account maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except to the extent otherwise required by law; and h. the Property Trustee shall not be responsible for monitoring the compliance by the Regular Trustees or the Sponsor with their respective duties under this Declaration, nor shall the Property Trustee be liable for any default or misconduct of the Regular Trustees or the Sponsor. Section J. Certain Rights of Property Trustee. 1. Subject to the provisions of Section 3.9: a. the Property Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; b. any direction or act of the Sponsor or the Regular Trustees contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate (or, with respect to the establishment of the terms and form of the Securities by the Regular Trustees, by a Trustees' Authentication Order); c. whenever in the administration of this Declaration, the Property Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Regular Trustees; d. the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or registration thereof; e. the Property Trustee may consult with counsel of its choice or other experts and the advice or opinion of such counsel and experts with respect to legal matters or advice within the scope of such experts' area of expertise shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or any of its Affiliates, and may include any of its employees. The Property Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction; 25 f. the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any Holder, unless such Holder shall have provided to the Property Trustee security and indemnity, reasonably satisfactory to the Property Trustee, against the costs, expenses (including attorneys, fees and expenses and the expenses of the Property Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Property Trustee; provided that, nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the occurrence of a Trust Enforcement Event, of its obligation to exercise the rights and powers vested in it by this Declaration; g. the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; h. the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, custodians, nominees or attorneys and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; i. any action taken by the Property Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Property Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Property Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Property Trustee's or its agent's taking such action; j. whenever in the administration of this Declaration the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders of the Securities (which instructions, if requested from the Holders, may only be given by the Holders of the same proportion in liquidation amount of the Securities as would be entitled to direct the Property Trustee under the terms of the Securities in respect of such remedy, right or action), the Regular Trustees or the Sponsor, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions; 26 k. If no Trust Enforcement Event has occurred and is continuing and the Property Trustee is required to decide between alternative causes of action, construe ambiguous provisions in this Declaration or is unsure of the application of any provision of this Declaration, and the matter is not one on which Holders of Capital Securities are entitled under this Declaration to vote, then the Property Trustee may, but shall be under no duty to, take such action as is directed by the Sponsor and, if not so directed, shall take such action as it deems advisable and in the best interests of the Holders of the Securities and will have no liability except for its own bad faith, gross negligence or willful misconduct; l. except as otherwise expressly provided by this Declaration, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration; and m. the Property Trustee shall not be liable for any action taken, suffered or omitted to be taken by it without negligence, in good faith and reasonably believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Declaration. 2. No provision of this Declaration shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. Section K. Delaware Trustee. Notwithstanding any other provision of this Declaration other than Section 6.2, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities of the Regular Trustees or the Property Trustee described in this Declaration. Except as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Business Trust Act. Section L. Execution of Documents. Unless otherwise determined by the Regular Trustees, and except as otherwise required by the Business Trust Act, any Regular Trustee is authorized to execute and deliver on behalf of the Trust any documents that the Regular Trustees have the power and authority to execute pursuant to Section 3.6. 27 Section M. Not Responsible for Recitals or Issuance of Securities. The recitals contained in this Declaration and the Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration, the Securities, the Debentures or the Indenture. Section N. Duration of Trust. The Trust shall exist until terminated pursuant to the provisions of Article 8 hereof. Section O. Mergers. 1. The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any Person, except as described in Section 3.15(b) and (c). 2. The Trust may at the request of the Sponsor, with the consent of the Regular Trustees or, if there are more than two, a majority of the Regular Trustees and without the consent of the Holders of the Securities, the Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any State; provided that: a. if the Trust is not the successor, such successor entity (the "Successor Entity") either: (1) expressly assumes all of the obligations of the Trust under the Capital Securities; or (2) substitutes for the Capital Securities other securities having substantially the same terms as the Capital Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Capital Securities rank in priority with respect to Distributions and payments upon liquidation, redemption and otherwise; b. the Sponsor expressly appoints a trustee of such Successor Entity that possesses the same powers and duties as the Property Trustee as the holder of the Debentures; c. such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Capital Securities (including any 28 Successor Securities) to be downgraded by any nationally recognized statistical rating organization; d. such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Capital Securities (including any Successor Securities) in any material respect; e. such Successor Entity has a purpose identical to that of the Trust; f. prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease the Sponsor has received an opinion of counsel experienced in such matters to the effect that: (1) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Capital Securities (including any Successor Securities) in any material respect; (2) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease neither the Trust nor the Successor Entity will be required to register as an Investment Company; and (3) following such merger, consolidation, amalgamation or replacement, the Trust (or the Successor Entity) will continue to be classified as a grantor trust for United States Federal income tax purposes; g. the Sponsor or any permitted successor or assignee owns all of the common securities of such Successor Entity and guarantees the obligations of such Successor Entity under the Successor Securities at least to the extent provided by the Guarantee; h. such Successor Entity expressly assumes all of the obligations of the Trust with respect to the Trustees; and i. there shall have been furnished to the Property Trustee an Officers' Certificate and an opinion of counsel, each to the effect that all conditions precedent set forth in this Declaration to such transaction have been satisfied. 3. Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders of 100% in aggregate liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties or assets substantially as an entity to any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger, 29 conveyance, transfer or lease replacement would cause the Trust or Successor Entity to be classified as other than a grantor trust for United States Federal income tax purposes. Section P. Property Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other similar judicial proceeding relative to the Trust or the property of the Trust, the Property Trustee (irrespective of whether any Distributions on the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Property Trustee shall have made any demand on the Trust for the payment of any past due Distributions) shall be entitled and empowered, to the fullest extent permitted by law, by intervention in such proceeding or otherwise (but shall have no duty): 1. to file and prove a claim for the whole amount of any Distributions owing and unpaid in respect of the Securities (or, if the Securities are original issue discount Securities, such portion of the liquidation amount as may be specified in the terms of such Securities) and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Property Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and 2. to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Property Trustee and, in the event the Property Trustee shall consent to the making of such payments directly to the Holders, to pay to the Property Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel, and any other amounts due the Property Trustee. Nothing herein contained shall be deemed to authorize the Property Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement adjustment or compensation affecting the Securities or the rights of any Holder thereof or to authorize the Property Trustee to vote in respect of the claim of any Holder in any such proceeding. 30 ARTICLE IV. SPONSOR Section A. Responsibilities of the Sponsor. In connection with the issue and sale of the Capital Securities, the Sponsor shall have the exclusive right and responsibility to engage in the following activities: 1. to prepare for filing by the Trust with the Commission one or more registration statements on the applicable forms, including any amendments thereto, pertaining to the Capital Securities, the Guarantee and the Debentures; 2. to determine the States in which to take appropriate action to qualify or register for sale all or part of the Capital Securities and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States; 3. to prepare any filing by the Trust of an application to the New York Stock Exchange, Inc. or any other national stock exchange or the Nasdaq National Market for listing, if such filing is determined to be necessary or desirable by the Sponsor; 4. to prepare for filing by the Trust with the Commission a registration statement on Form 8-A, including any amendments thereto, if such filing is determined to be necessary or desirable by the Sponsor; 5. to negotiate the terms of a purchase agreement and other related agreements providing for the sale of the Capital Securities to the Initial Purchasers; and 6. to negotiate the terms of the Registration Rights Agreement. Section B. Indemnification and Expenses of the Trustee. The Sponsor, as borrower, agrees to indemnify the Property Trustee and the Delaware Trustee for, and to hold each of them harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Property Trustee or the Delaware Trustee, as the case may be, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending either of them against any claim or liability in connection with the exercise or performance of any of their respective powers or duties hereunder; the provisions of this Section 4.2 shall survive the resignation or removal of the Delaware Trustee or the Property Trustee or the termination of this Declaration. 31 ARTICLE V. TRUST COMMON SECURITIES HOLDER Section A. Debenture Issuer's Purchase of Common Securities. On the Closing Date the Debenture Issuer will purchase all of the Common Securities issued by the Trust, for an amount at least equal to 3% of the capital of the Trust, at the same time as the Capital Securities are sold. Section B. Covenants of the Common Securities Holder. For so long as the Capital Securities remain outstanding, the Common Securities Holder covenants (i) to maintain directly 100% ownership of the Common Securities, (ii) to cause the Trust to remain a statutory business trust and not to voluntarily dissolve, wind up, liquidate or be terminated, except as permitted by this Declaration, (iii) to use its commercially reasonable efforts to ensure that the Trust will not be an Investment Company, and (iv) to take no action which would be reasonably likely to cause the Trust to be classified as an association or a publicly traded partnership taxable as a corporation for United States Federal income tax purposes. ARTICLE VI. TRUSTEES Section A. Number of Trustees. The number of Trustees initially shall be four (4), and: 1. at any time before the issuance of any Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and 2. after the issuance of any Securities, the number of Trustees may be increased or decreased by vote of the Holders of a Majority in Liquidation Amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities or by written consent in lieu of such meeting; provided that the number of Trustees shall be at least three; and provided further that (1) the Delaware Trustee, in the case of a natural person, shall be a person who is a resident of the State of Delaware or that, if not a natural person, is an entity which has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable Delaware law; (2) at least one Regular Trustee is an employee or officer of, or is affiliated with, the Sponsor; and (3) one Trustee shall be the Property Trustee for so long as this 32 Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it meets the applicable requirements. Section B. Delaware Trustee. If required by the Business Trust Act, one Trustee (the "Delaware Trustee") shall be: 1. a natural person who is a resident of the State of Delaware; or 2. if not a natural person, an entity which has its principal place of business in the State of Delaware, and otherwise meets the requirements of applicable Delaware law, provided that, if the Property Trustee has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable Delaware law, then the Property Trustee shall also be the Delaware Trustee and Section 3.11 shall have no application. Section C. Property Trustee; Eligibility. 1. There shall at all times be one Trustee which shall act as Property Trustee which shall: a. not be an Affiliate of the Sponsor; and b. be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or other Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 6.3(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 2. If at any time the Property Trustee shall cease to be eligible to so act under Section 6.3(a), the Property Trustee shall immediately resign in the manner and with the effect set forth in Section 6.6(c). 33 3. If the Property Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Property Trustee and the Holder of the Common Securities (as if it were the "obligor" referred to in Section 310(b) of the Trust Indenture Act) shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. 4. The Guarantee shall be deemed to be specifically described in this Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the Trust Indenture Act. Section D. Certain Qualifications of Regular Trustees and Delaware Trustee Generally. Each Regular Trustee and the Delaware Trustee (unless the Property Trustee also acts as Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more Authorized Officers. Section E. Initial Trustees. The initial Regular Trustees shall be: Parker S. Kennedy and Thomas A. Klemens, the business address of all of whom is c/o The First American Financial Corporation, 114 East Fifth Street, Santa Ana, California 90271. The initial Property Trustee and Delaware Trustee shall be: Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington Delaware 19890-0001, Attention: Corporate Trust Administration, fax: 302-427-4749, phone: 302-651-1000. Section F. Appointment, Removal and Resignation of Trustees. 1. Subject to Section 6.6(b) and 7.5(j), Trustees may be appointed or removed without cause at any time: a. until the issuance of any Securities, by written instrument executed by the Sponsor; and b. after the issuance of any Securities, by vote of the Holders of a Majority in Liquidation Amount of the Common Securities voting as a class at a meeting of the Holders of the Common Securities. 2. The Trustee that acts as Property Trustee shall not be removed in accordance with Section 6.6(a) until a successor Trustee possessing the qualifications to act as Property Trustee under Section 6.3 (a "Successor Property Trustee") has been appointed and has 34 accepted such appointment by written instrument executed by such Successor Property Trustee and delivered to the Regular Trustees and the Sponsor. The Trustee that acts as Delaware Trustee shall not be removed in accordance with Section 66 until a successor Trustee possessing the qualifications to act as Delaware Trustee under Sections 6.2 and 6.4 (a "Successor Delaware Trustee") has been appointed and has accepted such appointment by written instrument executed by such Successor Delaware Trustee and delivered to the Regular Trustees and the Sponsor. 3. A Trustee appointed to office shall hold office until his or its successor shall have been appointed, until his death or its dissolution or until his or its removal or resignation. Any Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or upon such later date as is specified therein; provided, however, that: a. No such resignation of the Trustee that acts as the Property Trustee shall be effective: (1) until a Successor Property Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Property Trustee and delivered to the Trust, the Sponsor and the resigning Property Trustee; or (2) until the assets of the Trust have been completely liquidated and the proceeds thereof distributed to the holders of the Securities; and b. no such resignation of the Trustee that acts as the Delaware Trustee shall be effective until a Successor Delaware Trustee has been appointed and has accepted such appointment by instrument executed by such Successor Delaware Trustee and delivered to the Trust, the Sponsor and the resigning Delaware Trustee. 4. The Holders of the Common Securities shall use their best efforts to promptly appoint a Successor Delaware Trustee or Successor Property Trustee, as the case may be, if the Property Trustee or the Delaware Trustee delivers an instrument of resignation in accordance with this Section 6.6. 5. If no Successor Property Trustee or Successor Delaware Trustee, as the case may be, shall have been appointed and accepted appointment as provided in this Section 6.6 within 60 days after delivery to the Sponsor and the Trust of an instrument of resignation or removal, the resigning or removed Property Trustee or Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment of a Successor Property Trustee or Successor Delaware Trustee, as applicable. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Property Trustee or Successor Delaware Trustee, as the case may be. 35 6. No Property Trustee or Delaware Trustee shall be liable for the acts or omissions to act of any Successor Property Trustee or Successor Delaware Trustee, as the case may be. 7. At the time of resignation or removal of the Property Trustee or the Delaware Trustee, the Debenture Issuer shall pay to such Trustee any amounts that may be owed to such Trustee pursuant to Section 9.4. Section G. Vacancies among Trustees. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is increased pursuant to Section 6.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 6.6. Section H. Effect of Vacancies. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by the appointment of a Regular Trustee in accordance with Section 6.6, the Regular Trustees in office, regardless of their number, shall have all the powers granted to the Regular Trustees and shall discharge all the duties imposed upon the Regular Trustees by this Declaration. Section I. Meetings. If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting to the transaction of any activity on the ground that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by telephone) and eligible to vote with respect to such matter, 36 provided that a Quorum is present, or without a meeting by the unanimous written consent of the Regular Trustees. In the event there is only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a written consent of such Regular Trustee. Section J. Delegation of Power. 1. Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to any natural person over the age of 21 his, her or its power for the purpose of executing any documents contemplated in Section 3.6, including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing. 2. The Regular Trustees shall have power to delegate from time to time to such of their number or to officers of the Trust the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. Section K. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Property Trustee or the Delaware Trustee, as the case may be, may be merged or converted or with which either may be consolidated, or any Person resulting from an merger, conversion or consolidation to which the Property Trustee or the Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Property Trustee or the Delaware Trustee, as the case may be, shall be the successor of the Property Trustee or the Delaware Trustee, as the case may be, hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided such Person shall be otherwise qualified and eligible under this Article. ARTICLE VII. THE SECURITIES Section A. General Provisions Regarding Securities. 1. The Regular Trustees shall on behalf of the Trust issue one class of capital securities representing undivided beneficial ownership interests in the assets of the Trust, having such terms as are set forth in this Declaration (the "Transfer Restricted Securities"), one class of capital securities representing undivided beneficial ownership interests in the assets of the Trust, having such terms as are set forth in this Declaration, to be only issued in exchange for the Transfer Restricted Securities (the "New Capital Securities," and together with the Transfer Restricted Securities the "Capital Securities"), and one class of common securities representing undivided beneficial ownership interests in the assets of the Trust, 37 having such terms as are set forth in this Declaration (the "Common Securities"). The Trust shall issue no securities or other interests in the assets of the Trust other than the Capital Securities and the Common Securities. a. Capital Securities. The Capital Securities of the Trust have an aggregate liquidation amount with respect to the assets of the Trust of $100,000,000 and a liquidation amount with respect to the assets of the Trust of $1,000 per Capital Security. The New Capital Security Certificates and the Transfer Restricted Security Certificates evidencing the Capital Securities shall be substantially in the form of Exhibit A to this Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice or to conform to the rules of any stock exchange on which the Capital Securities may be listed provided that the New Capital Security Certificate shall not contain any of the provisions following the Trustee's authentication, and shall not bear the legends required by Section 7.12(i) unless the Holder of such New Capital Securities is either (A) a broker-dealer who purchased Transfer Restricted Securities directly from the Trust for resale pursuant to Rule 144A or any other available exemption under the Securities Act, (B) a Person participating in the distribution of the Transfer Restricted Securities or (C) a Person who is an Affiliate of the Trust. b. Common Securities. The Common Securities of the Trust have an aggregate liquidation amount with respect to the assets of the Trust of $3,093,000 and a liquidation amount with respect to the assets of the Trust of $1,000 per Common Security. The Common Security Certificates evidencing the Common Securities shall be substantially in the form of Exhibit B to this Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice. 2. Payment of Distributions on, and amounts payable on redemption of, the Capital Securities and the Common Securities, as applicable, shall be made Pro Rata based on the liquidation amount of such Capital Securities and Common Securities; provided, however, that if on any date on which Distributions on the Securities, or amounts in respect of the redemption of the Securities or in respect of the liquidation of the Trust, are payable an Indenture Event of Default shall have occurred and be continuing, no payment of any Distribution on, or redemption amount of, any of the Common Securities, and no other payment on account of the redemption, liquidation or other acquisition of such Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all of the outstanding Capital Securities for all Distribution periods terminating on or prior thereto, or in the case of amounts payable on redemption the full amount of such redemption amounts on all of the outstanding Capital Securities then called for redemption, shall have been made or provided for, and all funds available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions on, amounts payable on redemption of the Capital Securities or amounts payable on liquidation of the Trust then due and payable. 38 3. The Certificates shall be signed on behalf of the Trust by a Regular Trustee. Such signature shall be the manual or facsimile signature of any present or any future Regular Trustee. In case a Regular Trustee of the Trust who shall have signed any of the Certificates shall cease to be such Regular Trustee before the Certificates so signed shall be delivered by the Trust, such Certificates nevertheless may be delivered as though the person who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Certificate, shall be the Regular Trustees of the Trust, although at the date of the execution and delivery of this Declaration any such person was not such a Regular Trustee. A Certificate shall not be valid until authenticated by the manual signature of an Authorized Officer of the Property Trustee. Such signature shall be conclusive evidence that the Certificate has been authenticated under this Declaration. Upon receipt by the Property Trustee of a Trustees' Authentication Order with respect thereto, the Property Trustee shall authenticate the Certificates for original issue. The aggregate liquidation amount of Capital Securities outstanding at any time shall not exceed the liquidation amount set forth in Section 7.1(a)(i). The Property Trustee may appoint an authenticating agent acceptable to the Trust to authenticate Certificates. An authenticating agent may authenticate Certificates whenever the Property Trustee may do so. Each reference in this Declaration to authentication by the Property Trustee includes authentication by such agent. An authenticating agent has the same rights as the Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor. 4. The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust. 5. Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable. 6. Every Person, by virtue of having become a Holder or a Capital Security Beneficial Owner in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration and the terms of the Securities, the Guarantee, the Indenture and the Debentures. 7. The Holders of the Securities shall have no preemptive rights or rights to subscribe for additional Securities. Section B. Distributions. 1. Holders of Securities shall be entitled to receive cumulative cash Distributions at the rate per annum of 8.50% of the stated liquidation amount of $1,000 per 39 Security, calculated on the basis of a 360-day year consisting of twelve 30-day months. For any period shorter than a full 180-day semi-annual period, distributions will be computed on the basis of the actual number of days elapsed in such 180-day semi-annual period. Subject to Section 7.1(b), Distributions shall be made on the Capital Securities and the Common Securities on a Pro Rata basis. Distributions on the Securities shall, from the date of original issue, accrue and be cumulative and shall be payable semi-annually only to the extent that the Trust has funds available for the payment of such Distributions in the Property Account. Distributions not paid on the scheduled payment date will accumulate and compound semi-annually at the rate of 8.50% per annum ("Compounded Distributions"). "Distributions" shall mean ordinary cumulative distributions together with any Compounded Distributions. If and to the extent that the Debenture Issuer makes a payment of interest (including Additional Interest (as defined in the Indenture)) and/or principal on the Debentures held by the Property Trustee (the amount of any such payment being a "Payment Amount"), the Property Trustee shall and is directed, to the extent funds are available for that purpose, to make a Pro Rata Distribution of the Payment Amount to Holders, subject to the terms of Section 7.1(b). 2. Distributions on the Securities will be cumulative, will accrue from the date of initial issuance and will be payable semi-annually in arrears on each April 15 and October 15, commencing October 15, 1997, when, as and if available for payment, by the Property Trustee, except as otherwise described below. If Distributions are not paid when scheduled, the accrued Distributions shall be paid to the Holders of record of Securities as they appear on the books and records of the Trust on the record date as determined under Section 7.2(c). 3. Distributions on the Securities will be payable to the Holders thereof as they appear on the books and records of the Trust on the relevant record dates, which relevant record date shall be the first day of the month of the relevant payment dates. In the event that any date on which Distributions are payable on the Securities is not a Business Day, payment of the Distribution payable on such date will be made on the next succeeding day which is a Business Day (without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. Section C. Redemption of Securities. Upon the repayment or redemption of the Debentures, the proceeds from such repayment or redemption shall be simultaneously applied Pro Rata (subject to Section 7.1(b)) to redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so repaid or redeemed for an amount equal to the redemption price paid by the Debenture Issuer in respect of such Debentures plus an amount equal to accrued and unpaid Distributions thereon through the date of the redemption or such lesser amount as shall be received by the Trust in respect of the Debentures so repaid or redeemed (the "Redemption Price"). 40 Section D. Redemption Procedures. 1. Notice of any redemption of the Securities (a "Redemption Notice") will be given by the Trust by mail to each Holder of Securities to be redeemed not fewer than 30 nor more than 60 days before the date fixed for redemption thereof which will be the date fixed for redemption of the Debentures. For purposes of the calculation of the date of redemption and the date on which notices are given pursuant to this Section 7.4, a Redemption Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders of Securities. Each Redemption Notice shall be addressed to the Holders of Securities at the address of each such Holder appearing in the books and records of the Trust. No defect in the Redemption Notice or in the mailing thereof with respect to any Holder shall affect the validity of the redemption proceedings with respect to any other Holder. 2. If fewer than all the outstanding Securities are to be so redeemed, the Common Securities and the Capital Securities will be redeemed Pro Rata and the Capital Securities to be redeemed will be redeemed as described below. The Trust may not redeem the Securities unless all accrued and unpaid Distributions have been paid in full on all Securities then outstanding plus accrued but unpaid Distributions to the date of redemption. For all purposes of this Declaration, unless the context otherwise requires, all provisions relating to the redemption of Capital Securities shall relate, in the case of any Capital Security redeemed or to be redeemed only in part, to the portion of the aggregate liquidation amount of Capital Securities which has been or is to be redeemed. 3. If Securities are to be redeemed and the Trust gives a Redemption Notice, which notice may only be issued if the Debentures are to be redeemed as set forth in this Section 7.4 (which notice will be irrevocable), then (A) by 12:00 noon, New York City time, on the redemption date, provided that the Debenture Issuer has paid to the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Debentures by 10:00 a.m., Wilmington, Delaware time, on the date of redemption of the Securities, the Property Trustee will deposit irrevocably with DTC (in the case of Capital Securities held by the Depositary) or its nominee (or successor Depositary or its nominee), funds sufficient to pay the applicable Redemption Price with respect to the Capital Securities and will give DTC irrevocable instructions and authority to pay the Redemption Price with respect to Capital Securities held as a Global Security, to the Capital Security Beneficial Owners and (B) with respect to Capital Securities and Common Securities held in definitive form, provided that the Debenture Issuer has paid to the Property Trustee a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, the Property Trustee, will irrevocably deposit with the Paying Agent for such Capital Securities and the Common Securities funds sufficient to pay the Redemption Price and will give such Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders thereof upon surrender of their Certificates evidencing the Capital Securities and the Common Securities. If a Redemption Notice shall have been given and funds deposited as required, then immediately prior to the close of business on the date of such deposit, Distributions will cease to accrue on the Securities so called for redemption and all rights of Holders of such Securities 41 will cease, except the right of the Holders of such Securities to receive the Redemption Price, but without interest on such Redemption Price, and such Securities shall cease to be outstanding. If any date fixed for redemption of Securities is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Redemption Price in respect of any Securities is improperly withheld or refused and not paid either by the Property Trustee or by the Sponsor as guarantor pursuant to the Guarantee, Distributions on such Securities will continue to accrue at the then applicable rate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Security called for redemption shall be payable to the Holders who were Holders of such Security on the relevant record dates for the related Distribution Dates. Accordingly, for these purposes, the applicable Redemption Price shall not include Distributions which are being paid to Holders who were Holders on a relevant record date. Upon satisfaction of the foregoing conditions, then immediately prior to the close of business on the date of such deposit or payment, all rights of Holders of such Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the Redemption Price, but without interest on such Redemption Price, and such Securities shall cease to be outstanding, and from and after the date fixed for redemption, such Securities will not accrue distributions or bear interest. Neither the Regular Trustees nor the Trust shall be required to register or cause to be registered the transfer of any Securities that have been called for redemption. 4. Subject to the foregoing and applicable law (including, without limitation, United States Federal securities laws), the Debenture Issuer or its subsidiaries may at any time and from time to time purchase outstanding Capital Securities by tender, in the open market or by private agreement. Section E. Voting Rights of Capital Securities. 1. Except as provided under this Declaration and as otherwise required by the Business Trust Act, the Trust Indenture Act and other applicable law, the Holders of the Capital Securities will have no voting rights. 2. Subject to the requirement of the Property Trustee receiving a tax opinion in certain circumstances set forth in Section 7.5 (d) below, the Holders of a Majority in Liquidation Amount of the Capital Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or to direct the exercise of any trust or power conferred upon the Property Trustee under this Declaration, including the right to direct the Property Trustee, as holder of the Debentures, to 42 (i) exercise the remedies available to it under the Indenture as a holder of the Debentures or (ii) consent to any amendment or modification of the Indenture or the Debentures where such consent shall be required; provided, however, that where a consent or action under the Indenture would require the consent or act of the holders of more than a majority of the aggregate principal amount of Debentures affected thereby, only the Holders of the percentage of the aggregate stated liquidation amount of the Capital Securities which is at least equal to the percentage required under the Indenture may direct the Property Trustee to give such consent or to take such action. 3. If the Property Trustee fails to enforce its rights under the Debentures, any Holder of record of Capital Securities may institute a legal proceeding directly against the Debenture Issuer to enforce the Property Trustee's rights under the Indenture without first instituting any legal proceeding against the Property Trustee or any other person or entity. Notwithstanding the foregoing, if a Trust Enforcement Event has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to make any required payment when due and payable under the Indenture, then a Holder of Capital Securities may on or after the respective due dates specified in the Debenture (and after the expiration of any applicable cure period) institute a proceeding directly against the Debenture Issuer for enforcement of payment on Debentures having a principal amount equal to the aggregate liquidation amount of the Capital Securities held by such Holder. 4. The Property Trustee shall notify all Holders of the Capital Securities of any written notice of any Indenture Event of Default received by the Property Trustee from the Debenture Issuer with respect to the Debentures. Such notice shall state that such Indenture Event of Default also constitutes a Trust Enforcement Event. The Property Trustee shall be under no obligation to take any of the actions described in clauses 7.5(b)(i) and (ii) above unless the Property Trustee has received an opinion of counsel rendered by a law firm having a national tax practice to the effect that as a result of such action, the Trust will not fail to be classified as a grantor trust for United States Federal income tax purposes and each Holder will be treated as owning an undivided beneficial ownership interest in the Debentures. 5. In the event the consent of the Property Trustee, as the holder of the Debentures, is required under the Indenture with respect to any amendment or modification of the Indenture, the Property Trustee shall request the direction of the Holders of the Securities with respect to such amendment or modification and shall vote with respect to such amendment or modification as directed by a Majority in Liquidation Amount of the Securities voting together as a single class; provided, however, that where a consent under the Indenture would require the consent of the Holders of more than a majority of the aggregate principal amount of the Debentures, the Property Trustee may only give such consent at the direction of the Holders of at least the same proportion in aggregate stated liquidation amount of the Securities, voting together as a single class. The Property Trustee shall not take any such action in accordance with the directions of the Holders of the Securities unless the Property Trustee and the other Trustees have received an opinion of counsel rendered by a law firm having a national tax practice to the effect that, as a result of such action, the Trust will not be classified 43 as other than a grantor trust for United States Federal income tax purposes and each Holder will be treated as owning an undivided beneficial ownership interest in the Debentures. 6. A waiver of an Indenture Event of Default with respect to the Debentures will constitute a waiver of the corresponding Trust Enforcement Event. 7. Any required approval or direction of Holders of Capital Securities may be given at a separate meeting of Holders of Capital Securities convened for such purpose, at a meeting of the Holders of Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Capital Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to the Property Trustee and each Holder of record of Capital Securities. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. 8. No vote or consent of the Holders of Capital Securities will be required for the Trust to redeem and cancel Capital Securities or distribute Debentures in accordance with this Declaration and the terms of the Securities. 9. Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any of the circumstances described above, any of the Capital Securities that are owned at such time by the Debenture Issuer or any entity directly or indirectly controlled by, or under direct or indirect common control with, the Debenture Issuer, shall not be entitled to vote or consent and shall, for purposes of such vote or consent, be treated as if such Securities were not outstanding; provided, however that persons otherwise eligible to vote to whom the Debenture Issuer or any of its subsidiaries have pledged Capital Securities may vote or consent with respect to such pledged Capital Securities under any of the circumstances described herein; provided, further however, the -------- --------------- Regular Trustees shall certify in writing to the Property Trustee the results of any such vote or consent. 10. Except as provided in the following sentence, Holders of the Capital Securities will have no rights to appoint or remove the Trustees, who may be appointed, removed or replaced solely by the Debenture Issuer, as the Holder of all of the Common Securities. If an Indenture Event of Default has occurred and is continuing, the Property Trustee and the Delaware Trustee may be removed at such time by a Majority in Liquidation Amount of the Capital Securities. Section F. Voting Rights of Common Securities. 1. Except as provided under Section 6.1(b) or this Section 7.6 or as otherwise required by the Business Trust Act, the Trust Indenture Act or other applicable law or provided by this Declaration, the Holders of the Common Securities will have no voting rights. 44 2. The Holders of the Common Securities are entitled, in accordance with Article VI of this Declaration, to vote to appoint, remove or replace any Trustee or to increase or decrease the number of Trustees. 3. Subject to Section 2.6 of this Declaration and only after all Trust Enforcement Events with respect to the Capital Securities have been cured, waived, or otherwise eliminated and subject to the requirement of the Property Trustee receiving a tax opinion in certain circumstances set forth in this paragraph (c), the Holders of a Majority in Liquidation Amount of the Common Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or to direct the exercise of any trust or power conferred upon the Property Trustee under this Declaration, including the right to direct the Property Trustee, as holder of the Debentures, to (i) exercise the remedies available to it under the Indenture as a holder of the Debentures, or (ii) consent to any amendment or modification of the Indenture or the Debentures where such consent shall be required; provided, however, that where a consent or action under the Indenture would require the consent or act of the holders of more than a majority of the aggregate principal amount of Debentures affected thereby, only the Holders of the percentage of the aggregate stated liquidation amount of the Common Securities which is at least equal to the percentage required under the Indenture may direct the Property Trustee to give such consent or take such action. The Property Trustee shall be under no obligation to take any of the actions described in clause 7.6(c)(i) and (ii) above unless the Property Trustee has received an opinion of counsel rendered by a law firm having a national tax practice to the effect that, as a result of such action, for United States Federal income tax purposes the Trust will not fail to be classified as a grantor trust and each Holder will be treated as owning an undivided beneficial ownership interest in the Debentures. 4. If the Property Trustee fails to enforce its rights under the Debentures, the Holder of record of Common Securities may institute a legal proceeding directly against the Debenture Issuer to enforce the Property Trustee's rights under the Indenture without first instituting any legal proceeding against the Property Trustee or any other person or entity. 5. A waiver of an Indenture Event of Default with respect to the Debentures will constitute a waiver of the corresponding Trust Enforcement Event. 6. Any required approval or direction of Holders of Common Securities may be given at a separate meeting of Holders of Common Securities convened for such purpose, at a meeting of the Holders of Securities or pursuant to written consent. The Regular Trustees will cause a notice of any meeting at which Holders of Common Securities are entitled to vote, or of any matter on which action by written consent of such Holders is to be taken, to be mailed to the Property Trustee and each Holder of record of Common Securities. Each such notice will include a statement setting forth the following information: (i) the date of such meeting or the date by which such action is to be taken; (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought; and (iii) instructions for the delivery of proxies or consents. 45 7. No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common Securities or to distribute Debentures in accordance with this Declaration and the terms of the Securities. Section G. Paying Agent, Securities Registrar or Exchange Agent. In the event that any Capital Securities are not in book-entry only form, the Trust shall maintain in Wilmington, Delaware (i) an office or agency where Securities may be presented for registration of transfer ("Security Registrar" or "Securities Registrar"), (ii) an office or agency where Securities may be presented for payment ("Paying Agent") and (iii) an office or agency where Securities may be presented for exchange ("Exchange Agent"). The Security Registrar shall keep a register of the Capital Securities and of their transfer (the "Securities Register"). The Trust may appoint the Security Registrar, the Paying Agent and the Exchange Agent and may appoint one or more co-registrars, one or more additional paying agents and one or more additional exchange agents in such other locations as it shall determine. The term "Security Registrar" includes any additional registrar, "Paying Agent" includes any additional paying agent and the term "Exchange Agent" includes any additional exchange agent. The Trust may change any Paying Agent, Securities Registrar or Exchange Agent without prior notice to the Holders; provided that the Trust will provide the -------- Holders of the Securities written notice of any such change within 30 days after the date of such change. Any Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Regular Trustees. The Trust shall notify the Property Trustee of the name and address of any Paying Agent, Securities Registrar or Exchange Agent not a party to this Declaration. If the Trust fails to appoint or maintain another entity as Paying Agent, Securities Registrar or Exchange Agent, the Property Trustee shall act as such. The Trust or any of its Affiliates may act as Paying Agent, Securities Registrar or Exchange Agent. The Trust shall act as Paying Agent, Registrar and Exchange Agent for the Common Securities. The Trust initially appoints the Property Trustee to act as Paying Agent, Securities Registrar and Exchange Agent for the Capital Securities. In the event the Property Trustee shall no longer be Paying Agent, Securities Registrar or Exchange Agent, the Regular Trustees shall appoint a successor (which shall be a bank or trust company acceptable to the Regular Trustees and the Debenture Issuer) to act as Paying Agent, Securities Registrar or Exchange Agent. Section H. Transfer of Securities. 1. Upon surrender for registration of transfer of any Security at an office or agency of the Trust designated for such purpose, the Trust shall execute, and the Property Trustee shall authenticate and make available for delivery by the Trust, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate liquidation amount; provided that no Capital Security shall be issued in an amount representing less than $100,000 in aggregate liquidation amount of Capital Securities. 46 2. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate liquidation amount, upon surrender of the Securities to be exchanged at an office or agency of the Trust designated for such purpose. Whenever any Securities are so surrendered for exchange, the Trust shall execute, and the Property Trustee shall authenticate and make available for delivery by the Trust, the Securities which the Holder making the exchange is entitled to receive; provided that no Capital Security shall be issued in an amount representing less than $100,000 in aggregate liquidation amount of Capital Securities. 3. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Trust or the Security Registrar) be duly endorsed or be accompanied by a written instrument of transfer in form satisfactory to the Trust and the Security Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. A transferee of a Security shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Security from the Trust. By acceptance of a Security, each transferee shall be deemed to have agreed to be bound by this Declaration. 4. No service charge shall be made for any registration of transfer or exchange of Securities, but the Trust may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities. 5. If the Securities are to be redeemed in part, the Trust shall not be required (A) to issue, register or cause to be registered the transfer of or exchange of any Securities during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of any such Securities selected for redemption under Section 7.4 and ending at the close of business on the day of such mailing, or (B) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. 6. The Trust or the Sponsor at any time may deliver Capital Securities to the Property Trustee for cancellation. The Security Registrar, Paying Agent and Exchange Agent shall forward to the Property Trustee any Capital Securities surrendered to them for registration of transfer, redemption, exchange or payment. The Property Trustee shall promptly cancel all Capital Securities, surrendered for registration of transfer, redemption, exchange, payment, replacement or cancellation and shall dispose of cancelled Capital Securities in accordance with its customary procedures unless the Trust otherwise directs. Except as provided herein, the Trust may not issue new Capital Securities to replace Capital Securities that it has paid or that have been delivered to the Property Trustee for cancellation or that any Holder has exchanged. Section I. Mutilated, Destroyed, Lost or Stolen Certificates. 47 If: 1. any mutilated Certificates should be surrendered to the Securities Registrar, or if the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate; and 2. there shall be delivered to the Securities Registrar such security or indemnity as may be required by it to keep it, the Sponsor, the Regular Trustees, the Property Trustee, the Delaware Trustee and the Trust harmless, then, in the absence of notice that such Certificate shall have been acquired by a bona fide purchaser, the Securities Registrar on behalf of the Trust shall execute and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like denomination. In connection with the issuance of any new Certificate under this Section 7.9, the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the relevant Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. Section J. Deemed Security Holders. The Trustees may treat the Person in whose name any Certificate shall be registered on the books and records of the Trust as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust shall have actual or other notice thereof. Section K. Form and Dating. The Capital Securities shall be evidenced by one or more certificates substantially in the form of Exhibit A and the Common Securities shall be evidenced by one or more certificates substantially in the form of Exhibit B, each of which is hereby incorporated in and expressly made a part of this Declaration. The Property Trustee's certificate of authentication shall be substantially in the form set forth in Exhibits A and B. Certificates representing the Securities may be printed, typewritten, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Regular Trustees, as evidenced by their execution thereof. The Securities may have letters, CUSIP or other numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange rule, agreements to which the Trust is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable -------- ---- to the Trust). The Trust at the direction of the Sponsor shall furnish any such legend not contained in Exhibit A to the Property Trustee in writing. Each Capital Security 48 shall be dated the date of its authentication. The forms of Securities set forth in Exhibits A and B are part of the terms of this Declaration and to the extent applicable, the Property Trustee and the Sponsor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby. 1. Global Securities. Securities offered and sold to QIBs in ----------------- reliance on Rule 144A shall be issued in the form of one or more Global Securities in definitive, fully registered form without distribution coupons with the appropriate global legends in the form set forth in Exhibit A hereto, and the Private Placement Legend, which shall be deposited with the Property Trustee, at its Wilmington, Delaware office, as custodian for the Depositary, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Trust and authenticated by the Property Trustee as herein provided. The aggregate liquidation amount of Capital Securities represented by Global Security may from time to time be increased or decreased by adjustments made on the records of the Property Trustee at the direction of the Sponsor, and the Depositary or its nominee as hereinafter provided. 2. Book-Entry Provisions. This Section 7.11(b) shall apply only to --------------------- Global Securities to be deposited with or on behalf of the Depositary. A Regular Trustee shall execute and the Property Trustee shall, in accordance with this Section 7.11(b), authenticate and make available for delivery initially one or more Global Securities that (i) shall be registered in the name of Cede & Co. or other nominee of the Depositary and (ii) shall be delivered by the Property Trustee to the Depositary pursuant to the Depositary's written instructions or, if no such instructions are received by the Property Trustee, held by the Property Trustee as custodian for the Depositary. Members of, or participants in, the Depositary shall have no rights under this Declaration with respect to any Global Security held on their behalf by the Depositary or by the Property Trustee as the custodian of the Depositary or under such Global Security, and the Depositary may be treated by the Trust, the Property Trustee and any agent of the Trust or the Property Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Trust, the Property Trustee or any agent of the Trust or the Property Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its participants, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Security. 3. Definitive Capital Securities. Except as provided in this ----------------------------- Declaration, owners of beneficial interests in a Global Security will not be entitled to receive physical delivery of certificated Capital Securities ("Definitive Capital Securities"). Purchasers of Securities (other than QIBs) who are "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) will receive Capital Securities in the form of individual certificates in definitive, fully registered form without distribution coupons and with the Private Placement Legend ("Restricted Definitive Capital Securities"); provided, however, that upon transfer of such -------- ------- Restricted Definitive Capital Securities to a QIB, such Restricted 49 Definitive Capital Securities will, unless the Global Security has previously been exchanged, be exchanged for an interest in a Global Security pursuant to the provisions of Section 7.12(d). Restricted Definitive Capital Securities will bear the Private Placement Legend unless removed in accordance with Section 7.12. 4. Authorized Denominations. The Capital Securities are issuable ------------------------ only in denominations of $100,000 and integral multiples of $1,000 in excess thereof. Section L. Transfer Procedures and Restrictions. 1. General. Except as otherwise provided in Section 7.12(b), if ------- Capital Securities are issued upon the transfer, exchange or replacement of Capital Securities bearing the Private Placement Legend, or if a request is made to remove such Private Placement Legend on Capital Securities, the Capital Securities so issued shall bear the Private Placement Legend, or the Private Placement Legend shall not be removed, as the case may be, unless either (i) the date of such issuance or request is two years after the later of the date of original issue and the last date on which the Sponsor or any Affiliate of the Sponsor was the owner of such Capital Securities (or any predecessor thereto) or (ii) there is delivered to the Trust and the Property Trustee such satisfactory evidence, which shall include an opinion of counsel rendered by a law firm having a national securities practice, as may be reasonably required by the Sponsor and the Property Trustee, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof are made pursuant to an exception from the registration requirements of the Securities Act or, with respect to Transfer Restricted Securities, that such Securities are not "restricted" within the meaning of Rule 144. Upon provision of such satisfactory evidence, the Property Trustee, at the written direction of the Trust, shall authenticate and deliver Capital Securities that do not bear the legend. 2. Transfers After Effectiveness of a Registration Statement. After --------------------------------------------------------- the effectiveness of any registration statement with respect to any Capital Securities, all requirements pertaining to legends on such Capital Securities will cease to apply (other than (i) the legend requiring that transfers of Capital Securities be made in blocks having an aggregate liquidation amount of not less than $100,000 and (ii) the Private Placement Legend with respect to any Holder of such Capital Securities who is (A) a broker-dealer who purchased Transfer Restricted Securities directly from the Trust for resale pursuant to Rule 144A or any other available exemption under the Securities Act, (B) a Person participating in the distribution of the Transfer Restricted Securities or (C) a Person who is an Affiliate of the Trust), and beneficial interests in a Global Security will be available to transferees of such Capital Securities, upon exchange of the transferring Holder's Restricted Definitive Capital Security or directions to transfer such Holder's beneficial interest in the Global Security as the case may be. No such transfer or exchange of a Restricted Definitive Capital Security or of an interest in the Global Security shall be effective unless the transferor delivers to the Trust a certificate in a form substantially similar to that attached hereto as the form of "Assignment" in Exhibit A. Except as otherwise provided in Section 7.12(l), after the effectiveness of any such registration statement, the Trust shall issue and the Property Trustee, upon a written order of 50 the Trust signed by one Regular Trustee, shall authenticate a Global Security without the Private Placement Legend for deposit with the Depositary to evidence transfers of (i) beneficial interests from the Global Security with the Private Placement Legend and (ii) Restricted Definitive Capital Securities to the Global Security without the Private Placement Legend. 3. Transfer and Exchange of Definitive Capital Securities. When ------------------------------------------------------ Definitive Capital Securities are presented to the Security Registrar: (x) to register the transfer of such Definitive Capital Securities; or (y) to exchange such Definitive Capital Securities for an equal aggregate liquidation amount of Definitive Capital Securities, the Securities Registrar shall register the transfer or make the exchange as requested if the requirements of Section 7.8 or 7.9 are satisfied and in the case of Definitive Capital Securities that are Restricted Definitive Capital Securities: (A) if such Restricted Definitive Capital Securities are being delivered to the Security Registrar by a Holder for registration in the name of such Holder, without transfer, receipt by the Securities Registrar of a certification from such Holder to that effect; or (B) if such Restricted Definitive Capital Securities are being transferred: (i) receipt by the Security Registrar of a certification from the transferor in a form substantially similar to that attached hereto as the form of "Assignment" in Exhibit A, and (ii) if the Trust or Security Registrar so requests, evidence reasonably satisfactory to them as to the compliance with the restrictions set forth in the Private Placement Legend. 4. Restrictions on Transfer of a Definitive Capital Security for a --------------------------------------------------------------- Beneficial Interest in a Global Capital Security. A Definitive Capital Security - ------------------------------------------------ may not be exchanged for a beneficial interest in the applicable Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Securities Registrar of a Definitive Capital Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Securities Registrar, together with: a. if such Definitive Capital Security is a Restricted Definitive Capital Security, certification in a form substantially similar to that attached hereto as the form of "Assignment" in Exhibit A; and b. whether or not such Definitive Capital Security is a Restricted Definitive Capital Security, written instructions directing the Securities Registrar to make, or to direct the Depositary to make, an adjustment on its books and records with respect to 51 the appropriate Global Security to reflect an increase in the number of the Capital Securities represented by such Global Security, then the Securities Registrar shall cancel such Definitive Capital Security and cause, or direct the Depositary to cause, the aggregate liquidation amount of Capital Securities represented by the appropriate Global Security shall be increased accordingly. If no Global Securities are then outstanding, the Trust shall issue and the Property Trustee shall authenticate, upon written order of any Regular Trustee, an appropriate number of Capital Securities in global form. 5. Transfer and Exchange of Global Securities. Subject to Section ------------------------------------------ 7.12(f), the transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depositary, in accordance with this Declaration (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. 6. Transfer of a Beneficial Interest in a Global Security for a ------------------------------------------------------------ Definitive Capital Security. - --------------------------- a. Any Person having a beneficial interest in a Global Security may upon request, but only upon 20 days prior written notice to the Securities Registrar and only if accompanied by the information specified below, exchange such beneficial interest for a Definitive Capital Security representing the same aggregate liquidation amount of Capital Securities. Upon receipt by the Securities Registrar from the Depositary or its nominee on behalf of any Person having a beneficial interest in a Global Security of written transfer instructions and a certification from the transferor in a form substantially similar to that attached hereto as the form of "Assignment" in Exhibit A, which may be submitted by facsimile, then the Securities Registrar will cause the aggregate number of Capital Securities referenced in such transfer instructions represented by the applicable Global Security to be reduced on its books and records and, following such reduction, the Trust will execute and the Property Trustee will authenticate and make available for delivery to the transferee a Definitive Capital Security. b. Definitive Capital Securities issued in exchange for a beneficial interest in a Global Security pursuant to this Section 7.12(f) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its participants or otherwise, shall instruct the Securities Registrar in writing. The Property Trustee shall deliver such Definitive Capital Securities to the Persons in whose names such Definitive Capital Securities are so registered in accordance with such instructions of the Depositary. 7. Restrictions on Transfer and Exchange of Global Securities. ---------------------------------------------------------- Notwithstanding any other provisions of this Declaration (other than the provisions set forth in Section 7.12(h)), a Global Security may not be transferred as a whole except by the Depositary 52 to a nominee of the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. 8. Authentication of Definitive Capital Securities. If at any time: ----------------------------------------------- a. there occurs a Trust Enforcement Event which is continuing, or b. the Trust, in its sole discretion, notifies the Property Trustee in writing that it elects to cause the issuance of Definitive Capital Securities under this Declaration, then the Trust will execute, and the Property Trustee, upon receipt of a written order of the Trust signed by one Regular Trustee requesting the authentication and delivery of Definitive Capital Securities to the Persons designated by the Trust, will authenticate and make available for delivery Definitive Capital Securities, equal in number to the aggregate liquidation amount of Capital Securities represented by the Global Securities, in exchange for such Global Securities. 9. Legend. ------ a. Except as permitted by the following paragraph (ii), each Certificate evidencing the Global Securities and the Definitive Capital Securities (and all Certificates issued in exchange therefor or substitution thereof) shall bear a legend (the "Private Placement Legend") in substantially the following form: "THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE `SECURITIES ACT'), OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A `RESTRICTED' SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE 53 TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A `QUALIFIED INSTITUTIONAL BUYER' (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND SUBSTANCE. THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF 54 DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES." (ii) Upon any sale or transfer of a Restricted Capital Security (including any Restricted Capital Security represented by a Global Security) pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 under the Securities Act after such registration statement ceases to be effective: (A) in the case of any Restricted Capital Security that is a Definitive Capital Security, the Security Registrar shall permit the Holder thereof to exchange such Restricted Capital Security for a Definitive Capital Security that does not bear the Private Placement Legend (other than the legend requiring that transfers of Capital Securities be made in blocks having an aggregate liquidation amount of not less than $100,000) and rescind any restriction on the transfer of such Restricted Capital Security; and (B) in the case of any Restricted Capital Security that is represented by a Global Security, the Security Registrar shall permit the Holder of such Global Security to exchange such Global Security for another Global Security that does not bear the Private Placement Legend (other than the legend requiring that transfers of Capital Securities be made in blocks having an aggregate liquidation amount of not less than $100,000). (j) Cancellation or Adjustment of Global Security. At such time as --------------------------------------------- all beneficial interests in a Global Security have either been exchanged for Definitive Capital Securities to the extent permitted by this Declaration or redeemed, repurchased or canceled in accordance with the terms of this Declaration, such Global Security shall be returned to the Depositary for cancellation or retained and canceled by the Property Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for Definitive Capital Securities, Capital Securities represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Depositary and the Security Registrar, to reflect such reduction. (k) No Obligation. ------------- (i) Neither the Sponsor, the Trust nor the any Trustee shall have any responsibility or obligation to any beneficial owner of a Global Security, any participant in the Depositary or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant thereof, with respect to any ownership interest in the Capital Securities or with respect to the delivery to any participant in the Depositary, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption) or the payment of any amount, under or with 55 respect to such Capital Securities. All notices and communications to be given to the Holders and all payments to be made to Holders under the Capital Securities shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Security). The rights of beneficial owners in any Global Security shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Property Trustee and Securities Registrar may conclusively rely and shall be fully protected in relying upon information furnished by the Depositary or any agent thereof with respect to its participants and any beneficial owners. (ii) The Property Trustee and the Security Registrar shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Declaration or under applicable law with respect to any transfer of any interest in any Capital Security (including any transfers between or among Depositary participants or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Declaration, and to examine the same to determine substantial compliance as to form with the express requirements hereof. (l) Exchange of Transfer Restricted Securities for New Capital ---------------------------------------------------------- Securities. The Transfer Restricted Securities may be exchanged for New Capital - ---------- Securities pursuant to the terms of the Exchange Offer. The Property Trustee shall make the exchange as follows: The Sponsor shall present the Property Trustee with an Officers' Certificate certifying the following: (A) upon issuance of the New Capital Securities, the transactions contemplated by the Exchange Offer have been consummated; and (B) the number of Transfer Restricted Securities properly tendered in the Exchange Offer that are represented by a Global Security and the number of Transfer Restricted Securities properly tendered in the Exchange Offer that are represented by Definitive Capital Securities, the name of each Holder of such Definitive Capital Securities, the liquidation amount of Capital Securities properly tendered in the Exchange Offer by each such Holder and the name and address to which Definitive Capital Securities for New Capital Securities shall be registered and sent for each such Holder. The Property Trustee, upon receipt of (i) such Officers' Certificate and (ii) an opinion of counsel (x) to the effect that the New Capital Securities have been registered under 56 Section 5 of the Securities Act and the Indenture has been qualified under the Trust Indenture Act and (y) with respect to the matters set forth in Section 1 of the Registration Rights Agreement, shall authenticate (A) a Global Security, executed and delivered by the Trust to the Property Trustee, representing New Capital Securities in aggregate liquidation amount equal to the aggregate liquidation amount of Transfer Restricted Securities represented by a Global Security indicated in such Officers' Certificate as having been properly tendered and (B) Definitive Capital Securities, executed and delivered by the Trust to the Property Trustee, representing New Capital Securities registered in the names of and in the liquidation amounts indicated in such Officers' Certificate. If, upon consummation of the Exchange Offer, less than all the outstanding Transfer Restricted Securities shall have been properly tendered and not withdrawn, the Property Trustee shall make an endorsement on the Global Security representing Transfer Restricted Securities indicating the reduction in the number and aggregate liquidation amount represented thereby as a result of the Exchange Offer. The Trust shall deliver such authenticated Definitive Capital Securities representing New Capital Securities to the Holders thereof as indicated in such Officer's Certificate. (m) Minimum Transfers. Transfer Restricted Securities and, when ----------------- issued, New Capital Securities may only be transferred in minimum blocks of $100,000 aggregate liquidation amount. Any transfer of Capital Securities in a block having an aggregate liquidation amount of less than $100,000 shall be deemed to be void and of no legal effect whatsoever. Any such transferee shall be deemed not to be a Holder of such Capital Securities for any purpose, including, but not limited to, the receipt of Distributions on such Capital Securities, and such transferee shall be deemed to have no interest whatsoever in such Capital Securities. Section M. CUSIP Numbers. The Trust in issuing the Capital Securities may use "CUSIP" numbers (if then generally in use), and, if so used, the Property Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders of Capital Securities; provided that any such notice may state that no representation is -------- ---- made as to the correctness of such numbers either as printed on the Capital Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Capital Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Sponsor will promptly notify the Property Trustee of any change in the CUSIP numbers. 57 ARTICLE VIII. DISSOLUTION AND TERMINATION OF TRUST Section A. Terminating Events. The Trust shall dissolve upon the first to occur of any of the following events: 1. the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Holder of the Common Securities; 2. the written direction to the Property Trustee from the Sponsor at any time to terminate the Trust and, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to distribute Debentures to Holders in exchange for the Securities (which direction is optional and wholly within the discretion of the Sponsor); 3. the redemption of all of the Capital Securities in connection with the redemption or maturity of all of the Debentures; and 4. the entry of an order for dissolution of the Trust by a court of competent jurisdiction. Section B. Termination. The respective obligations and responsibilities of the Trustees and the Trust created and continued hereby shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Holders upon the liquidation of the Trust pursuant to Section 8.3, or upon the redemption of all of the Securities pursuant to Section 7.3, of all amounts required to be distributed hereunder upon the final payment of the Securities; (b) the payment of any expenses owed by the Trust; and (c) the discharge of all duties of the Regular Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Holders. Section C. Liquidation. 1. At such time as an event specified in clause (a), (b) or (d) of Section 8.1 occurs, the Trust shall be liquidated by the Regular Trustees as expeditiously as the Regular Trustees determine to be possible by distributing, after satisfaction or the making of reasonable provisions for the payment of liabilities to creditors of the Trust as provided by applicable law, to each Holder an interest in the Debentures Pro Rata, subject to Sections 7.1(b) and 8.3(d). The date of liquidation (the "Liquidation Date") shall be as specified in writing by the Regular Trustees to the Property Trustee, and thereafter notice of liquidation shall be given by the Property Trustee by first-class mail, postage prepaid mailed not less than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Securities at such Holder's address appearing in the Securities Register. All notices of liquidation shall: a. state the CUSIP number of the Securities; 58 b. state the Liquidation Date; c. state that from and after the Liquidation Date, the Securities will no longer be deemed to be outstanding and any Certificates not surrendered for exchange will be deemed to represent a Pro Rata portion of Debentures; and d. provide such information with respect to the mechanics by which Holders may exchange Certificates for Debentures, or if Section 8.3(d) applies receive a Liquidation Distribution, as the Regular Trustees shall determine is appropriate. 2. Except where Section 8.1(c) or 8.3(d) applies, in order to effect the liquidation of the Trust and distribution of the Debentures to Holders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as Exchange Agent or through the appointment of a separate Exchange Agent, shall establish such procedures as directed by the Trust to effect the distribution of Debentures in exchange for the outstanding Certificates. 3. Except where Section 8.1(c) or 8.3(d) applies, after the Liquidation Date, (i) the Securities will no longer be deemed to be outstanding, (ii) certificates representing a Pro Rata portion of Debentures will be issued to Holders of Securities, upon surrender of such Certificates to the Security Registrar or its agent for exchange, (iii) any Certificates not so surrendered for exchange will be deemed to represent a Pro Rata portion of Debentures, accruing interest at the rate provided for in the Debentures from the last Distribution date on which a Distribution was made on such Securities until such Certificates are so surrendered (and until such Certificates are so surrendered, no payments of interest or principal will be made to Holders of Securities with respect to such Debentures) and (iv) all rights of Holders holding Securities will cease, except the right of such Holders to receive Debentures upon surrender of Certificates. 4. In the event that, notwithstanding the other provisions of this Section 8.3, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Debentures in the manner provided herein is determined by the Regular Trustees not to be practical, the assets of the Trust shall be liquidated, and the Trust shall be dissolved, wound-up or terminated, by the Regular Trustees. In such event, on the date of the dissolution, winding-up or other termination of the Trust, Holders will be entitled to receive out of the assets of the Trust available for distribution to Holders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the liquidation amount per Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If, upon any such dissolution, winding up or termination, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, the amounts payable by the Trust on the Securities shall be applied Pro Rata (subject to Section 7.1(b)) based upon liquidation amounts. 59 ARTICLE IX. LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS Section A. Liability. 1. Except as expressly set forth in this Declaration, the Guarantee and the terms of the Securities, the Sponsor: a. shall not be personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; and b. shall not be required to pay to the Trust or to any Holder of Securities any deficit upon a liquidation of the Trust or otherwise. 2. The Holder of the Common Securities shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets. 3. Pursuant to Section 3803(a) of the Business Trust Act, the Holders of the Capital Securities shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. Section B. Exculpation. 1. No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration or by law, except that an Indemnified Person shall be liable or any such loss, damage or claim incurred by reason of such Indemnified Person's gross negligence or willful misconduct with respect to such acts or omissions. 2. An Indemnified Person shall be fully protected in relying in good faith upon the records of the Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Trust, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses or any other facts 60 pertinent to the existence and amount of assets from which Distributions to Holders of Securities might properly be paid. Section C. Fiduciary Duty. 1. To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to an other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person. 2. Unless otherwise expressly provided herein: a. whenever a conflict of interest exists or arises between any Covered Persons; or b. whenever this Declaration or any other agreement contemplated herein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Securities, the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Declaration or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise. 3. Whenever in this Declaration an Indemnified Person is permitted or required to make a decision: a. in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or b. in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law. 61 Section D. Indemnification. 1.a. The Sponsor shall indemnify, to the full extent permitted by law, any Debenture Issuer Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of the fact that he is or was a Debenture Issuer Indemnified Person against expenses (including attorney fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith, without gross negligence and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Debenture Issuer Indemnified Person did not act in good faith, without gross negligence and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. b. The Sponsor shall indemnify, to the full extent permitted by law, any Debenture Issuer Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor by reason of the fact that he is or was a Debenture Issuer Indemnified Person against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith, without gross negligence and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust and except that no such indemnification shall be made in respect of any claim, issue or matter as to which such Debenture Issuer Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such Person is fairly and reasonably entitled to indemnity for such expenses which such Court of Chancery or such other court shall deem proper. c. Any indemnification under paragraphs (i) and (ii) of this Section 94 (unless ordered by a court) shall be made by the Sponsor only as authorized in the specific case upon a determination that indemnification of the Debenture Issuer Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a majority vote of a Quorum consisting of such Regular Trustees who were not parties to such action, suit or proceeding, (2) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion, or (3) by the Holder of the Common Securities. 62 d. Expenses (including attorneys' fees) incurred by a Debenture Issuer Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (i) and (ii) of this Section 94 shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Debenture Issuer Indemnified Person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 94. Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (i) by the Regular Trustees by a majority vote of a Quorum of disinterested Regular Trustees, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Regular Trustees so directs, by independent legal counsel in a written opinion or (iii) the Holder of the Common Securities, that, based upon the facts known to the Regular Trustees, counsel or the Holder of the Common Securities at the time such determination is made, such Debenture Issuer Indemnified Person acted in bad faith, was grossly negligent or in a manner that such person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Debenture Issuer Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Regular Trustees, independent legal counsel or the Holder of the Common Securities reasonably determine that such person deliberately breached his duty to the Trust or the Holders. e. The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 9.4(a) shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any agreement, or by any vote of stockholders or disinterested directors of the Sponsor or by any vote of Holders of Capital Securities or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 9.4(a) shall be deemed to be provided by a contract between the Sponsor and each Debenture Issuer Indemnified Person who serves in such capacity at any time while this Section 9.4(a) is in effect. Any repeal or modification of this Section 9.4(a) shall not affect any rights or obligations then existing. f. The Sponsor or the Trust may purchase and maintain insurance on behalf of any person who is or was a Debenture Issuer Indemnified Person against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Sponsor would have the power to indemnify him against such liability under the provisions of this Section 9.4(a). g. For purposes of this Section 9.4(a), references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 9.4(a) with 63 respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued. h. The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 94 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a Debenture Issuer Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a person. The obligation to indemnify as set forth in this Section 94 shall survive the satisfaction and discharge of this Declaration. 2. The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the Delaware Trustee, (iii) each Affiliate of the Property Trustee or the Delaware Trustee, and (iv) any officers, directors, shareholders, members, partners, employees or agents of the Property Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified Person harmless against, any and all loss, liability, damage, claim or expense, including taxes (other than taxes based on the income of such Fiduciary Indemnified Person) incurred without gross negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as set forth in this Section 9.4(b) shall survive the satisfaction and discharge of this Declaration and the resignation or removal of the Property Trustee or the Delaware Trustee. Section E. Outside Businesses. Each Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the activities of the Trust, and the Trust and the Holders of Securities shall have no rights by virtue of this Declaration in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the activities of the Trust, shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware Trustee or the Property Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and each Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Each Covered Person, the Delaware Trustee and the Property Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates. 64 ARTICLE X. ACCOUNTING Section A. Fiscal Year. The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code. Section B. Certain Accounting Matters. 1. At all times during the existence of the Trust, the Regular Trustees shall keep, or cause to be kept, full books of account, records and supporting documents, which shall reflect in reasonable detail, each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles. The Trust shall use the accrual method of accounting for United States Federal income tax purposes. The books of account and the records of the Trust shall be examined by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent certified public accountants selected by the Regular Trustees. 2. The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders of Securities, within 90 days after the end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss. 3. The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders of Securities, an annual United States Federal income tax information statement, required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust. 4. The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing authority, an annual United States Federal income tax return, on a Form 1041 or such other form required by United States Federal income tax law, and any other annual income tax returns required to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing authority. Section C. Banking. The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Debentures held by the Property Trustee shall be made directly to the Property Account and no 65 other funds of the Trust shall be deposited in the Property Account. The sole signatories for such accounts shall be designated by the Regular Trustees; provided, however, that the Property Trustee shall designate the signatories for the Property Account. Section D. Withholding. The Trust and the Regular Trustees shall comply with all withholding requirements under United States federal, state and local law. The Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding with respect to each Holder, and any representations and forms as shall reasonably be requested by the Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Regular Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a distribution in the amount of the withholding to the Holder. In the event of any claim for excess withholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the amount of such withholding. ARTICLE XI. AMENDMENTS AND MEETINGS Section A. Amendments. 1. Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may only be amended by a written instrument approved and executed by (i) the Regular Trustees (or, if there are more than two Regular Trustees, a majority of the Regular Trustees) and (ii) by the Property Trustee if the amendment affects the rights, powers, duties, obligations or immunities of the Property Trustee; and (iii) by the Delaware Trustee if the amendment affects the rights, powers, duties, obligations or immunities of the Delaware Trustee. 2. No amendment shall be made, and any such purported amendment shall be void and ineffective: a. unless, in the case of any proposed amendment, the Property Trustee shall have first received an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); 66 b. unless, in the case of any proposed amendment which affects the rights, powers, duties, obligations or immunities of the Property Trustee, the Property Trustee shall have first received: (1) an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and (2) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities) and that all conditions precedent, if any, in this Declaration to the execution and delivery of such amendment have been satisfied, provided, however, the Property Trustee shall not be required to sign any -------- ------- such amendment; and c. unless the Trust shall have first received an opinion of counsel rendered by a law firm having a national tax and securities practice to the effect that such amendment would not: (1) cause the Trust to be classified as an association or publicly traded partnership taxable as a corporation for United States Federal income tax purposes; (2) reduce or otherwise adversely affect the powers of the Property Trustee in contravention of the Trust Indenture Act; or (3) cause the Trust to be deemed to be an Investment Company required to be registered under the Investment Company Act. 3. At such time after the Trust has issued any Securities that remain outstanding, any amendment that would (i) adversely affect the rights, privileges or preferences of the Holders, (ii) result in the dissolution, winding-up or termination of the Trust other than pursuant to the terms of this Declaration, (iii) change the amount or timing of any Distribution of the Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Securities as of a specified date or (iv) restrict the right of a Holder of Securities to institute suit for the enforcement of any such payment on or after such date, then the Holders of the Securities voting together as a single class will be entitled to vote on such amendment and such amendment shall not be effective except with the approval of at least a Majority in Liquidation Amount of the Securities affected thereby; provided that, if any amendment referred to in clause (i) above would adversely affect only the Capital Securities or the Common Securities, then only the affected class will be entitled to vote on such amendment 67 and such amendment shall not be effective except with the approval of a Majority in Liquidation Amount of such class of Securities. 4. Section 9.1(c) and this Section 11.1 shall not be amended without the consent of all of the Holders of the Securities. 5. Article 5 shall not be amended without the consent of the Holders of a Majority in Liquidation Amount of the Common Securities. 6. The rights of the Holders of the Common Securities under Article 6 to increase or decrease the number of, and appoint and remove Trustees shall not be amended without the consent of the Holders of a Majority in Liquidation Amount of the Common Securities. 7. Notwithstanding Section 11.1(c), this Declaration may be amended without the consent of the Holders of the Securities to: a. cure any ambiguity; b. correct or supplement any provision in this Declaration that may be inconsistent with any other provision of this Declaration; and c. to modify, eliminate or add to any provision of this Declaration, provided such modification, elimination or,addition would not adversely affect the rights, privileges or preferences of any Holder of the Securities. 8. The issuance of a Trustees' Authentication Order by the Regular Trustees for purposes of establishing the terms and form of the Securities as contemplated by Section 7.1 shall not be deemed an amendment of this Declaration subject to the provisions of this Section 11.1. Section B. Meetings of the Holders of Securities; Action by Written Consent. 1. Meetings of the Holders of any class of Securities may be called at any time by the Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in Liquidation Amount of such class of Securities. Such direction shall be given by delivering to the Regular Trustees one or more notices in writing stating that the signing Holders of Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of Securities calling a meeting shall specify in writing the Certificates held by the Holders of Securities exercising the right to call a meeting and only those 68 Securities specified shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met. 2. Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of Securities: a. notice of any such meeting shall be given to all the Holders of Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or required under this Declaration or the rules of any stock exchange on which the Capital Securities are listed or admitted for trading, such vote, consent or approval may be given at a meeting of the Holders of Securities. Any action that may be taken at a meeting of the Holders of Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of Securities owning not less than the minimum amount of Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders of Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of Securities entitled to vote who have not consented in writing. The Regular Trustees may specify that any written ballot submitted to the Security Holders for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Regular Trustees; b. each Holder of a Security may authorize any Person to act for it by proxy on all matters in which a Holder of Securities is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities executing such proxy. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust were a Delaware corporation and the Holders of the Securities were stockholders of a Delaware corporation; c. each meeting of the Holders of the Securities shall be conducted by the Regular Trustees or by such other Person that the Regular Trustees may designate; and d. unless the Business Trust Act, this Declaration, the terms of the Securities, the Trust Indenture Act or the listing rules of any stock exchange on which the Capital Securities are then listed for trading, otherwise provides, the Regular Trustees, in their sole discretion, shall establish all other provisions relating to meetings of Holders of Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of Securities, waiver of any such 69 notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote. ARTICLE XII. REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE Section A. Representations and Warranties of the Property Trustee. The Trustee that acts as initial Property Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Property Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Property Trustee's acceptance of its appointment as Property Trustee that: 1. the Property Trustee is a banking corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration; 2. the Property Trustee satisfies the requirements set forth in Section 6.3(a); 3. the execution, delivery and performance by the Property Trustee of this Declaration has been duly authorized by all necessary corporate action on the part of the Property Trustee. This Declaration under Delaware law has been duly executed and delivered by the Property Trustee, and constitutes a legal, valid and binding obligation of the Property Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law); 4. the execution, delivery and performance of this Declaration by the Property Trustee does not conflict with or constitute a breach of the charter or by-laws of the Property Trustee; and 5. no consent, approval or authorization of, or registration with or notice to, any Delaware or Federal banking authority is required for the execution, delivery or performance by the Property Trustee of this Declaration. 70 Section B. Representations and Warranties of the Delaware Trustee. The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee that: 1. the Delaware Trustee satisfies the requirements set forth in Section 6.2 and has the power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration and, if it is not a natural person, is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization; 2. the execution, delivery and performance by the Delaware Trustee of this Declaration has been duly authorized by all necessary corporate action on the part of the Delaware Trustee. This Declaration under Delaware law constitutes a legal, valid and binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency and other similar laws affecting creditors' rights generally and to general principles of equity and the discretion of the court (regardless of whether the enforcement of such remedies is considered in a proceeding in equity or at law); 3. the execution, delivery and performance of this Declaration by the Delaware Trustee does not conflict with or constitute a breach of the charter or by-laws of the Delaware Trustee; and 4. no consent, approval or authorization of, or registration with or notice to, any Delaware or Federal banking authority is required for the execution, delivery or performance by the Delaware Trustee of this Declaration. ARTICLE XIII. MISCELLANEOUS Section A. Notices. All notices provided for in this Declaration shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows: 1. if given to the Trust, in care of the Regular Trustees at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Property Trustee, the Delaware Trustee and the Holders of the Securities): 71 The First American Financial Corporation 114 East Fifth Street Santa Ana, California 90271 2. if given to the Delaware Trustee, at the mailing address set forth below (or such other address as the Delaware Trustee may give notice of to the Regular Trustees, the Property Trustee and the Holders of the Securities): Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington Delaware 19890-0001 Attention: Corporate Trust Administration fax: 302-427-4749 phone: 302-651-1000 3. if given to the Property Trustee, at its Corporate Trust Office (or such other address as the Property Trustee may give notice of to the Regular Trustees, the Delaware Trustee and the Holders of the Securities). 4. if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice of to the Property Trustee, the Delaware Trustee and the Trust). 5. if given to any other Holder, at the address set forth on the books and records of the Trust. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. Section B. Governing Law. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware (without regard to principles of conflicts of laws). Section C. Intention of the Parties. 72 It is the intention of the parties hereto that the Trust be classified for United States Federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted in a manner consistent with such classification. Section D. Headings. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof. Section E. Successors and Assigns. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether or not so expressed. Section F. Partial Enforceability. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby. Section G. Counterparts. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees to one of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day and year first above written. THE FIRST AMERICAN FINANCIAL CORPORATION, as Sponsor and Holder of Common Securities BY: /s/ THOMAS A. KLEMENS -------------------------------------- Name: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer WILMINGTON TRUST COMPANY, as Property Trustee BY: /s/ EMMETT R. HARMON ------------------------------------- Name: Emmett R. Harmon Title: Vice President WILMINGTON TRUST COMPANY, as Delaware Trustee BY: /s/ EMMETT R. HARMON ------------------------------------- Name: Emmett R. Harmon Title: Vice President Thomas A. Klemens, as Regular Trustee BY: /s/ THOMAS A. KLEMENS ------------------------------------- Name: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer Parker S. Kennedy, as Regular Trustee BY: /s/ PARKER S. KENNEDY ------------------------------------- Name: Parker S. Kennedy Title: Regular Trustee EXHIBIT A THIS CAPITAL SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITORY"), OR A NOMINEE OF THE DEPOSITORY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS CAPITAL SECURITY CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TO FIRST AMERICAN CAPITAL TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REGISTERED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED 2 IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND SUBSTANCE. THE CAPITAL SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 (100 CAPITAL SECURITIES). ANY SUCH TRANSFER OF CAPITAL SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH CAPITAL SECURITIES FOR ANY PURPOSE, INCLUDING BUT NOT LIMITED TO THE RECEIPT OF DISTRIBUTIONS ON SUCH CAPITAL SECURITIES, AND SUCH TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH CAPITAL SECURITIES. Certificate No. Number of Capital Securities: CUSIP No. 31847J AA8 Certificate Evidencing Capital Securities of First American Capital Trust I 8.50% Capital Securities (liquidation amount $1,000 per Capital Security) FIRST AMERICAN CAPITAL TRUST I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of the aggregate liquidation amount of Capital Securities of the Trust specified in Schedule A hereto representing undivided beneficial ownership interests in the assets of the Trust designated the 8.50% Capital Securities (liquidation amount $1,000 per Capital Security) (the "Capital Securities"). The Capital Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in the Declaration (as defined below). The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities represented hereby are set forth in and shall in all respects be subject to the provisions of, the Amended and Restated Declaration of Trust of the Trust, dated as of April 22, 1997 (as the same may be amended from time to time (the "Declaration")), among The First American Financial Corporation, as Sponsor, Parker S. 3 Kennedy and Thomas A. Klemens, as Regular Trustees, Wilmington Trust Company, as Property Trustee, and Wilmington Trust Company, as Delaware Trustee. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent described therein. The Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture to a Holder without charge upon written request to the Sponsor at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Capital Securities as evidence of undivided indirect beneficial ownership interests in the Debentures. 4 IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day of _____, 19__. FIRST AMERICAN CAPITAL TRUST I BY:_______________________________________ Name: Title: This is one of the Securities referred to in the within mentioned Declaration. Dated: _____ ___, 19__ Wilmington Trust Company as Trustee By:____________________________________________ Authorized Signatory 5 ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Insert assignee's social security or tax identification number) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Insert address and zip code of assignee) and irrevocably appoints ________________________________________________________________________________ _________________________________________________________________________ agent to transfer this Capital Security on the books of the Trust. The agent may substitute another to act for him or her. Date:_________________________ Signature:____________________ (Sign exactly as your name appears on the other side of this Capital Security certificate) Signature Guarantee:/*/:________________________________________________________ In connection with any transfer of any of the Capital Securities evidenced by this certificate, the undersigned confirms that such Capital Securities are being: CHECK ONE BOX BELOW (1) [_] exchanged for the undersigned's own account without transfer; or - -------------- /*/ Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 6 (2) [_] transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or (3) [_] transferred to an institutional "accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act of 1933, as amended that is acquiring the Capital Securities for its own account, or for the account of such an institutional "accredited investor," for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act of 1933, as amended; or (4) [_] transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933; or (5) [_] transferred pursuant to an effective registration statement under the Securities Act of 1933, as amended. Unless one of the boxes is checked, the Security Registrar will refuse to register any of the Capital Securities evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided, however, -------- ------- that if box (3) or (4) is checked, the Registrar may require, prior to registering any such transfer of the Capital Securities, such legal opinions, certifications and other information as the Trust or the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act; provided, further, that (i) if box (2) is checked, the transferee must also -------- ------- certify that it is a qualified institutional buyer as defined in Rule 144A or (ii) if box (3) is checked, the transferee must also provide to the Registrar a Transferee Letter of Representation in the form attached to the Offering Memorandum of the Trust dated April 17, 1997; provided, further, that after the date that a registration statement has been filed and so long as such registration statement continues to be effective, the Security Registrar may only permit transfers for which box (5) has been checked. -------------------------------------------- Signature 7 EXHIBIT B THIS CERTIFICATE IS NOT TRANSFERABLE Certificate No. Number of Common Securities: Certificate Evidencing Common Securities of First American Capital Trust I 8.50% Common Securities (liquidation amount $1,000 per Common Security) FIRST AMERICAN CAPITAL TRUST I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of the aggregate liquidation amount of Common Securities of the Trust specified in schedule A hereto representing undivided beneficial ownership interests in the assets of the Trust designated the 8.50% Common Securities (liquidation amount $1,000 per Common Security) (the "Common Securities"). The Common Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in the Declaration (as defined below). The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are set forth in and shall in all respects be subject to the provisions of, the Amended and Restated Declaration of Trust of the Trust, dated as of April 22, 1997 (as the same may be amended from time to time (the "Declaration")), among The First American Financial Corporation, as Sponsor, Parker S. Kennedy and Thomas A. Klemens, as Regular Trustees, Wilmington Trust Company, as Property Trustee, and Wilmington Trust Company, as Delaware Trustee. Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent described therein. The Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture to a Holder without charge upon written request to the Sponsor at its principal place of business. Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder. By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Common Securities as evidence of undivided indirect beneficial ownership interests in the Debentures. IN WITNESS WHEREOF, the Trust has executed this certificate this _____ day of ________, 19__. FIRST AMERICAN CAPITAL TRUST I By:____________________________ Name: Title: This is one of the Securities referred to in the within mentioned Declaration. Dated: ________ ___, 19__ Wilmington Trust Company as Trustee By: ------------------------------- Authorized Signatory 9 EXHIBIT C FORM OF TRUSTEES' AUTHENTICATION ORDER __________, _____ Wilmington Trust Company as Property Trustee Rodney Square North 1100 North Market Street Wilmington, DE 19890 Ladies and Gentlemen: Reference is made to the Amended and Restated Declaration of Trust of First American Capital Trust I, dated as of April 22, 1997 (the "Trust Agreement"), among The First American Financial Corporation (the "Sponsor"), Wilmington Trust Company, as Property Trustee (the "Property Trustee") and Delaware Trustee and the Regular Trustees named therein, the resolution of the Finance Committee of the Corporation's Chief Financial Officer to whom the Finance Committee delegated certain authority, providing for the issuance of the Certificates evidencing _______ Capital Securities (liquidation amount $1,000 per Capital Security) and _____ Common Securities (liquidation amount $1,000 per Common Security), there have been delivered to you _______ Capital Securities and ______ Common Securities in the liquidation amount of $___________. Please authenticate such Capital Securities and hold the same as Property Trustee on behalf of The Depository Trustee Company. Please authenticate such Common Securities and hold the same as Property Trustee on behalf of the Sponsor. Very truly yours, THE FIRST AMERICAN CAPITAL TRUST By:________________________ [Name] Regular Trustee By:________________________ Mark R Arnesen Secretary EX-4.4 5 AMENDED & RESTATED CREDIT AGREEMENT -- JULY 29, 1997 EXHIBIT 4.4 Composite Conformed Copy ************************************************************ AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 29, 1997 among THE FIRST AMERICAN FINANCIAL CORPORATION The Lenders Party Hereto and THE CHASE MANHATTAN BANK, as Administrative Agent _________________________ CHASE SECURITIES INC., as Arranger ************************************************************ Table of Contents
Page ----- Section 1. Definitions and Accounting Matters.......................... 1 1.01 Certain Defined Terms................................. 1 1.02 Accounting Terms and Determinations................... 19 1.03 Types of Loans........................................ 20 Section 2. Revolving Credit Commitments, Loans, Notes and Prepayments.. 20 2.01 Loans................................................. 20 2.02 Borrowings............................................ 21 2.03 Changes of Revolving Credit Commitments............... 21 2.04 Commitment Fee........................................ 22 2.05 Lending Offices....................................... 22 2.06 Several Obligations; Remedies Independent............. 22 2.07 Notes................................................. 22 2.08 Optional Prepayments and Conversions or Continuations of Revolving Credit Loans............................. 23 Section 3. Payments of Principal and Interest.......................... 24 3.01 Repayment of Loans.................................... 24 3.02 Interest.............................................. 24 Section 4. Payments; Pro Rata Treatment; Computations; Etc............. 25 4.01 Payments.............................................. 25 4.02 Pro Rata Treatment.................................... 26 4.03 Computations.......................................... 26 4.04 Minimum Amounts....................................... 26 4.05 Certain Notices....................................... 27 4.06 Non-Receipt of Funds by the Administrative Agent...... 27 4.07 Sharing of Payments, Etc.............................. 28 Section 5. Yield Protection, Etc....................................... 29 5.01 Additional Costs...................................... 29 5.02 Limitation on Types of Revolving Credit Loans......... 32 5.03 Illegality............................................ 32 5.04 Treatment of Affected Loans........................... 33 5.05 Compensation.......................................... 33 5.06 U.S. Taxes............................................ 34 5.07 Replacement of a Lender............................... 35 Section 6. Conditions Precedent........................................ 35
(i)
Page ---- Section 7. Representations and Warranties......................... 37 7.01 Corporate Existence.............................. 37 7.02 Financial Condition.............................. 37 7.03 Litigation....................................... 38 7.04 No Breach........................................ 38 7.05 Action........................................... 39 7.06 Approvals........................................ 39 7.07 Use of Credit.................................... 39 7.08 ERISA............................................ 39 7.09 Taxes, Etc....................................... 39 7.10 Investment Company Act........................... 40 7.11 Public Utility Holding Company Act............... 40 7.12 Environmental Matters............................ 40 7.13 Title to Assets.................................. 41 7.14 True and Complete Disclosure..................... 41 Section 8. Covenants of the Company............................... 41 8.01 Financial Statements, Etc........................ 41 8.02 Litigation....................................... 45 8.03 Existence, Etc................................... 45 8.04 Insurance........................................ 46 8.05 Fundamental Changes.............................. 46 8.06 Limitation on Liens.............................. 46 8.07 Indebtedness..................................... 48 8.08 Total Stockholders' Equity....................... 49 8.09 Total Debt to Total Capitalization............... 49 8.10 Minimum Combined Earnings........................ 49 8.11 Lines of Business................................ 50 8.12 Transactions with Affiliates..................... 50 8.13 Use of Proceeds, Etc............................. 50 8.14 Foreclosure; Etc................................. 50 8.15 Communication with Accountants................... 51 8.16 Sale/Leaseback Transactions...................... 51 Section 9. Events of Default...................................... 51 Section 10. The Administrative Agent............................... 55 10.01 Appointment, Powers and Immunities............... 55 10.02 Reliance by Administrative Agent................. 55 10.03 Defaults......................................... 56 10.04 Rights as a Lender............................... 56
(ii)
Page ---- 10.05 Indemnification......................................... 56 10.06 Non-Reliance on Administrative Agent and Other Lenders.. 57 10.07 Failure to Act.......................................... 57 10.08 Resignation or Removal of Administrative Agent.......... 57 10.09 Consents under Basic Documents.......................... 58 Section 11. Miscellaneous.................................................. 58 11.01 Waiver.................................................. 58 11.02 Notices................................................. 58 11.03 Expenses, Etc........................................... 58 11.04 Amendments, Etc......................................... 60 11.05 Successors and Assigns.................................. 60 11.06 Assignments and Participations.......................... 60 11.07 Survival................................................ 62 11.08 Captions................................................ 62 11.09 Counterparts............................................ 62 11.10 Governing Law; Submission to Jurisdiction............... 62 11.11 Waiver of Jury Trial.................................... 62 11.12 Treatment of Certain Information; Confidentiality....... 63 11.13 Amendment Fees.......................................... 63 11.14 Pledge Agreement........................................ 64 SCHEDULE I - Hazardous Materials SCHEDULE II - Liens SCHEDULE III - Indebtedness EXHIBIT A - Form of Revolving Credit Note EXHIBIT B - Form of Opinion of Counsel to the Company EXHIBIT C - Form of Confidentiality Agreement
(iii) AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 29, 1997 among THE FIRST AMERICAN FINANCIAL CORPORATION, the LENDERS party hereto, and THE CHASE MANHATTAN BANK, as Administrative Agent. The Company (as defined below), the Lenders (as defined below), and the Administrative Agent are parties to an Amended and Restated Credit Agreement dated as of April 28, 1993 (as heretofore amended by Amendment No. 1 dated as of March 31, 1994, Amendment No. 2 dated as of November 22, 1994, Amendment No. 3 dated as of March 31, 1995, Amendment No. 4 dated as of June 1, 1995, Amendment No. 5 dated as of February 16, 1996, and Amendment No. 6 dated as of April 1, 1997 (which Amended and Restated Credit Agreement amended and restated the First Credit Agreement, as defined below) and, as supplemented and in effect on the date hereof, the "Existing Credit Agreement"), pursuant to which certain term ------------------------- loans and a revolving credit facility were continued and/or made available to the Company. As of the date hereof, the aggregate outstanding principal amount of such term loans is $6,140,000 and the revolving credit commitments are equal to $30,000,000. The parties hereto desire to amend and restate the Existing Credit Agreement to provide, among other things, for the continuation of the "Fixed Rate Loan" (as defined in the Existing Credit Agreement), for the increase of the revolving credit commitments to $75,000,000 and for the extension of the availability of the Revolving Credit Availability Period, as hereinafter set forth. Effective as of the Effective Date (as defined below), the Existing Credit Agreement shall be amended and restated to read in its entirety as follows, provided that this Amended and Restated Credit Agreement shall terminate and be of no further force or effect (except for the provisions of this Amended and Restated Credit Agreement referred to in Sections 11.03 and 11.07 and the definitions ancillary thereto) and the Existing Credit Agreement shall not be so amended and restated unless the Effective Date shall occur before August 5, 1997. Accordingly, the parties hereto agree as follows: Section 1. Definitions and Accounting Matters. ---------------------------------- 1.01 Certain Defined Terms. As used herein, the following terms --------------------- shall have the following meanings (all terms defined in this Section 1.01 or in other provisions of this Agreement in the singular to have the same meanings when used in the plural and vice versa): ---- ----- "Affiliate" shall mean any Person that directly or indirectly --------- controls, or is under common control with, or is controlled by, the Company and, if such Person is an individual, any member of the immediate family (including parents, spouse, children and siblings) of such individual and any trust whose principal beneficiary is such individual or one or more members of such immediate family and any Person who is controlled by any such member or trust. As used in this definition, "control" (including, with its correlative meanings, ------- "controlled by" and "under common control with") shall mean possession, directly ------------- ------------------------- or indirectly, of power to direct -2- or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person that owns directly or -------- indirectly securities having 5% or more of the voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person. Without limiting the generality of the foregoing, each of the following Persons shall, at all times, be Affiliates of the Company: Donald P. Kennedy, Parker S. Kennedy, any member of their immediate families (including parents, spouses, children and siblings), any trust whose principal beneficiary is Donald P. Kennedy or Parker S. Kennedy or one of more members of their immediate families and any Person who is controlled by such member or trust. Notwithstanding the foregoing, (a) no individual (other than any Person specified in the preceding sentence) shall be an Affiliate solely by reason of his or her being a director, officer or employee of the Company or any of its Subsidiaries and (b) none of the Subsidiaries of the Company shall be Affiliates. This "Agreement" shall mean the Existing Credit Agreement as amended --------- and restated by this Amendment and Restatement and as the same shall be further amended and modified and in effect from time to time. "Applicable Bank Regulatory Authority" shall mean, for any Bank ------------------------------------ Subsidiary, the Federal Deposit Insurance Corporation and all other relevant bank or thrift regulatory authorities (including, without limitation, relevant state bank or thrift regulatory authorities) having jurisdiction over such Bank Subsidiary. "Applicable Insurance Regulatory Authority" shall mean, for any ----------------------------------------- Insurance Company, the insurance commission or similar administrative authority or agency of the State in which such Insurance Company is domiciled. "Applicable Lending Office" shall mean, for each Lender and for each ------------------------- Type of Loan made by such Lender, the "Lending Office" of such Lender (or of an affiliate of such Lender) designated for such Type of Loan on the signature pages hereof or such other office of such Lender (or of an affiliate of such Lender) as such Lender may from time to time specify to the Administrative Agent and the Company as the office by which its Loans of such Type are to be made and maintained. "Applicable Margin" shall mean, for any day, with respect to any Base ----------------- Rate Loan or Eurodollar Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "Base Rate Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be, corresponding to the ratings by Moody's and S&P, respectively, as provided for in the definitions of "Category 1", "Category 2", "Category 3", "Category 4", and "Category 5" in this Section 1.01. Credit Agreement ---------------- -3-
=========================================================== Index Debt Base Rate Eurodollar Committment Ratings: Spread Spread Fee - ---------- --------- ---------- ----------- Category 1 0.0000% 0.3000% 0.1000% Category 2 0.0000% 0.3500% 0.1250% Category 3 0.0000% 0.4000% 0.1500% Category 4 0.0000% 0.5000% 0.2000% Category 5 0.0000% 0.7500% 0.2500% ===========================================================
For purposes of the foregoing, (i) if either Moody's or S&P shall not have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating equivalent to the rating provided by the rating agency then having a rating in effect; (ii) if the Moody's Rating or the S&P Rating established or deemed to have been established shall fall within different Categories, the Applicable Margin shall be based on the higher of the Moody's Rating or the S&P Rating unless one of the Moody's Rating or the S&P Rating is two or more Categories lower than the other, in which case the Applicable Margin shall be determined by reference to the Category next below that of the higher of the Moody's Rating or the S&P Rating; and (iii) if the Moody's Rating or the S&P Rating established or deemed to have been established shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency. Each change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Company and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Margin shall be determined by reference to the rating most recently in effect prior to such change or cessation. "Arbitrage Loans" shall mean loans made by any financial institution --------------- (a "lender") which is, at the time of the making of such loan, a depository of the Company or any Subsidiary of the Company, to the Company or any such Subsidiary in an amount not exceeding the amount of the deposits of the Company or any such Subsidiary held by such depository, the proceeds of which are invested in U.S. Government securities and/or Credit Agreement ---------------- -4- certificates of deposit rated A-1 or P-1 and having a term not exceeding the maturity date of such loan (but in no event longer than 92 days), provided that (i) the relevant borrower shall have a right of offset against such investment (in the case of certificates of deposit) and (ii) all such loans must be off the balance sheet of the Company and its Subsidiaries at the last day of any quarterly fiscal period. "Bank Subsidiary" shall mean First Security Thrift, First American --------------- Trust and any other Subsidiary of the Company which is a federally- or state- chartered thrift, bank or trust company. "Bankruptcy Code" shall mean the Federal Bankruptcy Code of 1978, as --------------- amended from time to time. "Base Rate" shall mean, for any day, a rate per annum equal to the --------- higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b) the Prime Rate for such day. Each change in any interest rate provided for herein based upon the Base Rate resulting from a change in the Base Rate shall take effect at the time of such change in the Base Rate. "Basic Documents" shall mean, collectively, this Agreement, the Notes --------------- and the Pledge Agreement. "Business Day" shall mean (a) any day (other than a Saturday or a ------------ Sunday) on which commercial banks are not authorized or required to close in New York City and (b) if such day relates to a payment or prepayment of principal of or interest on, a Conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice by the Company with respect to any such payment, prepayment, Conversion or Interest Period, any day (other than a Saturday or a Sunday) on which dealings in Dollar deposits are carried out in the London interbank market. "Capital Lease Obligations" shall mean, for any Person, all ------------------------- obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) Property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board), and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP (including such Statement No. 13). "Capital Securities" shall mean preferred securities issued by a ------------------ Subsidiary of the Company organized as a Delaware business trust that are redeemable, at the option of such issuer, ten years or more after the issuance thereof, which securities are guaranteed by the Credit Agreement ---------------- -5- Company and the proceeds of which are invested in junior subordinated securities of the Company. "Category 1" shall mean a period when the Moody's Rating is at or ---------- above A2 and the S&P Rating is at or above A; "Category 2" shall mean a period ---------- when the Moody's Rating is at or above Baa1 and the S&P Rating is at or above BBB+; "Category 3" shall mean a period when the Moody's Rating is at or above ---------- Baa2 and the S&P Rating is at or above BBB; "Category 4" shall mean a period ---------- when the Moody's Rating is at or above Baa3 and the S&P Rating is at or above BBB-; "Category 5" shall mean a period when the Moody's Rating is below ---------- Baa3 and the S&P Rating is below BBB-. "Chase" shall mean The Chase Manhattan Bank. ----- "Code" shall mean the Internal Revenue Code of 1986, as amended from ---- time to time. "Combined Earnings" shall mean, for any period, the sum of the ----------------- following: (a) consolidated earnings (calculated before income taxes, Interest Expense and minority interest expense) of the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) for such period plus depreciation and amortization (to the ---- extent deducted in determining such consolidated earnings) for such period plus ---- (b) Deferred Revenues (or, in the case of a Deferred Revenue deficit, minus an ----- amount equal to such deficit) for such period. "Company" shall mean The First American Financial Corporation, a ------- California corporation. "Consolidated Subsidiary" shall mean, for any Person, each Subsidiary ----------------------- of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of such Person in accordance with GAAP. "Continue", "Continuation" and "Continued" shall refer to the -------- ------------ --------- continuation pursuant to Section 2.08 hereof of a Eurodollar Loan from one Interest Period to the next Interest Period. "Convert", "Conversion" and "Converted" shall refer to a conversion ------- ---------- --------- pursuant to Section 2.08 hereof of one Type of Revolving Credit Loans into the other Type of Revolving Credit Loans, which may be accompanied by the transfer by a Revolving Credit Credit Agreement ---------------- -6- Lender (at its sole discretion) of a Revolving Credit Loan from one Applicable Lending Office to another. "Default" shall mean an Event of Default or an event that with notice ------- or lapse of time or both would become an Event of Default. "Deferred Revenues" shall mean, with respect to the Company and its ----------------- Consolidated Subsidiaries, for any fiscal period, the amount of revenue received but not recognized (in accordance with GAAP) during such fiscal period minus the ----- amount of revenue recognized (in accordance with GAAP) but not received during such fiscal period. "Dollars" and "$" shall mean lawful money of the United States of ------- - America. "Effective Date" shall mean the date on which the conditions specified -------------- in Section 6 are satisfied (or waived in accordance with Section 11.04 hereof). "Environmental Claim" shall mean, with respect to any Person, (a) any ------------------- written notice, claim, demand or other written communication (collectively, a "claim") by any other Person alleging or asserting such Person's liability for - ------ investigatory costs, cleanup costs, governmental response costs, damages to natural resources or other Property, personal injuries, fines or penalties arising out of, based on or resulting from (i) the presence, or Release into the environment, of any Hazardous Material at any location, whether or not owned by such Person, or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. The term "Environmental Claim" shall include, without limitation, any claim by any governmental authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law, and any claim by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from the presence of Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment. "Environmental Laws" shall mean any and all present and future ------------------ Federal, state, local and foreign laws, rules or regulations, and any orders or decrees, in each case as now or hereafter in effect, relating to the regulation or protection of human health, safety or the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes into the indoor or outdoor environment, including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or toxic or hazardous substances or wastes. Credit Agreement ---------------- -7- "Equity Issuance" shall mean (a) any issuance or sale by the Company --------------- of (i) any capital stock, (ii) any warrants or options exercisable in respect of capital stock (other than any warrants or options issued to directors, officers or employees of the Company or any of its Subsidiaries in their capacity as such and any capital stock of the Company issued upon the exercise of such warrants) or (iii) any other security or instrument representing an equity interest (or the right to obtain any equity interest) in the Company or (b) the receipt by the Company of any contribution to its capital (whether or not evidenced by any equity security). "ERISA" shall mean the Employee Retirement Income Security Act of ----- 1974, as amended from time to time. "ERISA Affiliate" shall mean any corporation or trade or business that --------------- is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which the Company is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which the Company is a member. "ERISA Event" shall mean (a) any "reportable event", as defined in ----------- Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Company or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Company or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "Eurodollar Base Rate" shall mean, with respect to any Eurodollar Loan -------------------- for any Interest Period therefor, the arithmetic mean (rounded upwards, if necessary, to the nearest 1/16 of 1%) of the respective rates per annum quoted by each Reference Bank at approximately 11:00 a.m. London time (or as soon thereafter as practicable) on the date two Business Days prior to the first day of such Interest Period for the offering by such Reference Bank to leading banks in the London interbank market of Dollar deposits having a term comparable to such Credit Agreement ---------------- -8- Interest Period and in an amount comparable to the principal amount of the Eurodollar Loan to be made by such Reference Bank for such Interest Period. If any Reference Bank is not participating in any Eurodollar Loan during any Interest Period therefor, the Eurodollar Base Rate for such Loan for such Interest Period shall be determined by reference to the amount of the Loan that such Reference Bank would have had outstanding had it been participating in such Loan during such Interest Period. "Eurodollar Loans" shall mean Revolving Credit Loans the interest ---------------- rates on which are determined on the basis of rates referred to in the definition of "Eurodollar Base Rate" in this Section 1.01. "Eurodollar Rate" shall mean, for any Eurodollar Loan for any Interest --------------- Period therefor, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by the Administrative Agent to be equal to the Eurodollar Base Rate for such Loan for such Interest Period divided by 1 minus ----- the Reserve Requirement for such Loan for such Interest Period. "Event of Default" shall have the meaning assigned to such term in ---------------- Section 9 hereof. "Existing Lender" shall mean each Lender party to the Existing Credit --------------- Agreement. "Existing Credit Agreement" has the meaning given to such term in the ------------------------- recitals to this Agreement. "FAREISI" shall mean First American Real Estate Information Services, ------- Inc., a California corporation and a Wholly Owned Subsidiary of the Company. "FATICO" shall mean First American Title Insurance Company, a ------ California corporation and a Wholly Owned Subsidiary of the Company. "Federal Funds Rate" shall mean, for any day, the rate per annum ------------------ (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if the day for which such rate is to -------- be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if such rate is not so published for any Business Day, the Credit Agreement ---------------- -9- Federal Funds Rate for such Business Day shall be the average rate charged to Chase on such Business Day on such transactions as determined by the Administrative Agent. "First American Title & Trust Company" shall mean First American Title ------------------------------------ & Trust Company, an Oklahoma corporation and a Subsidiary of the Company. "First American Trust" shall mean First American Trust Company, a -------------------- California corporation and a Wholly Owned Subsidiary of the Company. "First Credit Agreement" shall mean the Credit Agreement between the ---------------------- Company, the Lenders, and the Administrative Agent dated as of April 21, 1992 (as amended by Amendment No. 1 dated as of June 30, 1992, Amendment No. 2 dated as of September 25, 1992 and Amendment No. 3 dated as of October 29, 1992), pursuant to which term loans were made to the Company by the Lenders in the aggregate principal amount of $65,000,000, which such Credit Agreement was amended and restated by the Existing Credit Agreement. "First Security Thrift" shall mean First Security Thrift Company, a --------------------- California corporation and an indirect Subsidiary of FATICO. "Fixed Rate" shall mean a rate per annum equal to 9.38%. ---------- "Fixed Rate Lender" shall mean any Lender from time to time holding ----------------- the Fixed Rate Loan, including after giving effect to any assignment permitted by Section 11.06 hereof. "Fixed Rate Loan" shall mean the Loan made by the Fixed Rate Lender --------------- pursuant to the First Credit Agreement (as more fully described in Section 2.01(b)). "Fixed Rate Note" shall mean the promissory note provided for by --------------- Section 2.07(b) hereof or any promissory note delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time. "Funded Debt" shall mean, for any Person: (a) all Indebtedness for ----------- such Person that should be reflected on a balance sheet of such Person in accordance with GAAP, (b) all Indebtedness of any other Person that should be reflected on a balance sheet of such other Person in accordance with GAAP and that is secured by a Lien on the Property of such Person, is supported by a letter of credit issued for account of, or is Guaranteed by, such Person and (c) all Capital Lease Obligations of such Person; provided that, Funded Debt shall -------- include (i) the aggregate liquidation preference of all preferred securities that are mandatorily redeemable, exchangeable or convertible into debt at the option of the holder or redeemable at the option of the holder, less than ten years after issue and (ii) the aggregate liquidation preference of all Credit Agreement ---------------- -10- Capital Securities but only that portion of such aggregate liquidation preference that is on such date equal to, or in excess of, 15% of Total Capitalization on such date. "GAAP" shall mean generally accepted accounting principles applied on ---- a basis consistent with those which, in accordance with the last sentence of Section 1.02(a) hereof, are to be used in making the calculations for purposes of determining compliance with this Agreement. "Governmental Authority" shall mean the government of the United ---------------------- States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guarantee" shall mean a guarantee, an endorsement, a contingent --------- agreement to purchase or to furnish funds for the payment or maintenance of, or otherwise to be or become contingently liable under or with respect to, the Indebtedness, other obligations, net worth, working capital or earnings of any Person, or a guarantee of the payment of dividends or other distributions upon the stock or equity interests of any Person, or an agreement to purchase, sell or lease (as lessee or lessor) Property, products, materials, supplies or services primarily for the purpose of enabling a debtor to make payment of such debtor's obligations or an agreement to assure a creditor against loss, including, without limitation, causing a bank or other financial institution to issue a letter of credit or other similar instrument for the benefit of another Person, but excluding endorsements for collection or deposit in the ordinary course of business. The terms "Guarantee" and "Guaranteed" used as a verb shall --------- ---------- have a correlative meaning. Notwithstanding the foregoing, the issuance by an Insurance Company of title insurance shall not be deemed to be a "Guarantee". "Hazardous Material" shall mean, collectively, (a) any petroleum or ------------------ petroleum products, flammable explosives, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls (PCB's) in amounts exceeding 50 parts per million, (b) any chemicals or other materials or substances which are now or hereafter become defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous wastes", "restricted hazardous wastes", "toxic substances", "toxic pollutants", "contaminants", "pollutants" or words of similar import under any Environmental Law and (c) any other chemical or other material or substance, exposure to which is now or hereafter prohibited, limited or regulated under any Environmental Law. Credit Agreement ---------------- -11- "Indebtedness" shall mean, for any Person: (a) obligations created, ------------ issued, assumed or incurred by such Person for borrowed money (whether by loan, the issuance and sale of debt securities (including surplus debentures or notes whether or not characterized as liabilities for the purposes of GAAP or SAP and non-perpetual preferred stock requiring redemption or repurchase and any option exercisable in respect thereof to the extent of such redemption or repurchase) or the sale of Property to another Person subject to an understanding or agreement, contingent or otherwise, to repurchase such Property from such Person); (b) obligations of such Person to pay the deferred purchase or acquisition price of Property or services, other than trade accounts payable (other than for borrowed money) arising, and accrued expenses incurred, in the ordinary course of business so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are rendered; (c) Indebtedness of others secured by a Lien on the Property of such Person, whether or not the respective indebtedness so secured has been assumed by such Person; (d) obligations of such Person in respect of letters of credit or similar instruments issued or accepted by banks and other financial institutions for account of such Person; (e) Capital Lease Obligations of such Person; and (f) Indebtedness of others Guaranteed by such Person. "Index Debt" shall mean senior, unsecured, long-term indebtedness for ---------- borrowed money of the Company that is not guaranteed by any other Person or subject to any other credit enhancement; provided that if such indebtedness is -------- not rated by Moody's or S&P, "Index Debt" shall mean indebtedness in respect of Capital Securities. "Insurance Company" shall mean FATICO, First American Home Buyers ----------------- Protection Corporation and any other Subsidiary of the Company which is a licensed insurance company or a licensed underwritten title company. "Interest Expense" shall mean, for any period, the sum, for the ---------------- Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness accrued or capitalized during such period (whether or not actually paid during such period) plus (b) the net amounts ---- payable (or minus the net amounts receivable) under Interest Rate Protection ----- Agreements accrued during such period (whether or not actually paid or received during such period). "Interest Period" shall mean, with respect to any Eurodollar Loan, --------------- each period commencing on the date such Eurodollar Loan is Converted from a Base Rate Loan or the last day of the next preceding Interest Period for such Loan and ending on the numerically corresponding day in the first, second, third or sixth calendar month thereafter, as the Company may select as provided in Section 4.05 hereof, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no Credit Agreement ---------------- -12- numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. Notwithstanding the foregoing: (i) no Interest Period may end after the Revolving Credit Commitment Termination Date; (ii) each Interest Period that would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day (or, if such next succeeding Business Day falls in the next succeeding calendar month, on the next preceding Business Day); and (iii) no Interest Period shall have a duration of less than one month and, if the Interest Period for any Eurodollar Loan would otherwise be a shorter period, such Loan shall not be available hereunder for such period. "Interest Rate Protection Agreement" shall mean, for any Person, an ---------------------------------- interest rate swap, cap or collar agreement or similar arrangement between such Person and one or more financial institutions providing for the transfer or mitigation of interest risks either generally or under specific contingencies. For purposes hereof, the "credit exposure" at any time of any Person under an --------------- Interest Rate Protection Agreement to which such Person is a party shall be determined at such time in accordance with the standard methods of calculating credit exposure under similar arrangements as prescribed from time to time by the Administrative Agent, taking into account potential interest rate movements and the respective termination provisions and notional principal amount and term of such Interest Rate Protection Agreement. "Lenders" shall mean the Revolving Credit Lenders and the Fixed Rate ------- Lender. "Licenses" shall mean any licenses or certificates of authority from -------- any Applicable Insurance Regulatory Authority, or permits or authorizations to transact title insurance business. "Lien" shall mean, with respect to any Property, any mortgage, lien, ---- pledge, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this Agreement and the other Basic Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property. "Loans" shall mean the Revolving Credit Loans and the Fixed Rate Loan. ----- "Majority Revolving Credit Lenders" shall mean Revolving Credit --------------------------------- Lenders holding at least 66-2/3% of the aggregate unpaid principal amount of the Revolving Credit Loans and the unused Revolving Credit Commitments. Credit Agreement ---------------- -13- "Majority Lenders" shall mean (a) Lenders holding at least 66-2/3% of ---------------- the aggregate unpaid principal amount of the Fixed Rate Loan, Revolving Credit Loans and the unused Revolving Credit Commitments; provided that, at any time -------- that both the Revolving Credit Loans and the Fixed Rate Loan are outstanding, then "Majority Lenders" under this clause (a) shall also require no fewer than three Lenders or (b) for purposes of administering the Pledge Agreement pursuant to Section 10 hereof if the Loans have been paid in full, Lenders holding at least 66-2/3% of the aggregate Secured Obligations. "Make-Whole Amount" shall mean, in connection with any acceleration of ----------------- the Fixed Rate Loan pursuant to the last paragraph of Section 9 hereof, the amount (but not less than zero) equal to the excess, if any, of (a) the sum of the Present Values (as hereinafter defined) of (i) the outstanding principal amount of the Fixed Rate Loan on the date of such acceleration (assuming such principal amount will be paid on the originally scheduled due date therefor) and (ii) the amount of interest that would have been payable on each Quarterly Date on or after the date of such acceleration on the principal amount of the Fixed Rate Loan (assuming such principal amount and interest thereon are paid on the originally scheduled due date therefor), over ---- (b) the outstanding principal amount of the Fixed Rate Loan on the date of such acceleration. For the purposes of this definition, "Present Value" shall be determined in ------------- accordance with generally accepted financial practice on a quarterly basis at a discount rate equal to the sum of the applicable Treasury Yield plus 1/2 of 1%; ---- and the "Treasury Yield" for such purposes shall be the yield of actively traded -------------- United States Treasury securities having a maturity equal to the then-remaining weighted average life to maturity (determined in accordance with generally accepted financial practice) of the Fixed Rate Loan as determined by reference to the most recent Federal Reserve Statistical Release H.15(519) (or, if such Statistical Release is no longer published, any publicly available source of similar market data) that became publicly available at least one Business Day prior to the date of such acceleration; provided that if such weighted average -------- life to maturity is not equal to the maturity of any actively traded United States Treasury securities as set forth in said Statistical Release (or said substitute source of market data), such yield shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the yields of actively traded United States Treasury securities set forth in said Statistical Release (or said substitute source of market data) having a maturity closest to such weighted average life to maturity. "Margin Stock" shall mean "margin stock" within the meaning of ------------ Regulation U and Regulation X. Credit Agreement ---------------- -14- "Material Adverse Effect" shall mean a material adverse effect on (a) ----------------------- the Property, business, operations, financial condition, prospects, liabilities or capitalization of the Company and its Subsidiaries taken as a whole, (b) the ability of the Company to perform its obligations under any of the Basic Documents, (c) the validity or enforceability of any of the Basic Documents, (d) the rights and remedies of the Lenders and the Administrative Agent under any of the Basic Documents or (e) the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith. "Material Subsidiary" shall mean, at any date: (a) each of the ------------------- following: FATICO, First American Trust, First Security Thrift and FAREISI; and (b) any other Subsidiary of the Company with (i) assets at such date with a net book value in excess of $5,000,000 and (ii) total assets at such date in excess of $10,000,000. "Minority Stockholders Put Documents" shall mean (a) the Stock ----------------------------------- Restriction Agreement dated May 3, 1983 among First American Title Guaranty Holding Company, FATICO and the management-shareholders and outside-shareholders named therein, (b) the letter agreement dated March 2, 1988 among Philip B. Branson, Daniel T. Langston, Gene D. Merlo, Lawrence A. Newland, Martin R. Wool, First American Home Buyers Protection Corporation and FATICO, (c) the Financing Agreement dated as of June 28, 1984 among FATICO, First American Home Buyers Protection Corporation and each of the persons listed on Exhibit A thereto as modified by the Amendment to Financing Agreement, dated as of March 29, 1985, and (d) the stock purchase agreements entered into by First American Home Buyers Protection Corporation, FATICO and certain employees of First American Home Buyers Protection Corporation who are parties to stock option agreements entered into pursuant to the First American Home Buyers Protection Corporation 1988 Non- Qualified Stock Option Plan. "Minority Stockholders Put Obligations" shall mean the respective ------------------------------------- obligations of FATICO, First American Title Guaranty Holding Company and First American Home Buyers Protection Corporation to buy back shares of capital stock (whether for cash, Property, through issuance of a note or otherwise) from minority stockholders of First American Title Guaranty Holding Company and First American Home Buyers Protection Corporation, as the case may be, pursuant to exercise by such minority stockholders of put options, all as provided in the Minority Stockholders Put Documents in effect on the date hereof. "Moody's" shall mean Moody's Investors Service, Inc. ------- "Moody's Rating" shall mean the Moody's rating in respect of the Index -------------- Debt, provided that if such rating is in respect of Index Debt consisting of -------- Capital Securities, "Moody's Rating" shall mean the rating that is one grade higher than the rating of the Index Debt. Credit Agreement ---------------- -15- "Multiemployer Plan" shall mean a multiemployer plan defined as such ------------------ in Section 3(37) of ERISA to which contributions have been made by the Company or any ERISA Affiliate at any time during the six calendar years immediately preceding April 21, 1992 and which is covered by Title IV of ERISA. "NAIC" shall mean the National Association of Insurance Commissioners. ---- "New Lender" shall mean each Lender which is party to this Agreement ---------- but is not party to the Existing Credit Agreement. "Notes" shall mean the Revolving Credit Notes and the and the Fixed ----- Rate Note, and any replacement or substitute notes received in exchange therefore. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any ---- entity succeeding to any or all of its functions under ERISA. "Person" shall mean any individual, corporation, company, voluntary ------ association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof). "Plan" shall mean an employee benefit or other plan established or ---- maintained by the Company or any ERISA Affiliate and that is covered by Title IV of ERISA, other than a Multiemployer Plan. "Pledge Agreement" shall mean the Pledge Agreement dated as of April ---------------- 27, 1992 between the Company and the Administrative Agent, as the same shall be modified and supplemented and in effect from time to time. "Post-Default Rate" shall mean, in respect of any principal of any ----------------- Loan or any other amount under this Agreement, any Note or the Pledge Agreement that is not paid when due (whether at stated maturity, by acceleration or otherwise), a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to 2% plus ---- the Base Rate as in effect from time to time plus the Applicable Margin for Base ---- Rate Loans; provided that, if the amount so in default is the principal of a -------- Eurodollar Loan and the due date thereof is a day other than the last day of the Interest Period therefor, the "Post-Default Rate" for such principal shall be, for the period from and including such due date to but excluding the last day of the Interest Period, 2% plus the interest rate for such Loan as provided in ---- Section 3.02(b) hereof and, thereafter, the rate provided for above in this definition; and provided further that, with respect to the principal of the -------- ------- Fixed Rate Loan or any other amount payable in connection with the Fixed Rate Loan under this Agreement or under Credit Agreement ---------------- -16- the Fixed Rate Note, the "Post-Default Rate" shall be a rate equal to 2% plus ---- the Fixed Rate. "Prime Rate" shall mean the rate of interest from time to time ---------- announced by Chase at the Principal Office as its prime commercial lending rate. "Principal Office" shall mean the principal office of Chase, in New ---------------- York, New York, as is designated as such by Chase from time to time. "Principal Payment Dates" shall mean the Principal Payment Dates as ----------------------- provided for by Section 3.01. "Property" shall mean any right or interest in or to property of any -------- kind whatsoever, whether real, personal or mixed and whether tangible or intangible. "Quarterly Dates" shall mean the 21st day of each January, April, July --------------- and October, commencing with July 21, 1992; provided that if any such day is not -------- a Business Day, then such Quarterly Date shall be the next succeeding Business Day (unless such Business Day falls in a subsequent calendar month, in which event such Quarterly Date shall be the next preceding Business Day). "Reference Banks" shall mean Chase and Sanwa Bank California (or their --------------- respective Applicable Lending Offices, as the case may be). "Regulation A", "Regulation D", "Regulation U" and "Regulation X" ------------ ------------ ------------ ------------ shall mean, respectively, Regulation A, Regulation D, Regulation U and Regulation X of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time. "Regulatory Change" shall mean, with respect to any Lender, any change ----------------- (in the case of a change affecting Eurodollar Loans, after the date hereof and, in all other cases, after April 21, 1992) in Federal, state or foreign law or regulations or the adoption or making (after such date) of any interpretation, directive or request applying to a class of lenders including such Lender of or under any Federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Release" shall mean any release, spill, emission, leaking, pumping, ------- injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor Credit Agreement ---------------- -17- environment, including, without limitation, the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata. "Relevant 8-K Report" shall mean the Current Report filed with the ------------------- Securities and Exchange Commission and the National Association of Securities Dealers Automated Quotation System on Form 8-K as a result of the execution and delivery of the Pledge Agreement. "Reserve Requirement" shall mean, for any Interest Period for any ------------------- Eurodollar Loan, the average maximum rate at which reserves (including, without limitation, any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall include any other reserves required to be maintained by such member banks by reason of any Regulatory Change with respect to (i) any category of liabilities that includes deposits by reference to which the Eurodollar Base Rate is to be determined as provided in the definition of "Eurodollar Base Rate" in this Section 1.01 or (ii) any category of extensions of credit or other assets that includes Eurodollar Loans. "Reserves" shall mean, for any Insurance Company, as at any date, the -------- aggregate reserves for undetermined title losses of such Insurance Company (which amount is shown at the date hereof on the most recent annual Statutory Statement of such Insurance Company at page 3, line 1(b), column 1) as at the last day of the fiscal year of such Insurance Company ending on or most recently ended prior to such date. "Revolving Credit Availability Period" shall mean the period from and ------------------------------------ including the Effective Date to but excluding the earlier of the Revolving Credit Commitment Termination Date and the date of termination of the Revolving Credit Commitments. "Revolving Credit Commitment" shall mean, for each Revolving Credit --------------------------- Lender, the obligation of such Lender to make Revolving Credit Loans in an aggregate principal amount at any one time outstanding up to but not exceeding the amount set forth opposite the name of such Lender on the signature pages hereof under the caption "Revolving Credit Commitment" (as the same may be reduced from time to time pursuant to Section 2.05 hereof). The aggregate amount of the Revolving Credit Commitments is $75,000,000. "Revolving Credit Commitment Termination Date" shall mean the fifth -------------------------------------------- anniversary of the Effective Date, and if such date is not a Business Day, the next preceding Business Day. Credit Agreement ---------------- -18- "Revolving Credit Lenders" shall mean the Lenders from time to time ------------------------ holding Revolving Credit Loans or unused Revolving Credit Commitments after giving effect to any assignments thereof permitted by Section 11.06 hereof. "Revolving Credit Loans" shall mean Loans made by the Revolving Credit ---------------------- Lenders, as more fully described in Section 2.01(a) hereto. "Revolving Credit Notes" shall mean the promissory notes provided for ---------------------- by the second sentence of Section 2.07(a) hereof and all promissory notes delivered in substitution or exchange therefor, in each case as the same shall be modified and supplemented and in effect from time to time. "S&P" shall mean Standard & Poor's. --- "S&P Rating" shall mean the S&P rating in respect of the Index Debt, ---------- provided that if such rating is in respect of Index Debt consisting of Capital - -------- Securities, "S&P Rating" shall mean the rating that is one grade higher than the rating of the Index Debt. "Sale/Leaseback Transactions" shall have the meaning assigned to such --------------------------- term in Section 8.16. "SAP" shall mean, for any Insurance Company, the statutory accounting --- procedures or practices required by the Applicable Insurance Regulatory Authority applied on a basis consistent with those which, in accordance with the last sentence of Section 1.02(a) hereof, are to be used in making the calculations for purposes of determining compliance with certain terms of this Agreement. "Secured Obligations" shall have the meaning assigned to such term in ------------------- the Pledge Agreement. "Statutory Statement" shall mean, for any Insurance Company, for any ------------------- fiscal year of such Insurance Company, the most recent annual statement required to be filed with the Applicable Insurance Regulatory Authority and, for any fiscal quarter of such Insurance Company, the quarterly statement required to be filed with the Applicable Insurance Regulatory Authority, which annual and quarterly statements shall be prepared in accordance with statutory accounting practices or generally accepted accounting principles as specified by the Applicable Insurance Regulatory Authority. "Subsidiary" shall mean, for any Person, any corporation, partnership ---------- or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other Credit Agreement ---------------- -19- persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. "Wholly Owned Subsidiary" shall mean any ----------------------- such corporation, partnership or other entity of which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors' qualifying shares) are so owned or controlled. "Tax Sharing Agreements" shall have the meaning assigned to such term ---------------------- in Section 7.09(b) hereof. "Total Capitalization" shall mean, at any date, the sum of Total Debt -------------------- plus Total Stockholders' Equity. - ---- "Total Debt" shall mean, as at any date, the sum for the Company and ---------- its Consolidated Subsidiaries of all Funded Debt. "Total Stockholders' Equity" shall mean at any date the aggregate -------------------------- stockholders' equity (including minority interests in subsidiaries) for the Company and its Consolidated Subsidiaries; provided that, the aggregate -------- liquidation preference of Capital Securities shall be included in the calculation of Total Stockholders' Equity only with respect to that portion of such aggregate liquidation preference that is less than 15% of Total Capitalization on such date; provided further that, for purposes of ---------------- determining compliance with Section 8.08, the definition of "Total Stockholders' Equity" shall not include any amount with respect to Capital Securities. "Type" shall have the meaning assigned to such term in Section 1.03 ---- hereof. "Withdrawal Liability" shall mean liability to a Multiemployer Plan as -------------------- a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. 1.02 Accounting Terms and Determinations. ----------------------------------- (a) Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall (unless otherwise disclosed to the Lenders in writing at the time of delivery thereof in the manner described in subsection (b) below) be prepared, in accordance with (in the case of the Company and its Credit Agreement ---------------- -20- Subsidiaries on a consolidated basis) generally accepted accounting principles or (in the case of certain of the Insurance Companies) statutory accounting practices, as the case may be, applied on a basis consistent with those used in the preparation of the latest financial statements furnished to the Lenders hereunder (which, prior to the delivery of the first financial statements (after the date hereof) under Section 8.01 hereof, shall mean the financial statements as at December 31, 1996 referred to in Section 7.02 hereof). All calculations made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of (in the case of the Company and its Subsidiaries on a consolidated basis) generally accepted accounting principles or (in the case of certain of the Insurance Companies) statutory accounting practices, as the case may be, applied on a basis consistent with those used in the preparation of the latest annual or quarterly financial statements furnished to the Lenders pursuant to Section 8.01 hereof (or, prior to the delivery of the first financial statements (after the date hereof) under Section 8.01 hereof, used in the preparation of the financial statements as at December 31, 1996 referred to in Section 7.02 hereof) unless (i) the Company shall have objected to determining such compliance on such basis at the time of delivery of such financial statements or (ii) the Majority Lenders shall so object within 30 days after delivery of such financial statements, in either of which events such calculations shall be made on a basis consistent with those used in the preparation of the latest financial statements as to which such objection shall not have been made (which, if objection is made in respect of the first financial statements delivered under Section 8.01 hereof, shall mean the financial statements referred to in Section 7.02 hereof). (b) The Company shall deliver to the Lenders at the same time as the delivery of any annual or quarterly financial statement under Section 8.01 hereof (i) a description in reasonable detail of any material variation between the application of accounting principles or practices employed in the preparation of such statement and the application of accounting principles or practices employed in the preparation of the next preceding annual or quarterly financial statements as to which no objection has been made in accordance with the last sentence of subsection (a) above and (ii) reasonable estimates of the difference between such statements arising as a consequence thereof. (c) The Company will not change the last day of its fiscal year from December 31 of each year, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30 and September 30 of each year, respectively. 1.03 Types of Loans. Loans hereunder are distinguished by "Type". -------------- The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or a Eurodollar Loan or a Fixed Rate Loan, each of which constitutes a Type. Section 2. Revolving Credit Commitments, Loans, Notes and ---------------------------------------------- Prepayments. - ----------- Credit Agreement ---------------- -21- 2.01 Loans. ----- (a) Revolving Credit Commitments. On the Effective Date, (i) the ---------------------------- "Revolving Credit Loans" (as defined in the Existing Credit Agreement) held by the Existing Lenders under the Existing Credit Agreement shall automatically, and without any action on the part of any Person, be designated as Revolving Loans hereunder and each of the New Lenders (and each Existing Lender, if any, whose relative proportion of Revolving Credit Commitments hereunder is increasing over its relative proportion of "Revolving Credit Commitments" held by it under the Existing Credit Agreement (each an "Increasing Existing ------------------- Revolving Credit Lender")) shall, by assignments from the Existing Lenders, if - ----------------------- any, whose relative proportion of the Revolving Credit Commitments hereunder is decreasing from its relative proportion of "Revolving Credit Commitments" held by it under the Existing Credit Agreement (which assignments shall be deemed to occur automatically on the Effective Date), acquire a portion of the Revolving Credit Loans and Revolving Credit Commitments of the Existing Lenders so designated in such amounts (and the Revolving Credit Lenders shall, through the Administrative Agent, make such additional adjustments among themselves as shall be necessary), (ii) each New Lender and each Increasing Existing Revolving Credit Lender severally agrees, on the terms and conditions of this Agreement, to make (on a non pro-rata basis) a revolving credit loan to the Company in Dollars and/or (iii) the Company shall prepay the Revolving Credit Loans of the Existing Lenders (on a non pro-rata basis) in such amounts, such that after giving effect to such assignments and adjustments and such revolving credit loans, the Revolving Credit Lenders shall hold the Revolving Loans hereunder ratably in accordance with their respective Revolving Credit Commitments. As of the Effective Date, all Interest Periods under the Existing Credit Agreement in respect of the "Revolving Credit Loans" under and as defined in the Existing Credit Agreement shall continue hereunder until the end of such Interest Periods and not be terminated. All accrued and unpaid interest on the "Revolving Credit Loans" held by the Existing Lenders under the Existing Credit Agreement as of the Effective Date shall remain payable and be paid by the Company to the respective Existing Lenders in accordance with Section 3.01 hereof as if such Revolving Credit Loans were made hereunder. Subject to the terms and conditions set forth herein and as of the Effective Date, each Lender agrees to make Revolving Loans to the Company from time to time during the Revolving Credit Availability Period in an aggregate principal amount that will not result in (a) such Lender's Revolving Credit Loans plus such Lender's unused Revolving Credit Commitments exceeding such ---- Lender's Revolving Credit Commitment or (b) the sum of the total Revolving Credit Loans plus the sum of the total unused Revolving Credit Commitments ---- exceeding the total Revolving Credit Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Company may borrow, prepay and reborrow Revolving Credit Loans. Credit Agreement ---------------- -22- (b) Fixed Rate Loan. On April 21, 1992, the Fixed Rate Lender --------------- agreed, on the terms and conditions of the First Credit Agreement, to make the "Fixed Rate Loan" (as defined in the First Credit Agreement) to the Company in Dollars in an amount up to but not exceeding the amount of the "Fixed Rate Commitment" (as defined in the First Credit Agreement) and the Company hereby confirms and acknowledges that on April 27, 1992, the Fixed Rate Lender made such a term loan in an amount equal to the Fixed Rate Commitment and that, as a result thereof, the "Fixed Rate Commitment" was terminated on such date. The Company further hereby confirms and acknowledges that, as of the date hereof, the aggregate outstanding principal amount of the Fixed Rate Loan is $6,140,000. The Fixed Rate Loan may not be Converted into a Loan of any other Type. 2.02 Borrowings. The Company shall give the Administrative Agent ---------- (which shall promptly notify the Lenders) notice of any borrowing hereunder as provided in Section 4.05 hereof. Not later than 1:00 p.m. New York time on the date specified for the borrowing hereunder, each Revolving Credit Lender shall make available the amount of the Revolving Credit Loan to be made by it on such date to the Administrative Agent, at an account designated and maintained by the Administrative Agent with Chase at the Principal Office, in immediately available funds, for account of the Company. The amount so received by the Administrative Agent shall be made available to the Company by depositing the same, in immediately available funds, in an account of the Company, designated by the Company, maintained with Chase at the Principal Office. 2.03 Changes of Revolving Credit Commitments. --------------------------------------- (a) The Company has the right to terminate or reduce the aggregate unused amount of the Revolving Credit Commitments; provided that (i) the Company -------- give notice of each such termination or reduction as provided in Section 4.05 thereof and (ii) each partial reduction be in an aggregate amount at least equal to $3,000,000 or in multiples of $500,000 in excess thereof. (b) The Revolving Credit Commitments, once terminated or reduced, may not be reinstated. 2.04 Commitment Fee. The Company shall pay to the Administrative -------------- Agent for account of each Revolving Credit Lender a commitment fee on the daily average unused amount of such Lender's Revolving Credit Commitment, for the period from and including the date of this Agreement to but not including the earlier of the date such Revolving Credit Commitment is terminated and the Revolving Credit Commitment Termination Date, at a rate per annum equal to the Applicable Margin. Accrued commitment fee is payable on each Quarterly Date and on the earlier of the date the Revolving Credit Commitments are terminated and the Revolving Credit Commitment Termination Date. Credit Agreement ---------------- -23- 2.05 Lending Offices. The relevant Type of Loan made by each Lender --------------- shall be maintained at such Lender's Applicable Lending Office for Loans of such Type. 2.06 Several Obligations; Remedies Independent. The failure of any ----------------------------------------- Lender to make the Loan to be made by it on the date specified therefor shall not relieve any other Lender of its obligation to make its Loan on such date, but neither any Lender nor the Administrative Agent shall be responsible for the failure of any other Lender to make a Loan to be made by such other Lender, and no Lender shall have any obligation to the Administrative Agent or any other Lender for the failure by such Lender to make the Loan required to be made by such Lender. The amounts payable by the Company at any time hereunder and under the Notes to each Lender shall be a separate and independent debt and each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and the Notes, and it shall not be necessary for any other Lender or the Administrative Agent to consent to, or be joined as an additional party in, any proceedings for such purposes. 2.07 Notes. ----- (a) The Revolving Credit Commitment and Revolving Credit Loans of each Lender shall be evidenced by a single promissory note of the Company substantially in the form of Exhibit A-1 hereto, appropriately dated, in an amount equal to the Revolving Credit Commitment of such Lender and otherwise duly completed. Thereafter, the Revolving Credit Commitment of each Revolving Credit Lender shall be evidenced by a single promissory note of the Company substantially in the form of Exhibit A hereto, appropriately dated, payable to such Lender in an amount equal to the amount of the Revolving Credit Commitment held by such Lender on the Effective Date and otherwise duly completed. (b) The Fixed Rate Loan made by the Fixed Rate Lender shall be evidenced by a single promissory note of the Company substantially in the form as previously agreed between the Fixed Rate Lender and the Borrower, appropriately dated, payable to the Fixed Rate Lender or its designated nominee in a principal amount equal to the amount of the Fixed Rate Loan and otherwise duly completed. (c) The date, amount, Type, interest rate and duration of Interest Period (if applicable) of the Loan made by each Lender to the Company, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books and, prior to any transfer of the Note held by it, endorsed by such Lender on the schedule attached to such Note or any continuation thereof; provided that the failure of such Lender to make any such recordation -------- or endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing hereunder or under such Note in respect of such Loan. Credit Agreement ---------------- -24- (d) No Lender shall be entitled to have its Note subdivided, by exchange for promissory notes of lesser denominations or otherwise, except in connection with a permitted assignment of all or any portion of such Lender's Loan and Note pursuant to Section 11.06(b) hereof. 2.08 Optional Prepayments and Conversions or Continuations of -------------------------------------------------------- Revolving Credit Loans. Subject to Section 4.04 hereof, the Company shall have - ---------------------- the right to prepay Revolving Credit Loans, or to Convert Revolving Credit Loans of one Type into Revolving Credit Loans of the other Type or Continue Revolving Credit Loans of one Type as Revolving Credit Loans of the same Type, at any time or from time to time, provided that: (a) the Company shall give the -------- Administrative Agent irrevocable notice of each such prepayment, Conversion or Continuation as provided in Section 4.05 hereof (and, upon the date specified in any such notice of prepayment, the amount to be prepaid shall become due and payable hereunder); and (b) upon any prepayment or Conversion of Eurodollar Loans other than on the last day of an Interest Period for such Loans the Company shall pay any amounts owing under Section 5.05 hereof as a result of such prepayment or Conversion. Notwithstanding the foregoing, and without limiting the rights and remedies of the Revolving Credit Lenders under Section 9 hereof, in the event that any Event of Default shall have occurred and be continuing, the Administrative Agent may (and at the request of the Majority Revolving Credit Lenders shall) suspend the right of the Company to Convert any Base Rate Loan into a Eurodollar Loan, or to Continue any Eurodollar Loan as a Eurodollar Loan, in which event all Revolving Credit Loans shall be Converted (on the last day(s) of the respective Interest Periods therefor) or Continued, as the case may be, as Base Rate Loans. The Company may not prepay the Fixed Rate Loan without the consent of the Fixed Rate Lender. Section 3. Payments of Principal and Interest. ---------------------------------- 3.01 Repayment of Loans. ------------------ (a) The Company hereby unconditionally promises to pay to the Administrative Agent for the account of each Revolving Credit Lender the then unpaid principal amount of each Revolving Loan on the Revolving Credit Commitment Termination Date. (b) The Company hereby unconditionally promises to pay to the Administrative Agent for the account of each Fixed Rate Lender the principal of the Fixed Rate Loan in eight installments payable on the Principal Payment Dates as follows: Credit Agreement ---------------- -25-
Principal Payment Date Amount of Installment - ---------------------- --------------------- October 21, 1997 $ 820,000 January 21, 1998 $ 820,000 April 21, 1998 $ 820,000 July 21, 1998 $ 820,000 October 21, 1998 $ 820,000 January 21, 1999 $ 820,000 April 21, 1999 $1,220,000
3.02 Interest. The Company hereby promises to pay to the -------- Administrative Agent for account of each Lender interest on the unpaid principal amount of each Loan made by such Lender for the period from and including the date of such Loan to but excluding the date such Loan shall be paid in full, at the following rates per annum: (a) if such Loan is a Revolving Credit Loan, during such periods as such Loan is a Base Rate Loan, the Base Rate (as in effect from time to time) plus the Applicable Margin; - ---- (b) if such Loan is a Revolving Credit Loan, during such periods as such Loan is a Eurodollar Loan, for each Interest Period relating thereto, the Eurodollar Rate for such Loan for such Interest Period plus the Applicable ---- Margin; and (c) if such Loan is a Fixed Rate Loan, the Fixed Rate. Notwithstanding the foregoing, the Company hereby promises to pay to the Administrative Agent for account of each Lender interest at the applicable Post- Default Rate on any principal of any Loan made by such Lender and on any other amount payable by the Company hereunder or under the Note held by such Lender to or for account of such Lender, which shall not be paid in full when due (whether at stated maturity, by acceleration or otherwise), for the period from and including the due date thereof to but excluding the date the same is paid in full. Accrued interest on each Loan shall be payable (i) in the case of a Base Rate Loan or the Fixed Rate Loan, quarterly on the Quarterly Dates, (ii) in the case of a Eurodollar Loan, on the last day of each Interest Period therefor and, if such Interest Period is longer than three months, at three month intervals following the first day of such Interest Period, (iii) in the case of any Loan, upon the payment or prepayment thereof (but only on the principal amount so paid or prepaid) and (iv) in the case of any Revolving Credit Loan, upon the Conversion of such Loan to a Revolving Credit Loan of the other Type (but only on the principal amount so Converted), except that interest payable at the Post- Default Rate shall be payable from time to time on demand. Promptly after the determination of any interest rate provided for herein or Credit Agreement ---------------- -26- any change therein, the Administrative Agent shall give notice thereof to the Lenders to which such interest is payable and to the Company. Section 4. Payments; Pro Rata Treatment; Computations; Etc. ------------------------------------------------ 4.01 Payments. -------- (a) Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by the Company under this Agreement and the Notes, and, except to the extent otherwise provided therein, all payments to be made by the Company under the Pledge Agreement, shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, to the Administrative Agent at an account designated and maintained by the Administrative Agent with Chase at the Principal Office, not later than 1:00 p.m. New York time on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). (b) The Company shall, at the time of making each payment under this Agreement or any Note for account of any Lender, specify to the Administrative Agent (which shall so notify the intended recipient(s) thereof) the relevant Type of Loans or other amounts payable by the Company hereunder to which such payment is to be applied, subject to Section 4.02 hereof (and in the event that the Company fails to so specify, or if an Event of Default has occurred and is continuing, the Administrative Agent may distribute such payment to the Lenders for application in such manner as it or the Majority Lenders, subject to Section 4.02 hereof, may determine to be appropriate). (c) Each payment received by the Administrative Agent under this Agreement or any Note for account of any Lender shall be paid by the Administrative Agent promptly to such Lender, in immediately available funds, for account of such Lender's Applicable Lending Office for the Loan or other obligation in respect of which such payment is made. (d) If the due date of any payment under this Agreement or any Note would otherwise fall on a day that is not a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension. 4.02 Pro Rata Treatment. Except to the extent otherwise provided ------------------ herein: (a) each payment of commitment fees under Section 2.04 hereof shall be made for account of the Revolving Credit Lenders, and each termination or reduction of the amount of the Revolving Credit Commitments under Section 2.03 shall be applied to the respective Revolving Credit Commitments of the Revolving Credit Lenders, pro rata according to the amounts of their respective Revolving Credit Commitments; (b) the Revolving Credit Loans shall have been made by the relevant Revolving Credit Lenders pro rata according to the amounts of Credit Agreement ---------------- -27- their respective Revolving Credit Commitments; (b) the Revolving Credit Loans shall have been made by the relevant Revolving Credit Lenders pro rata according to the amounts of their respective Revolving Credit Commitments; (c) the Conversion and Continuation of Revolving Credit Loans of a particular Type (other than Conversions provided for by Section 5.04 hereof) shall be made pro rata among the Revolving Credit Lenders according to the amounts of their respective Revolving Credit Loans and the then current Interest Period for each Eurodollar Loan shall be coterminous; (d) each payment or prepayment of principal of Revolving Credit Loans by the Company shall be made for account of the relevant Revolving Credit Lenders pro rata in accordance with the respective unpaid principal amounts of such Revolving Credit Loans held by them; and (e) each payment of interest on the Loans by the Company shall be made for account of the Lenders pro rata in accordance with the amounts of interest on such Loans then due and payable to the respective Lenders. Notwithstanding the foregoing, each payment of principal or interest by the Company shall be made for the account of the Lenders pro rata in accordance with the amounts of principal or interest, as the case may be, then due and payable to the Lenders. 4.03 Computations. Interest on Eurodollar Loans shall be computed on ------------ the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable and interest on Base Rate Loans, the Fixed Rate Loan and commitment fees shall be computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable. Notwithstanding the foregoing, for each day that the Base Rate is calculated by reference to the Federal Funds Rate, interest on Base Rate Loans shall be computed on the basis of a year of 360 days and actual days elapsed. 4.04 Minimum Amounts. Except for Conversions or prepayments made --------------- pursuant to Section 5.04 hereof, each borrowing of the principal of the Loans and each Conversion and partial optional prepayment of principal of Revolving Credit Loans shall be in an aggregate amount at least equal to $300,000 or in multiples of $50,000 in excess thereof (Conversions or prepayments of or into Revolving Credit Loans of different Types or, in the case of Eurodollar Loans, having different Interest Periods at the same time hereunder shall be deemed separate Conversions and prepayments for purposes of the foregoing, one for each Type or Interest Period). Anything in this Agreement to the contrary notwithstanding, the aggregate principal amount of Eurodollar Loans having the same Interest Period shall be in an amount at least equal to $5,000,000 or in multiples of $1,000,000 in excess thereof and, if any Eurodollar Loans would otherwise be in a lesser principal amount for any period, such Revolving Credit Loans shall be Base Rate Loans during such period. 4.05 Certain Notices. Notices by the Company to the Administrative --------------- Agent of Conversions, Continuations and optional prepayments of Revolving Credit Loans and of the duration of Interest Periods shall be irrevocable and shall be effective only if received by the Credit Agreement ---------------- -28- Administrative Agent not later than 1:00 p.m. New York time on the number of Business Days set forth below prior to the date of the relevant Conversion, Continuation or prepayment or the first day of such Interest Period:
Number of Business Notice Days Prior ------ ---------- Prepayment of, or Conversions into, Base Rate Loans two Prepayment of, Conversions into, Continuations as, or duration of Interest Period for, Eurodollar Loans three
Each such notice of Conversion, Continuation or optional prepayment shall specify the amount (subject to Section 4.04 hereof) and Type of the Revolving Credit Loans to be Converted, Continued or prepaid, the date of Conversion, Continuation or optional prepayment (which shall be a Business Day). Each such notice of the duration of an Interest Period shall specify the Revolving Credit Loans to which such Interest Period is to relate. The Administrative Agent shall promptly notify the Lenders of the contents of each such notice. In the event that the Company fails to select the Type of Revolving Credit Loan, or the duration of any Interest Period for any Eurodollar Loan, within the time period and otherwise as provided in this Section 4.05, such Loan (if outstanding as a Eurodollar Loan) will be automatically Converted into a Base Rate Loan on the last day of the then current Interest Period for such Loan or (if outstanding as a Base Rate Loan) will remain as a Base Rate Loan. 4.06 Non-Receipt of Funds by the Administrative Agent. Unless the ------------------------------------------------ Administrative Agent shall have been notified by a Lender or the Company (the "Payor") prior to the date on which the Payor is to make payment to the - ------ Administrative Agent of (in the case of a Lender) the proceeds of a Loan to be made by such Lender hereunder or (in the case of the Company) a payment to the Administrative Agent for account of one or more of the Lenders hereunder (such payment being herein called the "Required Payment"), which notice shall be ---------------- effective upon receipt, that the Payor does not intend to make the Required Payment to the Administrative Agent, the Administrative Agent may assume that the Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the intended recipient(s) on such date; and, if the Payor has not in fact made the Required Payment to the Administrative Agent, the recipient(s) of such payment shall, on demand, repay to the Administrative Agent the amount so made available Credit Agreement ---------------- -29- together with interest thereon in respect of each day during the period commencing on the date (the "Advance Date") such amount was so made available by ------------ the Administrative Agent until the date the Administrative Agent recovers such amount at a rate per annum equal to the Federal Funds Rate for such day and, if such recipient(s) shall fail promptly to make such payment, the Administrative Agent shall be entitled to recover such amount, on demand, from the Payor, together with interest as aforesaid, provided that if neither the recipient(s) -------- nor the Payor shall return the Required Payment to the Administrative Agent within three Business Days of the Advance Date, then, retroactively to the Advance Date, the Payor and the recipient(s) shall each be obligated to pay interest on the Required Payment as follows: (i) if the Required Payment shall represent a payment to be made by the Company to the Lenders, the Company and the recipient(s) shall jointly and severally be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the applicable Post-Default Rate (and, in case the recipient(s) shall return the Required Payment to the Administrative Agent, without limiting the obligation of the Company under Section 3.02 hereof to pay interest to such recipient(s) at the applicable Post-Default Rate in respect of the Required Payment) and (ii) if the Required Payment shall represent proceeds of a loan to be made by the Lenders to the Company, the Payor and the Company shall jointly and severally be obligated retroactively to the Advance Date to pay interest in respect of the Required Payment at the rate of interest provided for such Required Payment pursuant to Section 3.02 hereof (and, in case the Company shall return the Required Payment to the Administrative Agent, without limiting any claim the Company may have against the Payor in respect of the Required Payment). 4.07 Sharing of Payments, Etc. ------------------------ (a) The Company agrees that, in addition to (and without limitation of) any right of set-off, banker's lien or counterclaim a Lender may otherwise have, each Lender shall be entitled upon and after the occurrence and during the continuance of a Default, at its option, to offset balances held by it for account of the Company at any of its offices, in Dollars or in any other currency, against any principal of or interest on any of such Lender's Loans or any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such balances are then due to the Company), in which case it shall promptly notify the Company and the Administrative Agent thereof, provided that such Lender's failure to give such notice shall not affect the - -------- validity thereof. (b) If any Lender shall obtain from the Company payment of any principal of or interest on any Loan owing to it or payment of any other amount under this Agreement or any other Basic Document through the exercise of any right of set-off, banker's lien or similar right Credit Agreement ---------------- -30- or otherwise (other than from the Administrative Agent as provided herein), and, as a result of such payment, such Lender shall have received a greater percentage of the principal of or interest on the Loans or such other amounts then due hereunder or thereunder by the Company to such Lender than the percentage received by any other Lender, it shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) that portion of the Loans or such other amounts, respectively, then due and payable to such other Lenders (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the unpaid principal of and/or interest on the Loans or such other amounts, respectively, then due and payable to each of the Lenders. To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. (c) The Company agrees that any Lender so purchasing such a participation (or direct interest) may exercise all rights of set-off, banker's lien or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such participation. (d) Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Company. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a set-off to which this Section 4.07 applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 4.07 to share in the benefits of any recovery on such secured claim. Section 5. Yield Protection, Etc. --------------------- 5.01 Additional Costs. ---------------- (a) The Company shall pay directly to each Revolving Credit Lender from time to time such amounts as such Revolving Credit Lender may determine to be necessary to compensate such Revolving Credit Lender for any costs that such Revolving Credit Lender determines are attributable to its maintaining of any Eurodollar Loans or its obligation to maintain any Eurodollar Loans hereunder, or any reduction in any amount receivable by such Revolving Credit Lender hereunder in respect of any of such Loans or such obligation (such increases in costs and reductions in amounts receivable being herein called "Additional ---------- Costs"), resulting from any Regulatory Change that: - ----- Credit Agreement ---------------- -31- (i) changes the basis of taxation of any amounts payable to such Revolving Credit Lender under this Agreement or its Note in respect of any of such Loans (other than any change in the rate at which taxes imposed on or measured by the overall net income or capital of such Revolving Credit Lender or of its Applicable Lending Office for any of such Loans by the jurisdiction in which such Revolving Credit Lender has its principal office or such Applicable Lending Office are levied); or (ii) imposes or modifies any reserve, special deposit or similar requirements (other than the Reserve Requirement utilized in the determination of the Eurodollar Rate for such Loan) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Revolving Credit Lender (including, without limitation, any of such Loans or any deposits referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof), or any commitment of such Revolving Credit Lender; or (iii) affects any Revolving Credit Lender or the interbank Eurodollar market or the position of any Revolving Credit Lender in such market. If any Revolving Credit Lender requests compensation from the Company under this Section 5.01(a), the Company may, by notice to such Revolving Credit Lender (with a copy to the Administrative Agent), suspend the obligation of such Revolving Credit Lender thereafter to Continue Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the Regulatory Change giving rise to such request ceases to be in effect (in which case the provisions of Section 5.04 hereof shall be applicable), provided that such suspension shall not affect -------- the right of such Revolving Credit Lender to receive the compensation so requested. (b) Without limiting the effect of the provisions of paragraph (a) of this Section 5.01, in the event that, by reason of any Regulatory Change, any Revolving Credit Lender either (i) incurs Additional Costs based on or measured by the excess above a specified level of the amount of a category of deposits or other liabilities of such Revolving Credit Lender that includes deposits by reference to which the interest rate on Eurodollar Loans is determined as provided in this Agreement or a category of extensions of credit or other assets of such Revolving Credit Lender that includes Eurodollar Loans or (ii) becomes subject to restrictions on the amount of such a category of liabilities or assets that it may hold, then, if such Revolving Credit Lender so elects by notice to the Company (with a copy to the Administrative Agent), the obligation of such Revolving Credit Lender to Continue, or to Convert Base Rate Loans into, Eurodollar Loans hereunder shall be suspended until such Regulatory Change ceases to be in effect (in which case the provisions of Section 5.04 hereof shall be applicable). (c) Without limiting the effect of the foregoing provisions of this Section 5.01 (but without duplication), the Company shall pay directly to each Lender from time to time on Credit Agreement ---------------- -32- request such amounts as such Lender may determine to be necessary to compensate such Lender (or, without duplication, the bank holding company of which such Lender is a subsidiary) for any additional costs that it determines are attributable to the maintenance by such Lender (or, subject to Section 5.01(b)(ii) hereof, any Applicable Lending Office or such bank holding company) of capital in respect of its Loans, pursuant to any law or regulation or any interpretation, directive or request (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) of any court or governmental or monetary authority (i) following any Regulatory Change or (ii) implementing any risk-based capital guideline or other requirement (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) heretofore or hereafter issued by any government or governmental or supervisory authority implementing at the national level the Basel Accord (including, without limitation, the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the Final Risk-Based Capital Guidelines of the Office of the Comptroller of the Currency (12 C.F.R. Part 3, Appendix A)). Such compensation shall include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of such Lender (or any Applicable Lending Office or such bank holding company) to a level below that which such Lender (or any Applicable Lending Office or such bank holding company) could have achieved but for such law, regulation, interpretation, directive or request. For purposes of this Section 5.01(c), "Basel Accord" shall mean the proposals for risk-based capital ------------ framework described by the Basel Committee on Banking Regulations and Supervisory Practices in its paper entitled "International Convergence of Capital Measurement and Capital Standards" dated July 1988, as amended, modified and supplemented and in effect from time to time or any replacement thereof. (d) Each Lender shall notify the Company of any event entitling such Lender to compensation under paragraph (a) or (c) of this Section 5.01 as promptly as practicable, but in any event within 45 days, after such Lender obtains actual knowledge thereof; provided that (i) if any Lender fails to give -------- such notice within 45 days after it obtains actual knowledge of such an event, such Lender shall, with respect to compensation payable pursuant to this Section 5.01 in respect of any costs resulting from such event, only be entitled to payment under this Section 5.01 for costs incurred from and after the date 45 days prior to the date that such Lender does give such notice and (ii) each Lender will designate a different Applicable Lending Office for the Loans of such Lender affected by such event if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole opinion of such Lender, be disadvantageous to such Lender, except that such Lender shall have no obligation to designate an Applicable Lending Office located in the United States of America. Each Lender will furnish to the Company a certificate setting forth the basis and amount of each request by such Lender for compensation under paragraph (a) or (c) of this Section 5.01. Determinations and allocations by any Lender for purposes of this Section 5.01 of the effect of any Regulatory Change pursuant to paragraph (a) or (b) of this Section 5.01, or Credit Agreement ---------------- -33- the effect of capital maintained pursuant to paragraph (c) of this Section 5.01, on its costs or rate of return of maintaining Loans or its obligation to make Loans, or on amounts receivable by it in respect of Loans or its obligation to make Loans, and of the amounts required to compensate such Lender under this Section 5.01, shall be conclusive, provided that such determinations and -------- allocations are made on a reasonable basis. 5.02 Limitation on Types of Revolving Credit Loans. Anything herein --------------------------------------------- to the contrary notwithstanding, if, on or prior to the determination of any Eurodollar Base Rate for any Interest Period: (a) the Administrative Agent determines, which determination shall be conclusive, that quotations of interest rates for the relevant deposits referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for Eurodollar Loans as provided herein; or (b) the Majority Revolving Credit Lenders determine, which determination shall be conclusive, and notify the Administrative Agent that the relevant rates of interest referred to in the definition of "Eurodollar Base Rate" in Section 1.01 hereof upon the basis of which the rate of interest for Eurodollar Loans for such Interest Period is to be determined are not likely adequately to cover the cost to such Revolving Credit Lenders of making or maintaining Eurodollar Loans for such Interest Period; then the Administrative Agent shall give the Company and each Revolving Credit Lender prompt notice thereof and, so long as such condition remains in effect, the Revolving Credit Lenders shall be under no obligation to Continue Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans, and the Company shall, on the last day(s) of the then current Interest Period(s) for the outstanding Eurodollar Loans, either prepay such Loans or Convert such Loans into Base Rate Loans in accordance with Section 2.08 hereof. 5.03 Illegality. Notwithstanding any other provision of this ---------- Agreement, in the event that it becomes unlawful for any Revolving Credit Lender or its Applicable Lending Office to honor its obligation to make or maintain Eurodollar Loans hereunder, then such Revolving Credit Lender shall promptly notify the Company thereof (with a copy to the Administrative Agent) and such Revolving Credit Lender's obligation to Continue, or to Convert Loans of any other Type into, Eurodollar Loans shall be suspended until such time as such Revolving Credit Lender may again make and maintain Eurodollar Loans (in which case the provisions of Section 5.04 hereof shall be applicable). 5.04 Treatment of Affected Loans. If the obligation of any Revolving --------------------------- Credit Lender to Continue, or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended Credit Agreement ---------------- -34- pursuant to Section 5.01 or 5.03 hereof, such Revolving Credit Lender's Eurodollar Loans shall be automatically Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for Eurodollar Loans (or, in the case of a Conversion required by Section 5.01(b) or 5.03 hereof, on such earlier date as such Revolving Credit Lender may specify to the Company with a copy to the Administrative Agent) and, unless and until such Revolving Credit Lender gives notice as provided below that the circumstances specified in Section 5.01 or 5.03 hereof that gave rise to such Conversion no longer exist: (a) to the extent that such Revolving Credit Lender's Eurodollar Loans have been so Converted, all payments and prepayments of principal that would otherwise be applied to such Revolving Credit Lender's Eurodollar Loans shall be applied instead to its Base Rate Loans; and (b) all Loans that would otherwise be Continued by such Revolving Credit Lender as Eurodollar Loans shall be Continued instead as Base Rate Loans, and all Base Rate Loans of such Revolving Credit Lender that would otherwise be Converted into Eurodollar Loans shall remain as Base Rate Loans. If such Revolving Credit Lender gives notice to the Company with a copy to the Administrative Agent that the circumstances specified in Section 5.01 or 5.03 hereof that gave rise to the Conversion of such Revolving Credit Lender's Eurodollar Loans pursuant to this Section 5.04 no longer exist (which such Revolving Credit Lender agrees to do promptly upon such circumstances ceasing to exist) at a time when Eurodollar Loans made by other Revolving Credit Lenders are outstanding, such Revolving Credit Lender's Base Rate Loans shall be automatically Converted, on the first day(s) of the next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the extent necessary so that, after giving effect thereto, all Loans held by the Revolving Credit Lenders holding Eurodollar Loans and by such Revolving Credit Lender are held in accordance with their respective pro rata shares of the outstanding Revolving Credit Loans (as to principal amounts, Types and Interest Periods). 5.05 Compensation. The Company shall pay to the Administrative Agent ------------ for account of each Revolving Credit Lender, upon the request of such Revolving Credit Lender through the Administrative Agent, such amount or amounts as shall be sufficient (in the reasonable opinion of such Revolving Credit Lender) to compensate it for any loss, cost or expense that such Revolving Credit Lender determines is attributable to any payment, mandatory or optional prepayment or Conversion of a Eurodollar Loan made by such Revolving Credit Lender for any reason (including, without limitation, the acceleration of the Loans pursuant to Section 9 hereof) on a date other than the last day of the Interest Period for such Loan. Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess, if any, of (i) the amount of interest that otherwise would have accrued on the principal amount so paid, prepaid or Converted for the period from the Credit Agreement ---------------- -35- date of such payment, prepayment or Conversion to the last day of the then current Interest Period for such Loan at the applicable rate of interest for such Loan provided for herein over (ii) the amount of interest that otherwise would have accrued on such principal amount at a rate per annum equal to the interest component of the amount such Revolving Credit Lender would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by such Revolving Credit Lender). 5.06 U.S. Taxes. ---------- (a) The Company agrees to pay to each Lender that is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Tax imposed with respect to such payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less than the amount stated herein to be then due and payable, provided that the -------- foregoing obligation to pay such additional amounts shall not apply: (i) to any payment to a Lender hereunder unless such Lender was, on April 21, 1992 (or on the date it becomes a Lender as provided in Section 11.06(b) hereof) and on the date of any change in the Applicable Lending Office of such Lender, either entitled to submit a Form 1001 (relating to such Lender and entitling it to a complete exemption from withholding on all interest to be received by it hereunder in respect of the Loans) or Form 4224 (relating to all interest to be received by such Lender hereunder in respect of the Loans), or (ii) to any U.S. Tax imposed solely by reason of the failure by such non-U.S. Person to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such non-U.S. Person if such compliance is required by statute or regulation of the United States of America as a precondition to relief or exemption from such U.S. Tax. For the purposes of this Section 5.06(a), (w) "Form 1001" shall mean Internal --------- Revenue Service Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) of the Department of the Treasury of the United States of America, (x) "Form 4224" --------- shall mean Internal Revenue Service Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America (or in relation to either such Form such successor and related forms as may from time to time be adopted by the relevant taxing authorities of the United States of America to document a claim to which such Form relates), (y) "U.S. Person" ----------- shall have the meaning set forth in Section 7701(a)(30) of the Code and (z) "U.S. Taxes" shall ---------- Credit Agreement ---------------- -36- mean any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof or therein. (b) Within 30 days after paying any amount to the Administrative Agent or any Lender from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, the Company shall deliver to the Administrative Agent for delivery to such non-U.S. Person evidence satisfactory to such Person of such deduction, withholding or payment (as the case may be). 5.07 Replacement of a Lender. Anything in this Agreement to the ----------------------- contrary notwithstanding, in the event that (and for so long as) any Lender is subject to a conservatorship or a receivership with, or is otherwise directly or indirectly under the control of, the Federal Deposit Insurance Corporation (or any successor thereto) or the Resolution Trust Company (or any successor thereto), then unless a Default shall have occurred and be continuing, the Company may designate another lender willing to purchase such Lender's Loan and Note and reasonably acceptable to the Administrative Agent (such lender being herein called a "Replacement Lender") to purchase the Loan and Note of such ------------------ Lender, as the case may be, and such Lender's rights hereunder, for a purchase price equal to the outstanding principal amount of the Loan and Note payable to such Lender plus any accrued but unpaid interest on such Loan and Note, and upon such purchase and sale (which such Lender shall promptly complete), and subject to the execution and delivery to the Administrative Agent by the Replacement Lender of documentation reasonably satisfactory to the Administrative Agent (pursuant to which the Replacement Lender shall assume the obligations of such original Lender under this Agreement), the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder and such Lender shall no longer be a party hereto or have any rights hereunder. Section 6. Conditions Precedent. The effectiveness of the Amendment -------------------- and Restatement (except for Sections 11.03 and 11.07 hereof and the definitions ancillary thereto) is subject to the receipt by the Administrative Agent of the following documents and evidence, each of which shall be satisfactory to the Administrative Agent (and to the extent specified below, to each Lender) in form and substance: (a) Corporate Documents. A certificate of the Secretary or an ------------------- Assistant Secretary of the Company, dated the Effective Date and certifying (A) that attached thereto is a true and complete copy of the articles of incorporation of the Company as amended and in effect at all times from the date of such certification, (B) that attached thereto is a true and complete copy of the by-laws of the Company as amended and in effect at all times from the date on which the resolutions referred to in clause (C) below were adopted to and including the date of such certificate, (C) that attached thereto is a Credit Agreement ---------------- -37- true and complete copy of resolutions duly adopted by the board of directors of the Company authorizing the execution, delivery and performance of the Amendment and Restatement and the Revolving Credit Notes, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, and (D) as to the incumbency and specimen signature of each officer of the Company executing the Amendment and Restatement and the Revolving Credit Notes and each other document to be delivered by the Company from time to time in connection therewith (and the Administrative Agent and each Lender may conclusively rely on such certificate until it receives notice in writing from the Company); (b) Officer's Certificate. A certificate of a senior officer of the --------------------- Company, dated the Effective Date, to the effect set forth in clauses (a) and (b) of the last paragraph of this Section 6. (c) Opinion of Counsel to the Company. An opinion, dated the --------------------------------- Effective Date, of Craig I. DeRoy, general counsel of the Company, substantially in the form of Exhibit B hereto and covering such other matters as the Administrative Agent or any Lender may reasonably request (and the Company hereby instructs such counsel to deliver such opinion to the Lenders and the Administrative Agent). (d) Revolving Credit Notes. The Revolving Credit Notes, duly ---------------------- completed and executed (and the Existing Lenders shall promptly return to the Company the notes executed in connection with the Existing Credit Agreement). (e) Other Documents. Such other documents as the Administrative --------------- Agent or any Lender or special New York counsel to Chase may reasonably request. The effectiveness of the Amendment and Restatement (except for Sections 11.03 and 11.07 hereof and the definitions ancillary thereto) is also subject to the payment by the Company of such fees as the Company shall have agreed to pay or deliver to any Lender or the Administrative Agent in connection herewith, including, without limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase in connection with the negotiation, preparation, execution and delivery of this Amendment and Restatement and the other Basic Documents (to the extent that statements for such fees and expenses have been delivered to the Company). The effectiveness of the Amendment and Restatement (except for Sections 11.03 and 11.07 hereof and the definitions ancillary thereto) is subject to the further conditions precedent that, both immediately prior to and on the Effective Date: (a) no Default shall have occurred and be continuing; and (b) the representations and warranties made by the Company in Section 7 hereof, and in each of the other Basic Documents, shall be true and complete on Credit Agreement ---------------- -38- and as of the Effective Date with the same force and effect as if made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date). Section 7. Representations and Warranties. The Company represents ------------------------------ and warrants to the Lenders that: 7.01 Corporate Existence. Each of the Company and its Material ------------------- Subsidiaries: (a) is a corporation, partnership or other entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify could have a Material Adverse Effect. 7.02 Financial Condition. ------------------- (a) The Company has heretofore furnished to the Lenders its consolidated and consolidating balance sheet and statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended December 31, 1996, reported on by Price Waterhouse, independent public accountants, and (ii) as of and for the fiscal quarter and the portion of the fiscal year ended March 31, 1997, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above. (b) The Company has heretofore furnished to each of the Lenders the Statutory Statements for the year ended December 31, 1996 of each Insurance Company that is a Material Subsidiary and that is required by any Applicable Insurance Regulatory Authority to file such Statutory Statements. Such Statutory Statements have been prepared in accordance with statutory accounting practices and filed with the Applicable Insurance Regulatory Authorities, and fairly present the financial condition of such Insurance Company as at said date and its results of operations for the fiscal year ended on said date in accordance with statutory accounting practices. (c) The Company has heretofore furnished to each of the Lenders consolidated balance sheets of each Material Subsidiary which is not an Insurance Company described in paragraph (b) above and its consolidated Subsidiaries as at December 31, 1996, and the related consolidated statements of income, stockholders' equity and cash flow of such Material Credit Agreement ---------------- -39- Subsidiary and its consolidated Subsidiaries for its fiscal year ended on said date. All such financial statements are complete and correct and fairly present the consolidated financial condition of such Material Subsidiary and its Consolidated Subsidiaries as at the applicable date and the consolidated results of their operations for the fiscal year ended on said date, all in accordance with generally accepted accounting principles and practices applied on a consistent basis. (d) Since December 31, 1996, there has been no material adverse change in the business, assets, operations, prospects or condition, financial or otherwise, of the Company and its Subsidiaries, taken as a whole. (e) Set forth on Schedule II hereto is a list of all Liens (other than Liens created pursuant to the Pledge Agreement) of the Company and its Subsidiaries existing on the date hereof, to the extent any such Lien secures Indebtedness in an aggregate principal or face amount which equals or exceeds (or may equal or exceed) $5,000,000. Liens of the Company and its Consolidated Subsidiaries existing on the date hereof and not set forth on Schedule II secure Indebtedness in an aggregate principal or face amount not exceeding $30,000,000. (f) Set forth on Schedule III hereto is a list of all Indebtedness (other than Indebtedness created pursuant to this Agreement) of the Company and its Subsidiaries on the date hereof, to the extent that any such Indebtedness has an aggregate principal or face amount which equals or exceeds (or may equal or exceed) $5,000,000. Indebtedness of the Company and its Consolidated Subsidiaries existing on the date hereof does not exceed an aggregate principal or face amount of $165,000,000. 7.03 Litigation. There are no legal or arbitral proceedings, or any ---------- proceedings by or before any governmental or regulatory authority or agency, now pending or (to the knowledge of the Company) threatened against the Company or any of its Subsidiaries which, if adversely determined could have a Material Adverse Effect. 7.04 No Breach. None of the execution and delivery of this Agreement --------- and the Notes, the consummation of the transactions herein and therein contemplated or compliance with the terms and provisions hereof and thereof will conflict with or result in a breach of, or require any consent under, the articles of incorporation or by-laws of the Company, or any applicable law or regulation, or any applicable order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which the Company or any of its Subsidiaries is a party or by which any of them or any of their Property is bound or to which any of them is subject, or constitute a default under any such agreement or instrument, or (except for the Liens created pursuant to the Pledge Agreement) result in the creation or imposition of any Lien upon any Property of the Company or any of its Subsidiaries pursuant to the terms of any such agreement or instrument. Credit Agreement ---------------- -40- 7.05 Action. The Company has all necessary corporate power, ------ authority and legal right to execute, deliver and perform its obligations under each of the Basic Documents; the execution, delivery and performance by the Company of each of the Basic Documents have been duly authorized by all necessary corporate action on its part (including, without limitation, any required shareholder approvals); and each of this Agreement, the Pledge Agreement and the Notes has been duly and validly executed and delivered by the Company and constitutes its legal, valid and binding obligation, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors' rights. 7.06 Approvals. Except for the Relevant 8-K Report which was filed --------- by the Company within fifteen days following its execution and delivery of the Pledge Agreement, no authorizations, approvals or consents of, and no filings or registrations with, any governmental or regulatory authority or agency, or any securities exchange, are necessary for the execution, delivery or performance by the Company of the Basic Documents or for the legality, validity or enforceability hereof or thereof; provided, however, that the enforceability of -------- the remedies contained in the Pledge Agreement is subject to compliance by the Administrative Agent (or any Person acquiring rights from the Administrative Agent) with the provisions of Section 4.06 thereof. 7.07 Use of Credit. Neither the Company nor any of its Subsidiaries ------------- is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock, and no part of the proceeds of any extension of credit hereunder will be used to buy or carry any Margin Stock. 7.08 ERISA. No ERISA Event has occurred or is reasonably likely to ----- occur that, when taken together with all other such ERISA Events for which liability is reasonably likely to occur, could reasonably be expected to result in a Material Adverse Effect. 7.09 Taxes, Etc. ---------- (a) The Company and its Subsidiaries are members of an affiliated group of corporations filing consolidated returns for Federal income tax purposes, of which the Company is the "common parent" (within the meaning of Section 1504 of the Code) of such group. The Company and its Subsidiaries have filed all Federal income tax returns and all other material tax returns that are required to be filed by them and have paid all taxes due pursuant to such returns or pursuant to any assessment except (a) taxes that are being contested in good faith by appropriate proceedings and for which the Company or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do Credit Agreement ---------------- -41- so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of taxes and other governmental charges are, in the opinion of the Company, adequate. The Company has not given or been requested to give a waiver of the statute of limitations relating to the payment of Federal, state, local and foreign taxes or other impositions. (b) The Company has heretofore furnished to each Lender a true and complete copy of each tax sharing agreement as in effect on the date hereof between any of the Company, any Affiliate or any Material Subsidiary (collectively, the "Tax Sharing Agreements"). The Tax Sharing Agreements and ---------------------- the implementation thereof are and will be in compliance with applicable laws and regulations (including, without limitation, the Code). (c) Under the Tax Sharing Agreements, the Company receives payments each year in amounts at least equal to the excess of (i) the tax liability of the Company's consolidated group, over (ii) the Company's tax liability computed on a separate return basis as if the Company were a stand alone corporation that derived no income from its subsidiaries. 7.10 Investment Company Act. Neither the Company nor any of its ---------------------- Subsidiaries is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 7.11 Public Utility Holding Company Act. Neither the Company nor any ---------------------------------- of its Subsidiaries is a "holding company", or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended. 7.12 Environmental Matters. Except as set forth in Schedule I --------------------- hereto, each of the Company and its Subsidiaries has obtained all environmental, health and safety permits, licenses and other authorizations required under all Environmental Laws to carry on its business as now being or as proposed to be conducted, except to the extent failure to have any such permit, license or authorization would not have a Material Adverse Effect. Except as set forth in Schedule I hereto, each of such permits, licenses and authorizations is in full force and effect and each of the Company and its Subsidiaries is in material compliance with the terms and conditions thereof, and is also in compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Environmental Law or in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, except to the extent failure to comply therewith would not have a Material Adverse Effect. In addition, no notice, notification, demand, request for information, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending or threatened by any governmental or other entity Credit Agreement ---------------- -42- with respect to any alleged failure by the Company or any of its Subsidiaries to have any environmental, health or safety permit, license or other authorization required under any applicable Environmental Law in connection with the conduct of the business of the Company or any of its Subsidiaries or with respect to any generation, treatment, storage, recycling, transportation, discharge or disposal, or any Release of any Hazardous Materials generated by the Company or any of its Subsidiaries. There have been no environmental investigations, studies, audits, tests, reviews or other analyses conducted by or that are in the possession of the Company or any of its Subsidiaries in relation to any site or facility now or previously owned, operated or leased by the Company or any of its Subsidiaries which have not been made available to the Lenders. 7.13 Title to Assets. --------------- (a) Each of the Company and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. (b) Each of the Company and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Company and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 7.14 True and Complete Disclosure. The Company has disclosed to the ---------------------------- Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the reports, financial statements, certificates or other information furnished by or on behalf of the Company to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Section 8. Covenants of the Company. The Company covenants and ------------------------ agrees with the Lenders and the Administrative Agent that, so long as any Loan is outstanding and until payment in full of all amounts payable by the Company hereunder: 8.01 Financial Statements, Etc. The Company will deliver to each of ------------------------- the Lenders: Credit Agreement ---------------- -43- (a) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of the Company, consolidated and consolidating statements of income and consolidated statements of stockholders' equity and cash flow of the Company and its Consolidated Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries as at the end of such period, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries, and said consolidating statements of income and balance sheets fairly present the individual unconsolidated financial condition and results of operations of the Company, in each case in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such period (subject to normal year-end audit adjustments); (b) as soon as available and in any event within 90 days after the end of each fiscal year of the Company, consolidated and consolidating statements of income and consolidated statements of stockholders' equity and cash flow of the Company and its Consolidated Subsidiaries for such fiscal year and the related consolidated and consolidating balance sheets of the Company and its Consolidated Subsidiaries as at the end of such fiscal year, setting forth in each case in comparative form the corresponding consolidated and consolidating figures for the preceding fiscal year, and accompanied (i) in the case of said consolidated statements and balance sheet of the Company, by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that said consolidated financial statements fairly present the consolidated financial condition and results of operations of the Company and its Consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with generally accepted accounting principles, and a certificate of such accountants stating that, in making the examination necessary for their opinion, they obtained no knowledge, except as specifically stated, of any Default, and (ii) in the case of said consolidating statements and balance sheets, to the extent that they relate to the Company on a parent company stand alone basis, by a certificate of a senior financial officer of the Company, which certificate shall state that said consolidating statements of income and balance sheets fairly present the individual unconsolidated financial condition and results of operations of the Company, in each case in accordance with generally accepted accounting principles, consistently applied, as at the end of, and for, such fiscal year; Credit Agreement ---------------- -44- (c) as soon as available and in any event within 45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of FATICO, Statutory Statements of FATICO (prepared in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority) for such fiscal period, accompanied by a certificate of a senior financial officer of FATICO which certificate shall state that such financial statements present the financial condition of FATICO in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority; (d) as soon as available and in any event within 60 days after the end of each fiscal year of FATICO, the annual Statutory Statement of FATICO (prepared in accordance with statutory accounting practices required or permitted by the Applicable Insurance Regulatory Authority) for such year and as filed with the Insurance Department of the State of California, accompanied by (i) a certificate of a senior financial officer of FATICO stating that said Statutory Statement presents the financial condition of FATICO in accordance with the statutory accounting practices required or permitted by the applicable Insurance Regulatory Authority, (ii) a certificate of a senior financial officer of FATICO, affirming the adequacy of Reserves of FATICO as at the end of such fiscal year and (iii) a report by Milliman & Robertson, Inc. affirming the adequacy of Reserves of FATICO as at the end of such fiscal year; (e) promptly upon their becoming available, copies of all registration statements and regular periodic reports, if any, which the Company shall have filed with the Securities and Exchange Commission (or any governmental agency substituted therefor) or any national securities exchange; (f) promptly upon the mailing thereof to the shareholders of the Company generally, copies of all financial statements, reports and proxy statements so mailed; (g) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Company and its Subsidiaries in an aggregate amount exceeding $10,000,000; (h) as soon as received by the Company, a copy of any final financial examination report (including, without limitation, any report in respect of any tri-annual examination conducted by any Applicable Insurance Regulatory Authority) or market conduct examination report issued by or prepared for any governmental authority (including any Applicable Insurance Regulatory Authority and NAIC) with respect to any Insurance Company that is a Material Subsidiary; and to the extent disclosure to the Lenders is permitted by law, a copy of any financial examination report issued by or prepared for any governmental authority (including any Applicable Credit Agreement ---------------- -45- Bank Regulatory Authority) with respect to the Company, First American Trust or First Security Thrift; (i) immediately, notice of actual (or threatened action that could lead to the) suspension, termination or revocation of any License of any Insurance Company which is a Material Subsidiary by any governmental authority (including any Applicable Insurance Regulatory Authority), including any notice by any governmental authority of the commencement of any proceeding, hearing or administrative action to suspend, terminate or revoke any such License as a result of the failure by any such Insurance Company to take or refrain from taking, any action which adversely affects the authority of such Insurance Company to conduct its business after notice thereof by such governmental authority (including any such Applicable Insurance Regulatory Authority); (j) promptly after the Company knows or has reason to believe that any insurance, banking or other regulator having jurisdiction over the Company or any of its Material Subsidiaries has commenced any proceeding, issued any order, given notice of a formal hearing, sought relief from any court or taken any similar action with respect to the Company or any of its Material Subsidiaries that seeks to, or would, result in the revocation of any license or authorization of the Company or any of its Material Subsidiaries or materially restrict the ability of the Company or any of its Material Subsidiaries to do business in any jurisdiction, a notice describing in reasonable detail such proceeding, order, hearing or similar action; (k) at the time it furnishes statements pursuant to paragraph (a) or (b) above, a certificate of a senior financial officer of the Company which certificate shall list all Subject Property (as such term is defined in Section 8.14 hereof) acquired by the Company and its Subsidiaries during the most recently ended fiscal quarter; (l) immediately, but in any event no later than five days after the Company knows that any Applicable Bank Regulatory Authority's specification by regulation of capital levels results in First Security Thrift being designated an "undercapitalized," "significantly undercapitalized" or "critically undercapitalized" institution pursuant to 12 U.S.C. 1831o, a notice identifying such designation and describing in reasonable detail the computations necessary to determine such designation; (m) promptly after the Company knows or has reason to believe that any Default has occurred, a notice of such Default describing the same in reasonable detail and, together with such notice or as soon thereafter as possible, a description of the action that the Company has taken or proposes to take with respect thereto; Credit Agreement ---------------- -46- (n) from time to time such other information regarding the financial condition, operations, business or prospects of the Company or any of its Subsidiaries (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA) as any Lender or the Agent may reasonably request; and (o) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect. The Company will furnish to each Lender, at the time it furnishes each set of financial statements pursuant to paragraph (a) or (b) above, a certificate of a senior financial officer of the Company (i) to the effect that no Default has occurred and is continuing (or, if any Default has occurred and is continuing, describing the same in reasonable detail and describing the action that the Company has taken or proposes to take with respect thereto) and (ii) setting forth in reasonable detail the computations necessary to determine (x) Deferred Revenues (but only to the extent not already reflected as a discrete item in the set of financial statements furnished with such certificate) and (y) whether the Company is in compliance with Sections 8.08, 8.09, and 8.10 hereof, as of the end of the respective quarterly fiscal period or fiscal year. 8.02 Litigation. The Company will promptly give to each Lender ---------- notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect of such legal or other proceedings, affecting the Company or any of its Subsidiaries, except proceedings which, if adversely determined, would not have a Material Adverse Effect. Without limiting the generality of the foregoing, the Company will give to each Lender notice of the assertion of any Environmental Claim by any Person against, or with respect to the activities of, the Company or any of its Subsidiaries and notice of any alleged violation of or non-compliance with any Environmental Laws or any permits, licenses or authorizations, other than any Environmental Claim or alleged violation which, if adversely determined, would not have a Material Adverse Effect. 8.03 Existence, Etc. (a) The Company will, and will cause each of -------------- its Material Subsidiaries to: (i) preserve and maintain its legal existence and all of its material rights, privileges, licenses and franchises; and (ii) maintain all of its Properties used or useful (in the good faith opinion of the Company) in its business in good working order and condition, ordinary wear and tear excepted. Credit Agreement ---------------- -47- (b) The Company will, and will cause each of its Subsidiaries to: (i) comply with the requirements of all applicable laws, rules, regulations and orders of governmental or regulatory authorities if failure to comply with such requirements could have a Material Adverse Effect; (ii) pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves (as required by generally accepted accounting principles or statutory accounting practices, as the case may be) are being maintained; (iii) keep adequate records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles or statutory accounting practices, as the case may be, consistently applied; and (iv) permit representatives of any Lender or the Agent, during normal business hours under guidance from officers of the Company or its Subsidiaries, to examine, copy and make extracts from its books and records, to inspect any of its Properties, and to discuss its business and affairs with its officers, all to the extent reasonably requested by such Lender or the Agent (as the case may be). 8.04 Insurance. The Company will, and will cause each of its --------- Subsidiaries to, keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business similarly situated against loss or damage of the kinds and in the amounts customarily insured against by such corporations and carry such other insurance as is usually carried by such corporations. 8.05 Fundamental Changes. The Company will not, and will not permit ------------------- any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all its assets, or all or substantially all of the stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Subsidiary may merge into the Company in a transaction in which the Company is the surviving corporation, (ii) any Subsidiary may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Company or to another Subsidiary and (iv) any Subsidiary may liquidate or dissolve if the Company determines in good faith that such liquidation or dissolution is in the best Credit Agreement ---------------- -48- interests of the Company and is not materially disadvantageous to the Lenders; provided that any such merger involving a Subsidiary shall not be permitted - -------- unless the Company or another Subsidiary shall have owned not less than 90% of the voting stock of such Subsidiary immediately prior to such merger. 8.06 Limitation on Liens. The Company will not, nor will it permit ------------------- any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except: (a) Liens created pursuant to the Pledge Agreement; (b) Liens in existence on the date hereof; (c) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or the affected Subsidiaries, as the case may be, in accordance with generally accepted accounting principles (or, in the case of an Insurance Company, statutory accounting practices); (d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings and Liens securing judgments but only to the extent for an amount and for a period not resulting in an Event of Default under clause (h) of Section 9 hereof; (e) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation; (f) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds, casualty insurance policies of the type usually carried by corporations engaged in businesses or activities that are the same as or similar to those of the Company and its Subsidiaries and other obligations of a like nature incurred in the ordinary course of business; (g) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title thereto which, in the aggregate, are not material in amount, and Credit Agreement ---------------- -49- which do not in any case materially detract from the value of the Property subject thereto or interfere with the ordinary conduct of the business of the Company or any of its Subsidiaries; (h) Liens upon Property of any corporation which becomes a Subsidiary of the Company after the date hereof, provided that such Liens are in -------- existence at the time such corporation becomes a Subsidiary of the Company and were not created in anticipation thereof; (i) Liens upon tangible personal Property used primarily in the ordinary course of the business of the Company and its Subsidiaries and acquired after the date hereof; (j) Liens upon real Property used to secure Indebtedness permitted by Section 8.07(i) hereof; (k) Liens upon the Property of First American Trust and First American Title & Trust Company which are created in the ordinary course of their respective financial services businesses as such businesses are conducted as of the date hereof; (l) Liens upon Property of the Company or any Subsidiary which are created pursuant to real estate exchange transactions (benefitting from the tax treatment of Section 1031 of the Code) in the ordinary course of their respective financial services businesses as such businesses are conducted as of the date hereof; (m) Liens upon Property of any Subsidiary of the Company securing Indebtedness of such Subsidiary to the Company or another Subsidiary of the Company that is the direct or indirect parent entity of such Subsidiary permitted by Section 8.07 hereof; (n) Liens upon Property of the Company or any of its Subsidiaries securing Arbitrage Loans; provided that no such Lien shall extend to or -------- cover any such Property other than the securities and/or other investments in which the proceeds of such Arbitrage Loans have been invested; and (o) any extension, renewal or replacement of the foregoing, provided -------- however, that the Liens permitted hereunder shall not be spread to cover any additional Indebtedness or Property (other than a substitution of like Property). 8.07 Indebtedness. The Company will not permit any of its ------------ Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness except: Credit Agreement ---------------- -50- (a) Indebtedness outstanding on the date hereof; (b) Indebtedness of Subsidiaries secured by Liens permitted under Section 8.06(h) hereof up to but not exceeding $50,000,000 at any one time outstanding; (c) Indebtedness of the Company to any Subsidiary of the Company, or Indebtedness of any Subsidiary of the Company to the Company or to any other Subsidiary of the Company; (d) Arbitrage Loans; (e) Indebtedness of FATICO, First American Title Guaranty Holding Company and First American Home Buyers Protection Corporation with respect to Minority Stockholders Put Obligations; (f) Indebtedness of FAREISI and FATICO to the Company representing intercompany loans made by the Company from net proceeds received by the Company from its Equity Issuances; (g) additional Indebtedness of the Insurance Companies in respect of letters of credit (or similar instruments) and Guarantees issued in the ordinary course of the title insurance business in connection with settlement of title insurance claims, so long as the aggregate amount of all such Indebtedness does not exceed $10,000,000 at any one time outstanding; (h) Indebtedness of Subsidiaries in respect of letters of credit (or similar instruments) and guarantees issued in connection with settlement or administration of claims made against any of its Subsidiary under insurance policies of the type usually carried by corporations engaged in businesses or activities that are the same as or similar to those of the Company and its Subsidiaries; (i) Indebtedness incurred by any Subsidiary used to acquire real Property to be occupied by such Subsidiary, so long as the aggregate amount of any such Indebtedness does not exceed 80% of the book value of such real property; (j) additional Indebtedness of Subsidiaries not exceeding 20% of Total Stockholder's Equity; (k) Obligations under Sale/Leaseback Transactions permitted by Section 8.16 hereof; and Credit Agreement ---------------- -51- (l) any extension, renewal or refinancing of the foregoing. 8.08 Total Stockholders' Equity. The Company will not permit Total -------------------------- Stockholders' Equity to be less than $285,000,000 at any time. 8.09 Total Debt to Total Capitalization. The Company will not permit ---------------------------------- Total Debt at any time to exceed 40% of Total Capitalization. 8.10 Minimum Combined Earnings. The Company will not permit Combined ------------------------- Earnings for any period of eight consecutive rolling fiscal quarters to be less than $70,000,000 at any time. 8.11 Lines of Business. The Company will not permit, nor will it ----------------- permit any of its Subsidiaries to, (a) engage to any substantial extent in any line or lines of business activity other than the businesses it was engaged in on the date hereof or (b) expand into any new markets or product lines substantially different from those in which it was engaged as of the date hereof. 8.12 Transactions with Affiliates. The Company will not, and will ---------------------------- not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices and on terms and conditions not less favorable to the Company or such Subsidiary than could be obtained on an arm's-length basis from unrelated third parties, and (b) transactions between or among the Company and its Wholly Owned Subsidiaries not involving any other Affiliate. 8.13 Use of Proceeds, Etc. The proceeds of the Loans will be used -------------------- for general corporate purposes. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of Governors of the Federal Reserve System, including Regulations G, U and X. 8.14 Foreclosure; Etc. The Company will not, nor will it permit any ---------------- of its Subsidiaries to, acquire ownership or control of any commercial real property with a fair market value of $1,000,000 or more and which is used for commercial purposes by means of the exercise of any right of foreclosure, power of sale or similar remedy it may avail itself of by way of any indenture of mortgage or similar instrument relating to such commercial real property (the "Subject Property"), or accept a deed to the Subject Property in lieu of - ----------------- foreclosure or in settlement of any title insurance claim against it, unless the Company shall have theretofore caused a Phase I Environmental Review (as defined below) with respect to the Subject Property to be conducted. As used herein, the term "Phase I Environmental Review" ---------------------------- Credit Agreement ---------------- -52- shall mean an environmental survey and assessment prepared by an independent engineer selected by the Company expert in the identification and analysis of environmental risks (such engineer and his agents being referred to as the "Environmental Consultant"), such survey and assessment to (a) estimate current ------------------------ liabilities and assess potential sources of future liabilities of any owner or operator of, or any other Person having control of, the Subject Property arising under the Comprehensive Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, in each case as amended, and any other act or regulation of any Federal, state or local environmental authority having authority in respect of the Subject Property and (b) be based upon (i) a physical on-site inspection by the Environmental Consultant of the Subject Property (without any excavation of the Subject Property), (ii) interviews by the Environmental Consultant of individuals who have direct managerial responsibility for operations on the Subject Property, (iii) a review by the Environmental Consultant of records relating to current and historical operations conducted at the Subject Property and (iv) as deemed appropriate by the Environmental Consultant, interviews by the Environmental Consultant of individuals in the area in which the Subject Property is located who may have knowledge of current and historical operations conducted at the Subject Property. The Company agrees to provide to any Lender a copy of such Environmental Review within 60 days of any request by such Lender therefor. 8.15 Communication with Accountants. The Company agrees to permit ------------------------------ the Agent (on behalf of the Lenders) to communicate through a financial officer of the Company with its independent certified public accountants (if no Event of Default has occurred and is continuing), after the Agent obtains the prior consent of the Company (which consent may be oral or written) and further agrees to authorize such accountants on a case by case basis to disclose to the Lenders through the Agent any and all financial statements and other supporting financial documents and schedules, including copies of any management letter with respect to the business, financial condition, and other affairs of the Company and any of its Subsidiaries which may be reasonably requested; provided -------- however, that, after the occurrence and during the continuance of any Event of - ------- Default, the Agent shall not be required to obtain the consent of the Company in order to engage in any direct discussions with such accountants, but the Agent shall be required to provide the Company with the opportunity to participate in such meetings. 8.16 Sale/Leaseback Transactions. The Company will not nor will it --------------------------- permit any of its Subsidiaries to enter into any arrangement with any Person whereby the Company or any of its Subsidiaries shall sell or otherwise transfer any of its Property and thereafter rent or lease such Property or similar Property for substantially the same use or uses as the Property sold or transferred (each such arrangement, a "Sale/Leaseback Transaction") if, as a -------------------------- result thereof, the aggregate amount of rent and lease payments payable in any fiscal year by the Company and its Subsidiaries under all such arrangements would exceed $25,000,000. Credit Agreement ---------------- -53- Section 9. Events of Default. If one or more of the following events ----------------- (herein called "Events of Default") shall occur and be continuing: ----------------- (a) The Company shall default in the payment when due (whether at stated maturity or upon mandatory or optional prepayment) of any principal of any Loan; or the Company shall default in the payment when due of any interest on any Loan or any fee or any other amount payable by it hereunder or under any other Basic Document and such default shall continue unremedied for three Business Days; or (b) The Company or any of its Subsidiaries shall default in the payment when due (beyond any applicable period of grace expressly set forth in the governing documents) of any principal of or interest on any of its other Indebtedness aggregating $10,000,000 or more, or in the payment when due of any amount under any Interest Rate Protection Agreement; or any event specified in any note, agreement, indenture or other document evidencing or relating to any such Indebtedness or any event specified in any Interest Rate Protection Agreement shall occur if the effect of such event is to cause, or (with the giving of any notice or the lapse of time or both) to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, such Indebtedness to become due, or to be prepaid in full (whether by redemption, purchase, offer to purchase or otherwise), prior to its stated maturity or to have the interest rate thereon reset to a level so that securities evidencing such Indebtedness trade at a level specified in relation to the par value thereof or, in the case of an Interest Rate Protection Agreement, to permit the payments owing under such Interest Rate Protection Agreement to be liquidated; or (c) Any representation, warranty or certification made or deemed made herein or in any other Basic Document (or in any modification or supplement hereto or thereto) by the Company, or any certificate furnished to any Lender or the Administrative Agent pursuant to the provisions hereof or thereof, shall prove to have been false or misleading as of the time made or furnished in any material respect; or (d) The Company shall default in the performance of any of its obligations under any of Sections 8.01(l), 8.05, 8.06, 8.07, 8.08, 8.09, 8.10, 8.12, or 8.14 hereof; or the Company shall default in the performance of any of its obligations under Section 4.02 of the Pledge Agreement; or the Company shall default in the performance of any of its other obligations in this Agreement or any other Basic Document and such default shall continue unremedied for a period of thirty days after notice thereof to the Company by the Administrative Agent or any Lender (through the Administrative Agent); or Credit Agreement ---------------- -54- (e) The Company or any of its Subsidiaries shall admit in writing its inability to, or be generally unable to, pay its debts as such debts become due; or (f) The Company or any of its Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee, examiner or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code or (vi) take any corporate action for the purpose of effecting any of the foregoing; or (g) A proceeding or case shall be commenced, without the application or consent of the Company or any of its Subsidiaries, in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, dissolution, arrangement or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, trustee, examiner, liquidator or the like of the Company or such Subsidiary or of all or any substantial part of its Property, or (iii) similar relief in respect of the Company or such Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against the Company or such Subsidiary shall be entered in an involuntary case under the Bankruptcy Code; or (h) A final judgment or judgments for the payment of money in excess of $5,000,000 in the aggregate (exclusive of judgment amounts fully covered by insurance where the insurer has admitted liability in respect of such judgment) or in excess of $20,000,000 in the aggregate (regardless of insurance coverage) shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against the Company or any of its Subsidiaries and the same shall not be discharged (or provision shall not be made for such discharge), or a stay of execution thereof shall not be procured, within 30 days from the date of entry thereof and the Company or the relevant Subsidiary shall not, within said period of 30 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; or Credit Agreement ---------------- -55- (i) Any ERISA Event shall have occurred that, in the opinion of the Majority Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be expected to have a Material Adverse Effect; or (j) A reasonable basis shall exist for the assertion against the Company or any of its Subsidiaries of (or there shall have been asserted against the Company or any of its Subsidiaries) claims or liabilities, whether accrued, absolute or contingent, based on or arising from the generation, storage, transport, handling or disposal of Hazardous Materials by the Company or any of its Subsidiaries or Affiliates, or any predecessor in interest of the Company or any of its Subsidiaries or Affiliates, or relating to any site or facility owned, operated or leased by the Company or any of its Subsidiaries or Affiliates, which claims or liabilities (insofar as they are payable by the Company or any of its Subsidiaries but after deducting any portion thereof which is reasonably expected to be paid by other creditworthy Persons jointly and severally liable therefor), in the judgment of the Majority Lenders are reasonably likely to be determined adversely to the Company or any of its Subsidiaries, and the amount thereof is, singly or in the aggregate, reasonably likely to have a Material Adverse Effect; or (k) During any period of 25 consecutive calendar months, a majority of the Board of Directors of the Company shall no longer be composed of individuals (i) who were members of said Board on the first day of such period, (ii) whose election or nomination to said Board was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of said Board or (iii) whose election or nomination to said Board was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of said Board; or (l) Except for expiration in accordance with its terms, the Pledge Agreement shall be terminated or shall cease to be in full force and effect, for whatever reason; or (m) The Company or any of its Subsidiaries shall be required by any Applicable Bank Regulatory Authority, any Applicable Insurance Regulatory Authority or any other similar governmental regulatory authority to enter into, after the date hereof, any indenture, agreement, instrument or other arrangement (including, without limitation, any capital maintenance agreement) that, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the incurrence or payment of Indebtedness, the granting of Liens, the declaration or payment of dividends, the making of loans, advances or Investments or the sale, assignment, transfer or other disposition of Property or requires the making of capital contributions to, or other Investments in, any such Subsidiary in an aggregate amount exceeding $5,000,000; Credit Agreement ---------------- -56- THEREUPON: (1) in the case of an Event of Default other than one referred to in clause (f) or (g) of this Section 9 with respect to the Company, the Administrative Agent may and, upon request of the Majority Lenders, shall, by notice to the Company, terminate the Revolving Credit Commitments and/or declare the principal amount then outstanding of, and the accrued interest on, the Loans and, in the case of the Fixed Rate Loan, to the extent lawful, the applicable Make-Whole Amount and all other amounts payable by the Company hereunder and under the Notes (including, without limitation, any amounts payable under Section 5.05 hereof) to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company; and (2) in the case of the occurrence of an Event of Default referred to in clause (f) or (g) of this Section 9 with respect to the Company, the Revolving Credit Commitments shall automatically be terminated and the principal amount then outstanding of, and the accrued interest on, the Loans and, in the case of the Fixed Rate Loan, to the extent lawful, the applicable Make-Whole Amount and all other amounts payable by the Company hereunder and under the Notes (including without limitation, any amounts payable under Section 5.05 hereof) shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Company. Section 10. The Administrative Agent. ------------------------ 10.01 Appointment, Powers and Immunities. Each Lender hereby ---------------------------------- irrevocably appoints and authorizes the Administrative Agent to act as its agent hereunder and under the other Basic Documents with such powers as are specifically delegated to the Administrative Agent by the terms of this Agreement and of the other Basic Documents, together with such other powers as are reasonably incidental thereto. The Administrative Agent (which term as used in this sentence and in Section 10.05 and the first sentence of Section 10.06 hereof shall include reference to its affiliates and its own and its affiliates' officers, directors, employees and agents): (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Basic Documents, and shall not by reason of this Agreement or any other Basic Document be a trustee for any Lender; (b) shall not be responsible to the Lenders for any recitals, statements, representations or warranties contained in this Agreement or in any other Basic Document, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Basic Document, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any Note or any other Basic Document or any other document referred to or provided for herein or therein or for any failure by the Company or any other Person to perform any of its obligations hereunder or thereunder; (c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder or under any other Basic Document; and (d) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other Basic Document or under any other document or instrument referred to or provided for herein Credit Agreement ---------------- -57- or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct. The Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith. The Administrative Agent may deem and treat the payee of any Note as the holder thereof for all purposes hereof unless and until a notice of the assignment or transfer thereof shall have been filed with the Administrative Agent, together with the consent of the Company to such assignment or transfer (to the extent provided in Section 11.06(b) hereof). 10.02 Reliance by Administrative Agent. The Administrative Agent -------------------------------- shall be entitled to rely upon any certification, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Administrative Agent. As to any matters not expressly provided for by this Agreement or any other Basic Document, the Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Majority Lenders, and such instructions of the Majority Lenders and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. 10.03 Defaults. The Administrative Agent shall not be deemed to have -------- knowledge or notice of the occurrence of a Default (other than the non-payment of principal of or interest on Loans or of commitment fees) unless the Administrative Agent has received notice from a Lender or the Company specifying such Default and stating that such notice is a "Notice of Default". In the event that the Administrative Agent receives such a notice of the occurrence of a Default, the Administrative Agent shall give prompt notice thereof to the Lenders (and shall give each Lender prompt notice of each such non-payment). The Administrative Agent shall (subject to Section 10.07 hereof) take such action with respect to such Default as shall be directed by the Majority Lenders, provided that, unless and until the Administrative Agent shall have -------- received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Lenders except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Majority Lenders or all of the Lenders. 10.04 Rights as a Lender. With respect to its Commitment and the ------------------ Loans made by it, Chase (and any successor acting as Administrative Agent) in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as the Administrative Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include the Administrative Agent in its individual capacity. Chase (and any successor acting as Administrative Agent) and Credit Agreement ---------------- -58- its affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, trust or other business with the Company (and any of its Subsidiaries or Affiliates) as if it were not acting as the Administrative Agent, and Chase and its affiliates may accept fees and other consideration from the Company for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. 10.05 Indemnification. The Lenders agree to indemnify the --------------- Administrative Agent (to the extent not reimbursed under Section 11.03 hereof, but without limiting the obligations of the Company under said Section 11.03, ratably in accordance with the aggregate principal amount of the Fixed Rate Loans, Revolving Credit Loans, and unused Revolving Credit Commitments held by the Lenders, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Administrative Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Basic Document or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including, without limitation, the costs and expenses that the Company is obligated to pay under Section 11.03 hereof, but excluding, unless a Default has occurred and is continuing, normal administrative costs and expenses incident to the performance of its agency duties hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided that no Lender -------- shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified. 10.06 Non-Reliance on Administrative Agent and Other Lenders. Each ------------------------------------------------------ Lender agrees that it has, independently and without reliance on the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Company and its Subsidiaries and decision to enter into this Agreement and that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement. The Administrative Agent shall not be required to keep itself informed as to the performance or observance by the Company of this Agreement or any of the other Basic Documents or any other document referred to or provided for herein or therein or to inspect the Properties or books of the Company or any of its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Company or any of its Subsidiaries (or any of Credit Agreement ---------------- -59- their affiliates) that may come into the possession of the Administrative Agent or any of its affiliates. 10.07 Failure to Act. Except for action expressly required of the -------------- Administrative Agent hereunder and under the other Basic Documents, the Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Section 10.05 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. 10.08 Resignation or Removal of Administrative Agent. Subject to the ---------------------------------------------- appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Company, and the Administrative Agent may be removed at any time with or without cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent's giving of notice of resignation or the Majority Lenders' removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, that shall be a bank which has an office in New York, New York with a combined capital and surplus of at least $1,000,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 10 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Administrative Agent. 10.09 Consents under Basic Documents. The Administrative Agent may, ------------------------------ with the prior consent of the Majority Lenders (but not otherwise), consent to any modification, supplement or waiver under any of the Basic Documents (other than this Agreement), provided that, without the prior consent of each Lender, -------- the Administrative Agent shall not (except as provided herein or in the Pledge Agreement) release any collateral or otherwise terminate any Lien under the Pledge Agreement, or agree to additional obligations being secured by such collateral security (unless the Lien for such additional obligations shall be junior to the Lien in favor of the other obligations secured by the Pledge Agreement), except that no such consent shall be required, and the Administrative Agent is hereby authorized, to release any Lien covering Property which is the subject of a disposition of Property permitted hereunder or to which the Majority Lenders have consented. Credit Agreement ---------------- -60- Section 11. Miscellaneous. ------------- 11.01 Waiver. No failure on the part of the Administrative Agent or ------ any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or any Note shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or any Note preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. 11.02 Notices. All notices, requests and other communications ------- provided for herein and under the Pledge Agreement (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof; or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. 11.03 Expenses, Etc. The Company agrees to pay or reimburse each of ------------- the Lenders and the Administrative Agent for paying: (a) all reasonable out-of- pocket costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel to Chase), in connection with (i) the negotiation, preparation, execution and delivery of this Agreement and the other Basic Documents and the making of the Loans hereunder and (ii) any modification, supplement or waiver of any of the terms of this Agreement or any of the other Basic Documents; (b) all reasonable costs and expenses of the Lenders and the Administrative Agent (including, without limitation, reasonable counsels' fees) in connection with (i) any Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated), or the obligations of the Company hereunder and (ii) the enforcement of this Section 11.03; and (c) all transfer, stamp, documentary or other similar taxes (other than income taxes), assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any of the other Basic Documents or any other document referred to herein or therein and all costs, expenses, taxes (other than income taxes), assessments and other charges incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Basic Document or any other document referred to therein. The Company hereby agrees (i) to indemnify the Administrative Agent and each Lender and their respective directors, officers, employees, attorneys and agents from, and hold Credit Agreement ---------------- -61- each of them harmless against, any and all losses, liabilities, claims, damages or expenses incurred by any of them (including, without limitation, any and all losses, liabilities, claims, damages or expenses incurred by the Administrative Agent to any Lender, whether or not the Administrative Agent or any Lender is a party thereto) arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings) relating to the extensions of credit hereunder or any actual or proposed use by the Company or any of its Subsidiaries of the proceeds of any of the extensions of credit hereunder, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation or litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified) and (ii) not to assert any claim against the Administrative Agent, any Lender, any of their affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to any of the transactions contemplated herein or in any other Basic Document. Without limiting the generality of the foregoing, the Company will indemnify the Administrative Agent and each Lender from, and hold the Administrative Agent and each Lender harmless against, any losses, liabilities, claims, damages or expenses described in the preceding sentence (but excluding, as provided in the preceding sentence, any loss, liability, claim, damage or expense incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified) arising under any Environmental Law as a result of the past, present or future operations of the Company or any of its Subsidiaries (or any predecessor in interest to the Company or any of its Subsidiaries), or the past, present or future condition of any site or facility owned, operated or leased by the Company or any of its Subsidiaries (or any such predecessor in interest), or any Release or threatened Release of any Hazardous Materials from any such site or facility, including any such Release or threatened Release which shall occur during any period when the Administrative Agent or any Lender shall be in possession of any such site or facility following the exercise by the Administrative Agent or any Lender of any of its rights and remedies hereunder or under the Pledge Agreement unless such Release or threatened Release is caused by the Administrative Agent or such Lender. 11.04 Amendments, Etc. Except as otherwise expressly provided in --------------- this Agreement, any provision of this Agreement may be modified or supplemented only by an instrument in writing signed by the Company, the Administrative Agent and the Majority Lenders, or by the Company and the Administrative Agent acting with the consent of the Majority Lenders, and any provision of this Agreement may be waived by the Majority Lenders or by the Administrative Agent acting with the consent of the Majority Lenders; provided that: in addition to the -------- foregoing, (a) no modification, supplement or waiver shall, unless by an instrument signed by all of the Lenders or by the Administrative Agent acting with the consent of all of the Lenders: (i) extend the date fixed for the payment of any fee Credit Agreement ---------------- -62- hereunder, (ii) reduce the rate at which any fee is payable hereunder, (iii) alter the terms of this Section 11.04, (iv) modify the definition of the term "Majority Lenders" or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or to modify any provision hereof, or (v) waive any of the conditions precedent set forth in Section 6 hereof; (b) no modification, supplement or waiver shall, unless by an instrument signed by all of the Revolving Credit Lenders or by the Administrative Agent acting with the consent of all of the Revolving Credit Lenders (i) extend the date fixed for the payment of principal of or interest on any Revolving Credit Loan (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest is payable thereon, (iv) alter the rights or obligations of the Company to prepay Revolving Credit Loans, or (v) modify the definition of the term "Majority Revolving Credit Lenders"; (c) no modification, supplement or waiver shall, unless by an instrument also signed by the Fixed Rate Lender (i) extend the date fixed for the payment of principal of or interest on the Fixed Rate Loan (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest is payable thereon, (iv) alter the rights or obligations of the Company to prepay the Fixed Rate Loan; and (d) any modification or supplement of Section 10 hereof shall require the consent of the Administrative Agent. 11.05 Successors and Assigns. This Agreement shall be binding upon ---------------------- and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 11.06 Assignments and Participations. ------------------------------ (a) The Company may not assign any of its rights or obligations hereunder or under the Notes without the prior consent of all of the Lenders and the Administrative Agent. (b) Each Lender may assign any of its Loans and its Note; provided -------- that (i) no partial assignment of the Fixed Rate Loan (together with the Fixed Rate Note) shall be permitted hereunder; (ii) any such partial assignment (not otherwise prohibited by clause (i) above) shall be in an amount at least equal to $5,000,000; (iii) each such assignment by a Revolving Credit Lender of its Revolving Credit Loans or Revolving Credit Note shall be made in such manner so that the same portion of its Revolving Credit Loans and Revolving Credit Note is assigned to the respective assignee; and (iv) each assignment by a Revolving Credit Lender of its Revolving Credit Loans or Revolving Credit Commitment shall be made in such a manner so that the same portion of its Revolving Credit Loans and Revolving Credit Commitment is assigned to the assignee. Upon execution and delivery by the assignee to the Company and the Administrative Agent of an instrument in writing pursuant to which such assignee agrees to become a "Lender" hereunder (if not already a Lender) having the Loans specified in such instrument, the assignee shall have, to the extent of such assignment, the obligations, rights and benefits of a Lender hereunder holding the Loans (or portions thereof) assigned to it (in addition to the Loans theretofore held by such assignee). Upon each such Credit Agreement ---------------- -63- assignment the assigning Lender shall pay the Administrative Agent an assignment fee of $2,000. (c) A Lender may sell or agree to sell to one or more other Persons a participation in all or any part of its Loans, in which event each purchaser of a participation (a "Participant") which, except as otherwise provided in Section ----------- 4.07(c) hereof, shall not have any other rights or benefits under this Agreement or any Note or any other Basic Document (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreements executed by such Lender in favor of the Participant). All amounts payable by the Company to any Lender under Section 5 hereof in respect of its Loans shall be determined as if such Lender had not sold or agreed to sell any participations in such Loans, and as if such Lender were funding each of such Loan in the same way that it is funding the portion of such Loan in which no participations have been sold. In no event shall a Lender that sells a participation agree with the Participant to take or refrain from taking any action hereunder or under any other Basic Document except that such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (i) extend the date fixed for the payment of principal of or interest on the related Loan or Loans or any portion of any fee hereunder payable to the Participant, (ii) reduce the amount of any such payment of principal, (iii) reduce the rate at which interest is payable thereon, or any fee hereunder payable to the Participant, to a level below the rate at which the Participant is entitled to receive such interest or fee, (iv) alter the rights or obligations of the Company to prepay the related Loans or (v) consent to any modification, supplement or waiver hereof or of any of the other Basic Documents to the extent that the same, under Section 10.09 or 11.04 hereof, requires the consent of each Lender. (d) In addition to the assignments and participations permitted under the foregoing provisions of this Section 11.06, any Lender may assign and pledge all or any portion of its Loan and its Note to any Federal Reserve Bank as collateral security pursuant to Regulation A and any Operating Circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder. (e) Subject to Section 11.12 hereof, a Lender may furnish any information concerning the Company or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants). (f) Anything in this Section 11.06 to the contrary notwithstanding, no Lender may assign or participate any interest in any Loan held by it hereunder to the Company or any of its Affiliates or Subsidiaries without the prior written consent of each Lender. 11.07 Survival. The obligations of the Company under Sections 5.01, -------- 5.05, 5.06 and 11.03 hereof, the obligations of the Lenders under Section 10.05 hereof and, to the Credit Agreement ---------------- -64- extent set forth in Section 5.10 of the Pledge Agreement, the provisions of Section 10 hereof shall survive the repayment of the Loans and the termination of the Revolving Credit Commitments. In addition, each representation and warranty made, or deemed to be made by the notice of borrowing, herein or pursuant hereto shall survive the making of such representation and warranty, and no Lender shall be deemed to have waived, by reason of making its Loan, any Default which may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that such Lender or the Administrative Agent may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such Loan was made. 11.08 Captions. The table of contents and captions and section -------- headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement. 11.09 Counterparts. This Agreement may be executed in any number of ------------ counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart. 11.10 Governing Law; Submission to Jurisdiction. This Agreement and ----------------------------------------- the Notes shall be governed by, and construed in accordance with, the law of the State of New York. The Company hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. The Company irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 11.11 Waiver of Jury Trial. EACH OF THE COMPANY, THE ADMINISTRATIVE -------------------- AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 11.12 Treatment of Certain Information; Confidentiality. ------------------------------------------------- (a) The Company acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Company or one or more of its Subsidiaries (in connection with this Agreement or otherwise) by any Lender or by one or more subsidiaries or affiliates of such Lender and the Company hereby authorizes each Credit Agreement ---------------- -65- Lender to share any information delivered to such Lender by the Company and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter into this Agreement, to any such subsidiary or affiliate, it being understood that any such subsidiary or affiliate receiving such information shall be bound by the provisions of clause (b) below as if it were a Lender hereunder. (b) Each Lender and the Administrative Agent agrees (on behalf of itself and each of its affiliates, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices, any non- public information supplied to it by the Company pursuant to this Agreement which is identified by the Company as being confidential at the time the same is delivered to the Lenders or the Administrative Agent, provided that nothing -------- herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for any of the Lenders or the Administrative Agent, (iii) to bank examiners, auditors or accountants, (iv) to the Administrative Agent or any other Lender (or to Chase Securities Inc.), (v) in connection with any litigation to which any one or more of the Lenders or the Administrative Agent is a party, (vi) to a subsidiary or affiliate of such Lender as provided in clause (a) above or (vii) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first executes and delivers to the respective Lender a Confidentiality Agreement substantially in the form of Exhibit C hereto; provided, further, that in no -------- ------- event shall any Lender or the Administrative Agent be obligated or required to return any materials furnished by the Company. The obligations of each Lender under this Section 11.12 shall supersede and replace the obligations of such Lender under the confidentiality letter in respect of this financing signed and delivered by such Lender to the Company prior to April 21, 1992. 11.13 Amendment Fees. Anything in this Agreement to the contrary -------------- notwithstanding, the Company, the Administrative Agent and each Lender hereby agrees that any payment of fees after the date hereof by the Company to the Lenders in connection with effecting any amendment hereto (other than an amendment of the type described in Section 11.04(b) or (c) hereof) shall be made for account of all of the Lenders who execute and deliver such amendment in accordance with the respective unpaid principal amounts of the Loans held by them, provided however, that in no event (i) shall the amendment fee payable to -------- the Fixed Rate Lender (for its execution and delivery of any amendment) pursuant to the foregoing provision be less than the greatest amount of any such amendment fee payable to any Revolving Credit Lender and (ii) shall the foregoing provision apply to any payment of any fee to the Administrative Agent. 11.14 Pledge Agreement. ---------------- Credit Agreement ---------------- -66- (a) Amendment to Pledge Agreement. By its signature below, each of ----------------------------- the parties hereto agrees that references to the "Credit Agreement" in the Pledge Agreement shall be deemed to references to this Amended and Restated Credit Agreement. (b) Termination of Pledge Agreement. By its signature below, each of ------------------------------- the parties hereto agrees that upon the repayment of the Fixed Rate Loan and all other amounts owing to the Fixed Rate Lender hereunder (including, without limitation, interest and fees), and upon notice in writing from the Fixed Rate Lender to the Administrative Agent to such effect, the Pledge Agreement shall terminate and no longer be in force and effect. Credit Agreement ---------------- -67- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. THE FIRST AMERICAN FINANCIAL CORPORATION By /s/ THOMAS A. KLEMENS ------------------------------------------ Title: Executive Vice President and Chief Financial Officer By /s/ MARK R. ARNESEN ------------------------------------------ Title: V.P./Secretary Address for Notices: The First American Financial Corporation 114 East Fifth Street Santa Ana, California 92701-4642 Attention: Parker S. Kennedy President Telecopier No.: (714) 647-4427 Telephone No.: (714) 558-3211 Credit Agreement ---------------- -68- LENDERS ------- Revolving Credit THE CHASE MANHATTAN BANK Commitment - ---------------- $18,750,000 By /s/ DEBORAH VAN ZIJL -------------------------- Title: Vice President Lending Office for all Loans: The Chase Manhattan Bank 1 Chase Manhattan Plaza New York, New York 10081 Address for Notices: The Chase Manhattan Bank 1 Chase Manhattan Plaza 8th Floor New York, New York 10081 Attention: Laura Rebecca New York Agency Telecopier No.: (212) 552-7490 Telephone No.: (212) 552-7253 Credit Agreement ---------------- -69- Revolving Credit SANWA BANK CALIFORNIA Commitment - ---------------- $18,750,000 By /s/ RITA RAYCHAUDHURI --------------------- Title: Vice President Lending Office: Sanwa Bank California 15165 Ventura Blvd. Suite 445 Sherman Oaks, CA 91403 Address for Notices: Sanwa Bank California 15165 Ventura Blvd. Suite 445 Sherman Oaks, CA 91403 Attention: Rita Ray Chaydhuri Telecopier No.: (818) 905-1002 Telephone No.: (818) 905-0853 Credit Agreement ---------------- -70- Revolving Credit UNION BANK OF CALIFORNIA, N.A. Commitment - ---------------- $18,750,000 By /s/ D S LAMBELL ---------------------------- Title: Vice President Lending Office: Union Bank of California, N.A. Commercial Portfolio Administration 500 S. Main Street, Suite 201 Orange, California 92868 Address for Notices: Union Bank of California, N.A. Commercial Portfolio Administration 500 S. Main Street, Suite 201 Orange, California 92868 Attention: Douglas S. Lambell Vice President Telecopier No.: (714) 565-5770 Telephone No.: (714) 565-5716 Credit Agreement ---------------- -71- Revolving Credit COMERICA BANK Commitment - ---------------- $18,750,000 By /s/ EMMANUEL SKIVOFILAX -------------------------------- Title: Corporate Banking Officer Lending Office: Comerica Bank 500 Woodward Avenue Detroit, MI 48226 Address for Notices: Comerica Bank 1920 Main Street, Suite 1150 Irvine, CA 92714 Attention: Emmanuel M. Skevofilax Telecopier No.: (714) 476-1222 Telephone No.: (714) 476-1933 Credit Agreement ---------------- -72- Revolving Credit WELLS FARGO BANK, N.A. Commitment - ---------------- $ 0 By /s/ SANDRA MARTIN --------------------- Title: Vice President Address for Notices: Wells Fargo Bank, N.A. 2030 Main Street Suite 900 Irvine, CA 92714 Attention: Sandra Martin Telecopier No.: (714) 261-1830 Telephone No.: (714) 251-4156 Credit Agreement ---------------- -73- Revolving Credit NBD BANK, N.A. Commitment (formerly National Bank of Detroit) - ---------------- $ 0 By /s/ DEBORAH A. PYNE --------------------------- Title: First Vice President Address for Notices: NBD First Chicago 777 S. Figueroa Street 4th Floor Los Angeles, CA 90017-5800 Attention: Thomas C. Williams Managing Director Telecopier No.: (213) 683-6407 Telephone No.: (213) 683-4944 Credit Agreement ---------------- -74- Principal Amount of the THE CANADA LIFE ASSURANCE COMPANY Fixed Rate Loan as of the Effective Date - ----------------------- $6,140,000 CHASE MANHATTAN BANK, AS NOMINEE FOR THE CANADA LIFE ASSURANCE COMPANY By /s/ KENNETH PETERS ---------------------------- Title: Vice President Lending Office: The Canada Life Assurance Company 330 University Avenue, U-6 Toronto, Ontario Canada M5G 1R8 Attention: U.S. Private Placements Address for Notices: The Canada Life Assurance Company 330 University Avenue Toronto, Ontario Canada M5G 1R8 Attention: Supervisor, Securities Accounting Telecopier No.: (416) 597-2609 Telephone No.: (416) 597-1456 Credit Agreement ---------------- -75- THE CHASE MANHATTAN BANK, as Administrative Agent By /s/ DEBORAH VAN ZIJL --------------------- Title: Vice President Address for Notices to Chase as Administrative Agent: The Chase Manhattan Bank 1 Chase Manhattan Plaza 8th Floor New York, New York 10081 Attention: Laura Rebecca New York Agency Telecopier No.: (212) 552-7490 Telephone No.: (212) 552-7253 Schedule I The First American Financial Corporation and Subsidiary Companies Environmental Matters - -None- Schedule II The First American Financial Corporation and Subsidiary Companies Liens Securing Indebtedness Greater Than or Equal to $5,000,000 -None- Schedule III The First American Financial Corporation and Subsidiary Companies Indebtedness Greater Than or Equal to $5,000,000
Description Rate Balance - ------------------------ --------- ------------ Capital Securities (Liquidation Amount $1,000 per 8.50% $100,000,000 Capital Security) issued by First American Capital Trust 1 (the "Trust") pursuant to the Amended and Restated Declaration of Trust dated as of April 22, 1997, among The First American Financial Corporation (the "Company"), as sponsor, Thomas A. Klemens and Parker S. Kennedy, as regular trustees of the Trust, and Wilmington Trust Company, as Delaware trustee and property trustee of the Trust, which Capital Securities, together with the Common Securities of the Trust (collectively, the "Trust Securities"), represent undivided beneficial ownership interests in the $103,093,000 aggregate principal amount of 8.50% Junior Subordinated Debentures due April 15, 2012, issued by the Company pursuant to the Junior Subordinated Indenture dated as of April 22, 1997, between the Company and Wilmington Trust Company, as trustee, and acquired by the Trust. The Company has guaranteed certain payments in respect of the Trust Securities pursuant to the Guarantee Agreement, dated as of April 22, 1997, made by the Company in favor of Wilmington Trust Company, as guarantee trustee for the benefit of the holders of the Trust Securities. Sale/leaseback of furniture, fixtures and equipment 10.34% $16,960,000 pursuant to Master Lease Agreement dated as of December 12, 1994, between the Company and General Electric Capital Corporation, for itself and as agent for certain participants.
EXHIBIT A REVOLVING CREDIT NOTE $18,750,000 July 29, 1997 New York, New York FOR VALUE RECEIVED, THE FIRST AMERICAN FINANCIAL CORPORATION, a California corporation (the "Company"), hereby promises to pay to SANWA BANK ------- CALIFORNIA (the "Lender"), for account of the Lender's respective Applicable ------ Lending Offices provided for by the Credit Agreement (as such term is defined below), at the principal office of The Chase Manhattan Bank in New York, New York, the principal sum of Eighteen Million Seven Hundred Fifty Thousand Dollars (or such lesser amount as shall equal the unpaid principal amount of the Revolving Credit Loans made to the Company under the Credit Agreement and held by the Lender), in lawful money of the United States of America and in immediately available funds, in installments on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each of the Revolving Credit Loans made by the Lender to the Company, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof, provided that the failure of the Lender to make any such recordation or -------- endorsement shall not affect the obligations of the Company to make a payment when due of any amount owing under the Credit Agreement or hereunder in respect of such Loans. This Note is one of the Revolving Credit Notes referred to in the Amendment and Restatement dated as of July 29, 1997 of the Amendment and Restatement dated as of April 28, 1993 of the Credit Agreement dated as of April 21, 1992 (as amended and supplemented from time to time, the "Credit Agreement") ---------------- between the Company, the lenders named therein and The Chase Manhattan Bank, as Administrative Agent, and evidences Revolving Credit Loans made thereunder and held by the Lender and is entitled to the benefits of certain security as further described therein. Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement. -2- The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments of the Loans evidenced hereby upon the terms and conditions specified therein. Except as permitted by Section 11.06(b) of the Credit Agreement, this Note may not be assigned by the Lender to any other Person. This Note shall be governed by, and construed in accordance with, the law of the State of New York. THE FIRST AMERICAN FINANCIAL CORPORATION By_________________________ Title: By_________________________ Title: SCHEDULE OF REVOLVING CREDIT LOANS This Note evidences Revolving Credit Loans made, Continued or Converted under the within-described Credit Agreement, on the dates, in the principal amounts, of the Types, bearing interest at the rates and having Interest Periods (if applicable) of the durations set forth below, subject to the payments, Continuations, Conversions and prepayments of principal set forth below:
Date Loan Made, Amount Paid, Pre- Duration Paid, Pre- Unpaid paid, Con- Principal Type of paid, Con- Prin- tinued or Amount of of Interest Interest tinued or cipal Notation Converted Loan Loan Rate Period Converted Amount Made by - ---------- --------- ---- -------- -------- ---------- ------ --------
EXHIBIT B [Form of Opinion of Counsel to the Company] ___________, 1997 To the Lenders party to the Credit Agreement referred to below and The Chase Manhattan Bank, as Administrative Agent Re: Amended and Restated Credit Agreement Ladies and Gentlemen: I am corporate counsel of The First American Financial Corporation, a California corporation (the "Company"), and have acted in such capacity in ------- connection with the Amendment and Restatement dated as of __________, 1997 to the Amendment and Restatement dated as of April 28, 1993, of the Credit Agreement dated as of April 21, 1992, among the Company, the lenders party thereto and The Chase Manhattan Bank, as Administrative Agent (the "Credit ------ Agreement"). Unless otherwise defined herein, capitalized terms shall have the - --------- meanings given thereto in the Credit Agreement. In rendering the opinions expressed below, I have examined the Credit Agreement and the Notes issued in connection therewith (collectively, the "Credit Documents"), and the originals or conformed copies of such resolutions, - ----------------- corporate records, agreements and instruments of the Company and its Subsidiaries, certificates of public officials and of officers of the Company and its Subsidiaries, and such other documents and records, and such matters of law, as I have deemed appropriate as a basis for the opinions hereinafter expressed. In such examination and investigation, I have assumed the genuineness of all signatures (other than those of officers of the Company), the legal capacity of natural persons, the authenticity of all documents submitted as originals and the conformity to original documents of documents submitted as certified or photostatic copies. I have also assumed that each of the Credit Documents has been or will be duly authorized, executed and delivered by the parties thereto other than the Company and constitutes or will constitute a valid, legal and binding obligation of all such other parties. In rending this opinion, I do not express any opinion concerning any law other than the law of the State of California and the federal law of the United States. Based upon the foregoing and subject to the limitations, qualifications, exceptions and assumptions set forth below, I am of the opinion that: 1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California and has the necessary corporate power to -2- make and perform the Credit Agreement and the Notes and to borrow under the Credit Agreement. 2. The execution, delivery and performance by the Company of the Credit Documents and the borrowing by the Company under the Credit Agreement have been duly authorized by all necessary corporate action, and do not and will not violate any provision of law or regulation or any provision of the Company's charter or bylaws or result in the breach of, or constitute a default or require any consent (other than consents which have been obtained) under, or (except for the Liens created pursuant to the Pledge Agreement) result in the creation of any Lien upon any of the Properties, revenues or assets of the Company pursuant to, any indenture or other agreement or instrument of which I have knowledge (after due inquiry) to which the Company is a party or by which the Company or its Properties may be bound. 3. The Credit Agreement constitutes, and each of the Notes, when executed and delivered for value, will constitute, legal, valid and binding obligations of the Company enforceable against it in accordance with their respective terms, except (a) as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors generally, (b) that the enforceability of such Credit Documents is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing. 4. Except as disclosed to the Lenders prior to the date hereof, there are no legal or arbitral proceedings, and no proceedings by or before any governmental or regulatory authority or agency, pending or (to my knowledge after due inquiry) threatened against or affecting the Company, or any Properties or rights of the Company, which, if adversely determined, would have a Material Adverse Effect. 5. Except for the filing by the Company of the Relevant 8-K Report and copies of the Credit Agreement with the Securities and Exchange Commission and the New York Stock Exchange, Inc., no authorizations, consents, approvals, licenses, filings or registrations with, any governmental or regulatory authority or agency are required in connection with the execution, delivery or performance by the Company for the Credit Documents. 6. Neither the Company nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. 7. The foregoing opinions are also subject to the following additional limitations, qualifications, exceptions and assumptions: -3- a. In rending my opinion in paragraph 3 above, I have assumed that the Credit Documents are governed by the laws of the State of California. b. I express no opinion as to whether or not the execution, delivery or performance by the Company of the Credit Documents will conflict with or result in a breach of, or constitute a default under, any covenant, restriction or provision with respect to financial ratios or tests or any aspect of the financial condition or results of operation of the Company (other than covenants or restrictions that relate to the incurrence of indebtedness and the incurrence of liens) under any indenture or other agreement or instrument. c. I express no opinion as to whether a federal or state court would give effect to the choice of New York law provided for in the Credit Documents. d. In rendering my opinion set forth in paragraph 4, I advise you that I have not conducted any search of any court docket. e. I express no opinion as to (i) Section 4.07(c) of the Credit Agreement, (ii) the second sentence of Section 11.10 of the Credit Agreement insofar as such sentence relates to the subject matter jurisdiction of the United State District Court for the Southern District of New York to adjudicate any controversy related to any of the Credit Documents or (iii) the waiver of inconvenient forum set forth in Section 11.10 of the Credit Agreement with respect to proceedings in the United States District Court for the Southern District of New York. f. I express no opinion as to whether a court would grant specific performance or any other suitable remedy with respect to any Credit Document. However, the Credit Documents contain, in my opinion, adequate remedial provisions for the practical realization of the rights and benefits purported to be afforded thereby. g. The enforceability of Section 11.03 of the Credit Agreement may be limited by laws rendering unenforceable indemnification contrary to federal or state securities laws and the public policy underlying such laws. h. The enforceability of provisions in the Credit Documents to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances. i. I express no opinion as to the effect of the laws of any jurisdiction in which any Lender is located (other than any California) that limits the interest, fees or other charges it may impose. -4- j. To the extent that my opinions set forth above involve factual determinations as to what may, or may not, constitute a Material Adverse Effect, I have relied with your approval upon certifications of the Company. k. I am a member of the Bar of the State of California and do not hold myself out as being conversant with, and express no opinion as to, the laws of any jurisdiction other than those of the United States of America and the State of California. The opinions expressed herein are solely for your benefit (and for the benefit of your successors and assigns) and may not be relied upon in any manner for any purpose by any other person without my prior written consent in each instance. Very truly yours, EXHIBIT C [Form of Confidentiality Agreement] CONFIDENTIALITY AGREEMENT [Date] [Insert Name and Address of Prospective Participant or Assignee] Re: Amended and Restated Credit Agreement dated as of ___________, 1997 (the "Credit Agreement"), between The First American Financial ---------------- Corporation (the "Company"), the lenders named therein and The Chase ------- Manhattan Bank, as Administrative Agent. Dear Ladies and Gentlemen: As a Lender party to the Credit Agreement, we have agreed with the Company pursuant to Section 11.12 of the Credit Agreement to use reasonable precautions to keep confidential, except as otherwise provided therein, all non-public information identified by the Company as being confidential at the time the same is delivered to us pursuant to the Credit Agreement. As provided in said Section 11.12, we are permitted to provide you, as a prospective [holder of a participation in the Loans (as defined in the Credit Agreement)][assignee Lender], with certain of such non-public information subject to the execution and delivery by you, prior to receiving such non-public information, of a Confidentiality Agreement in this form. Such information will not be made available to you until your execution and return to us of this Confidentiality Agreement. Accordingly, in consideration of the foregoing, you agree (on behalf of yourself and each of your affiliates, directors, officers, employees and representatives) that (A) such information will not be used by you except in connection with the proposed [participation][assignment] mentioned above and (B) you shall use reasonable precautions, in accordance with your customary procedures for handling confidential information and in accordance with safe and sound banking practices, to keep such information confidential, provided that -------- nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to your counsel or to counsel for any of the Lenders or the Administrative Agent, (iii) to bank examiners, auditors or accountants, (iv) to the Administrative Agent or any other Lender (or to Chase Securities Inc.), -2- (v) in connection with any litigation to which you or any one or more of the Lenders or the Agent are a party, (vi) to a subsidiary or affiliate of yours as provided in Section 11.12(a) of the Credit Agreement or (vii) to any assignee or participant (or prospective assignee or participant) so long as such assignee or participant (or prospective assignee or participant) first executes and delivers to you a Confidentiality Agreement substantially in the form hereof; provided, -------- further, that in no event shall you be obligated to return any materials - ------- furnished to you pursuant to this Confidentiality Agreement. Please indicate your agreement to the foregoing by signing as provided below the enclosed copy of this Confidentiality Agreement and returning the same to us. Very truly yours, [INSERT NAME OF LENDER] By_________________________ The foregoing is agreed to as of the date of this letter. [INSERT NAME OF PROSPECTIVE PARTICIPANT OR ASSIGNEE] By___________________________ EX-10.1 6 FIRST AMERICAN CAPITAL TRUST I REGISTRATION RIGHTS EXHIBIT 10.1 Composite Conformed Copy FIRST AMERICAN CAPITAL TRUST I 8.50% Capital Securities (liquidation amount $1,000 per Capital Security) guaranteed by The First American Financial Corporation REGISTRATION RIGHTS AGREEMENT ----------------------------- April 22, 1997 CHASE SECURITIES INC. UBS SECURITIES LLC 270 Park Avenue, 8th Floor New York, New York 10017-2070 Dear Sirs: First American Capital Trust I (the "Issuer"), a statutory business trust formed under the Business Trust Act of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801 et seq.), proposes to -- --- issue and sell to Chase Securities Inc. ("CSI") and UBS Securities LLC ("UBS") (together with CSI, the "Initial Purchasers"), upon the terms and subject to the conditions set forth in a purchase agreement dated April 17, 1997 (the "Purchase Agreement"), an aggregate of 100,000 8.50% Capital Securities, liquidation amount $1,000 per Capital Security (the "Capital Securities"). The Capital Securities will be guaranteed by The First American Financial Corporation (the "Company"), to the extent set forth in the Offering Memorandum (as defined below), with respect to distributions and amounts payable upon liquidation or redemption (the "Guarantee"), pursuant to the Guarantee Agreement (the "Guarantee Agreement"), to be dated as of the Closing Date (as defined below), executed and delivered by the Company and Wilmington Trust Company, not in its individual capacity but solely as trustee (the "Guarantee Trustee"), a Delaware banking corporation for the benefit of the holders from time to time of the Capital Securities. The proceeds from the sale of the Capital Securities to the Initial Purchasers will be aggregated with the entire proceeds from the sale by the Issuer to the Company of the 8.50% Common Securities, liquidation amount $1,000 per Common Security (the "Common Securities"), of the Issuer and will be used by the Issuer to purchase the 8.50% Junior Subordinated Deferrable Interest Debentures due 2012 (the "Debentures") issued by the Company. The Capital Securities and the Common Securities will be issued pursuant to the Amended and Restated Declaration of Trust of the Issuer, to be dated as of the Closing Date (the "Trust Agreement"), among the Company, as Sponsor, the trustees named therein (the "Trustees") and the holders 2 from time to time of the Capital Securities and the Common Securities, which represent undivided beneficial ownership interests in the assets of the Issuer. The Debentures will be issued pursuant to a Junior Subordinated Indenture, to be dated as of the Closing Date (the "Indenture"), between the Company and Wilmington Trust Company, as trustee (the "Indenture Trustee"). The Capital Securities, the Guarantee and the Debentures are collectively referred to herein as the "Securities". Capitalized terms used herein without definition have the respective meanings specified in the Purchase Agreement. As an inducement to the Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to the obligations of the Initial Purchasers thereunder, the Issuer and the Company agree with you, (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Securities, including the Initial Purchasers and the Exchange Securities (as defined herein) (each of the foregoing, a "Holder" and, collectively, the "Holders"), as follows: 1. Registered Exchange Offer. The Issuer and the Company shall (i) ------------------------- prepare and, not later than 150 days following the Closing Date (as hereinafter defined), file with the Commission a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act with respect to a proposed offer (the "Registered Exchange Offer") to the Holders of the Capital Securities to issue and deliver to such Holders, in exchange for the Capital Securities, a like aggregate liquidation amount of new Capital Securities (the "Exchange Capital Securities"), which Securities shall (a) represent undivided beneficial ownership interests in the assets of the Issuer, which assets shall be a new series of junior subordinated debentures issued by the Company in exchange for the Debentures (the "Exchange Debentures") and (b) be guaranteed on a junior subordinated basis by the Company (the "Exchange Guarantee" and, together with the Exchange Capital Securities and the Exchange Debentures, the "Exchange Securities") to the same extent that the Guarantee guaranteed the Capital Securities, that are identical in all material respects to the Securities, except for the deletion of certain transfer restrictions relating to the Securities, (ii) use their respective reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act no later than 180 days after the Closing Date and (iii) commence the Registered Exchange Offer and use their respective reasonable best efforts to issue, on or prior to 30 business days after the date on which the Registered Exchange Offer was declared effective by the Commission (such period being called the "Exchange Offer Registration Period"), Exchange Securities for Securities. The Exchange Capital Securities will be issued pursuant to the Trust Agreement, the Exchange Debentures will be issued pursuant to the Indenture and the Exchange Guarantee will be issued pursuant to the Guarantee Agreement. Upon the effectiveness of the Exchange Offer Registration Statement, the Company and the Issuer shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Securities for Exchange Securities (assuming that such Holder (a) is not (i) an affiliate of the Company or the Issuer within the meaning of the Securities Act or (ii) an Exchanging Dealer 3 (as defined herein) not complying with the requirements of the next sentence, (b) acquires the Exchange Securities in the ordinary course of such Holder's business and (c) has no arrangements or understandings with any person to participate in the distribution of the Exchange Securities) and to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company, the Issuer, the Initial Purchasers and each Exchanging Dealer (as defined below) acknowledge that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, each Holder which is a broker-dealer electing to exchange Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer. In connection with the Registered Exchange Offer, the Company and the Issuer shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (b) keep the Registered Exchange Offer open for not less than 30 days after the date notice of the Registered Exchange Offer is mailed to the Holders (or longer, if required by applicable law); (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply in all respects with all laws applicable to the Registered Exchange Offer. As soon as practicable after the close of the Registered Exchange Offer, the Company and the Issuer shall: (a) accept for exchange all Capital Securities tendered and not validly withdrawn pursuant to the Registered Exchange Offer; 4 (b) deliver to the Property Trustee for cancellation all Capital Securities so accepted for exchange; (c) cause Debentures in aggregate principal amount equal to the aggregate liquidation amount of Capital Securities so accepted for exchange to be exchanged for Exchange Debentures (d) cause the Guarantee to be exchanged for the Exchange Guarantee; and (e) cause the Property Trustee and the Indenture Trustee promptly to authenticate and deliver to each holder of Capital Securities, Exchange Capital Securities, Debentures and Exchange Debentures, as the case may be, equal in principal amount or liquidation amount, as the case may be, to the Securities of such holder so accepted for exchange. The Company and the Issuer shall use their respective reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein in order to permit such prospectus to be used by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided that (i) in the case where such prospectus and any amendment or - -------- supplement thereto must be delivered by an Exchanging Dealer, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers have sold all Exchange Securities held by them and (ii) the Company and the Issuer shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 90 days after the consummation of the Registered Exchange Offer. The Indenture and the Trust Agreement shall provide that the Securities and the Exchange Securities shall vote and consent together on all matters as one class and that none of the Securities or the Exchange Securities will have the right to vote or consent as a separate class on any matter. Interest on each Exchange Debenture issued pursuant to the Registered Exchange Offer will accrue from the last interest payment date on which interest was paid on the Debentures surrendered in exchange therefor or, if no interest has been paid on the Debentures, from the date of original issue of the Debentures. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company and the Issuer that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act and (iii) such Holder is not an affiliate of the Company or the 5 Issuer within the meaning of the Securities Act, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Notwithstanding any other provisions hereof, the Company and the Issuer will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include, as of the consummation of the Registered Exchange Offer, an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. Shelf Registration. If (i) the Company and the Issuer are not ------------------ required to file the Exchange Offer Registration Statement or permitted to consummate the Registered Exchange Offer because the Registered Exchange Offer is not permitted by applicable law or Commission policy, (ii) the Company has received an opinion of counsel, rendered by a law firm having a recognized national tax practice, to the effect that, as a result of the consummation of the Exchange Offer, there is more than an insubstantial risk that (x) the Issuer would be subject to United States federal income tax with respect to income received or accrued on the Debentures or Exchange Debentures, (y) interest payable by the Company on such Debentures or Exchange Debentures would not be deductible by the Company, in whole or in part, for United States federal income tax purposes, or (z) the Issuer would be subject to more than a de minimis amount of other taxes, duties or other governmental charges, (iii) any holder of Transfer Restricted Securities notifies the Company and the Issuer on or before the 20th business day following the consummation of the Registered Exchange Offer that (A) it is prohibited by law or Commission policy from participating in the Registered Exchange Offer, (B) it may not resell the Exchange Securities acquired by it in the Registered Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales or (C) it is a broker-dealer and owns Securities acquired directly from the Issuer or an affiliate of the Issuer, then the following provisions shall apply: (a) The Company and the Issuer shall use their reasonable best efforts to file as promptly as practicable (but in no event more than 150 days after so required or requested pursuant to this Section 2) with the Commission and thereafter shall use their reasonable best efforts to cause to be declared effective (but in no event more than 180 days after so required or requested pursuant to this Section 2), a shelf registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities (as defined below) by the Holders thereof from time to time in accordance with the methods of 6 distribution set forth in such registration statement (hereafter, a "Shelf Registration Statement" and, together with any Exchange Offer Registration Statement, a "Registration Statement"); (b) The Company and the Issuer each shall use their respective reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus forming part thereof to be used by Holders of Transfer Restricted Securities for a period of two years from the Issue Date or such shorter period that will terminate when all the Transfer Restricted Securities covered by the Shelf Registration Statement have been sold pursuant thereto (in any such case, such period being called the "Shelf Registration Period"). The Company and the Issuer each shall be deemed not to have used their reasonable best efforts to keep the Shelf Registration Statement effective during the requisite period if any of them voluntarily takes any action that would result in Holders of Transfer Restricted Securities covered thereby not being able to offer and sell such Securities or Exchange Securities during that period, unless such action is required by applicable law; and (c) Notwithstanding any other provisions hereof, the Company and the Issuer will ensure that (i) any Shelf Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in either case, other than with respect to information included therein in reliance upon or in conformity with written information furnished to the Company or the Issuer by or on behalf of any Holder specifically for use therein (the "Holders' Information")) does not, when it -------------------- becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Shelf Registration Statement, and any supplement to such prospectus (in either case, other than with respect to Holders' Information), does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3. Additional Interest. (a) If (i) the applicable Registration ------------------- Statement is not filed with the Commission on or before the date specified for such filing, (ii) such Registration Statement is not declared effective by the Commission on or prior to the date specified in Section 1 (in the case of the Exchange Offer Registration Statement) or Section 2 (in the case of the Shelf Registration Statement) (such date the "Effectiveness Target Date"), (iii) the Company and the Issuer fail to consummate the Exchange Offer within 30 business days of the Effectiveness Target Date with respect to the Registered Exchange Offer or (iv) the Shelf Registration Statement or the Exchange Offer Registration Statement is filed and declared effective but thereafter ceases to be effective (at any time that the Company is obligated to maintain the effectiveness thereof) or to be usable in connection with resales of Transfer Restricted Securities without being succeeded within 60 days by an additional Registration Statement filed and declared effective that cures such failure (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company will be obligated to pay additional interest in respect of the Debentures (including in respect of amounts accruing 7 during any Extension Period (as defined in the Indenture)) ("Additional Interest") and corresponding additional distributions ("Additional Distributions") will become payable on the Capital Securities, with respect to the first 30-day period immediately following such Registration Default, in an amount equal to .25% per week per $1,000 liquidation amount of the Capital Securities held by such holder. The amount of Additional Interest (and corresponding Additional Distributions) will increase by an additional .25% per week per $1,000 liquidation amount of Capital Securities with respect to each subsequent 30-day period until all Registration Defaults have been cured, up to a maximum amount of Additional Interest (and corresponding Additional Distributions) of .50% per week per $1,000 of liquidation amount of Capital Securities. Following the cure of all Registration Defaults, the accrual of Additional Interest will cease. "Transfer Restricted Securities" means each Security until (i) the date on which such Security has been exchanged by a person other than a broker- dealer for an Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of a Security, the date on which such Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Security is distributed to the public pursuant to Rule 144 under the Act. Notwithstanding anything to the contrary in this Section 3(a), the Company and the Issuer shall not be required to pay Additional Interest to the Holder of Transfer Restricted Securities if such Holder: (a) failed to comply with its obligations to make the representations in the second to last paragraph of Section 1 or (b) failed to provide the information required to be provided by it, if any, pursuant to Section 4(n). (b) The Company and the Issuer shall notify the Indenture Trustee and the paying agent under the Indenture immediately upon the happening of each and every Registration Default. The Company and the Issuer shall pay the Additional Interest due on the Transfer Restricted Securities by depositing with the paying agent (which may not be the Company for these purposes), in trust, for the benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on the next interest payment date specified by the Indenture and the Securities, sums sufficient to pay the Additional Interest then due. The Additional Interest due shall be payable on each interest payment date specified by the Indenture to the record holder entitled to receive the interest payment to be made on such date. Each obligation to pay Additional Interest shall be deemed to accrue from and including the applicable Registration Default. 4. Registration Procedures. In connection with any Registration ----------------------- Statement, the following provisions shall apply: (a) The Company and the Issuer shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each 8 amendment thereof and each supplement, if any, to the prospectus included therein and use their reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as CSI may reasonably and timely propose; (ii) if requested by any Initial Purchaser, include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement, and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; and (iii) if requested by any Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement. (b) The Company and the Issuer shall advise each Initial Purchaser, each Exchanging Dealer and the Holders (if applicable), and, if requested by any such person, confirm such advice in writing (which advice pursuant to clauses (ii)-(vi) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when any Registration Statement and any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company and the Issuer of any notification with respect to the suspension of the qualification of the Securities or the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (v) of the happening of any event that requires the making of any changes in any Registration Statement so that such Registration Statement, as of its effective date, does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (vi) of the happening of any event that requires the making of any changes in any prospectus so that, as of the date of such prospectus, the statements therein do not include an untrue statement of a material fact or omit to state a material fact necessary 9 in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) The Company and the Issuer will make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement at the earliest possible time. (d) The Company and the Issuer will furnish to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, at least one conformed copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any such Holder so requests in writing, all exhibits thereto (including those incorporated by reference). (e) The Company and the Issuer will, during the Shelf Registration Period, promptly deliver to each Holder of Transfer Restricted Securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the prospectus (including each preliminary prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company and the Issuer each consents to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Securities in connection with the offer and sale of the Transfer Restricted Securities covered by the prospectus or any amendment or supplement thereto. (f) The Company and the Issuer will furnish to each Initial Purchaser and each Exchanging Dealer and to any other Holder who so requests, without charge, at least one conformed copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or Exchanging Dealer or any such Holder so requests in writing, all exhibits (including those incorporated by reference). (g) The Company and the Issuer will, during the Exchange Offer Registration Period or the Shelf Registration Period, as the case may be, promptly deliver to each Initial Purchaser, each Exchanging Dealer and such other persons that are required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included within the coverage of the Exchange Offer Registration Statement or the Shelf Registration Statement and any amendment or supplement thereto as such Exchanging Dealer, Initial Purchaser or other person may reasonably request; and the Company and the Issuer each consents to the use of such prospectus or any amendment or supplement thereto that complies in all material respects with the Securities Act and the rules and regulations thereunder by any such Exchanging Dealer, Initial Purchaser or other person as aforesaid. 10 (h) Prior to any public offering of Securities or Exchange Securities pursuant to any Registration Statement, the Company and the Issuer each will use its respective reasonable best efforts to register or qualify or cooperate with the Holders of Securities or Exchange Securities included therein and their respective counsel in connection with the registration or qualification of such Securities or Exchange Securities for offer and sale under the securities or blue sky laws of such jurisdictions within the United States as any such Holder reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities or Exchange Securities covered by such Registration Statement; provided, however, that neither the Company nor the Issuer will be required (1) - -------- ------- to qualify generally to do business in any jurisdiction where it is not then so qualified or (2) to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject. (i) The Company and the Issuer each will cooperate with the Holders of Securities or Exchange Securities to facilitate the timely preparation and delivery of certificates representing Securities or Exchange Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request in writing a reasonable period of time prior to sales of Securities or Exchange Securities pursuant to such Registration Statement. (j) If (i) any event contemplated by paragraphs (b)(ii) through (vi) above occurs during the period for which the Company and the Issuer are required to maintain an effective Registration Statement, the Company and the Issuer will promptly prepare and file with the Commission a post-effective amendment to the Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities or Exchange Securities from a Holder, the prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Securities or Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Securities or Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (l) The Company and the Issuer each will comply with all applicable rules and regulations of the Commission and will make generally available to its security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Securities Act. (m) The Company and the Issuer will cause the Indenture, the Trust Agreement and the Guarantee Agreement to be qualified under the Trust Indenture Act as required by applicable law in a timely manner. 11 (n) The Company and the Issuer may require each Holder of Transfer Restricted Securities to be registered pursuant to any Shelf Registration Statement to furnish to the Company and the Issuer such information regarding the Holder and the distribution of such Transfer Restricted Securities as the Company may from time to time reasonably require for inclusion in such Shelf Registration Statement, and the Company and the Issuer may exclude from such registration the Transfer Restricted Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (o) In the case of a Shelf Registration Statement, each Holder of Transfer Restricted Securities to be registered pursuant thereto agrees by acquisition of such Transfer Restricted Securities that, upon receipt of any notice from the Company pursuant to Section 4(b)(ii) through (vi) hereof, such Holder will discontinue disposition of such Transfer Restricted Securities until such Holder's receipt of copies of the supplemental or amended prospectus contemplated by Section 4(j) hereof or until advised in writing (the "Advice") by the Company that the use of the applicable prospectus may be resumed. If the Company and the Trust shall give any notice under Section 4(b)(ii) through (vi) during the period that the Company and the Issuer is required to maintain an effective Registration Statement (the "Effectiveness Period"), such Effectiveness Period shall be extended by the number of days during such period from and including the date of the giving of such notice to and including the date when each seller of Transfer Restricted Securities covered by such Registration Statement shall have received (x) the copies of the supplemental or amended prospectus contemplated by Section 4(j) (if an amended or supplemental prospectus is required) or (y) the Advice (if no amended or supplemental prospectus is required). (p) In the case of a Shelf Registration Statement, the Company and the Issuer shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as Holders of at least a majority in aggregate liquidation amount of the Securities and Exchange Securities being sold or the managing underwriters (if any) shall reasonably request in order to facilitate any disposition of Securities or Exchange Securities pursuant to such Shelf Registration Statement, provided that the Company and the Issuer shall not be required to enter into any such agreement more than once with respect to all Securities. (q) In the case of a Shelf Registration Statement, the Company and the Issuer shall (i) make reasonably available for inspection by a representative of, and Special Counsel (as defined below) acting for, Holders of at least a majority in aggregate liquidation amount of the Securities and Exchange Securities being sold and any underwriter participating in any disposition of Securities or Exchange Securities pursuant to such Shelf Registration Statement, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries and (ii) use its reasonable best efforts to have its officers, directors, employees, accountants and counsel supply all relevant information reasonably requested by such representative, Special Counsel or any such underwriter (an "Inspector") in connection with such --------- Shelf Registration Statement. 12 (r) In the case of a Shelf Registration Statement, the Company and the Issuer shall, if requested by Holders of at least a majority in aggregate liquidation amount of the Securities and Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) in connection with such Shelf Registration Statement, use their respective reasonable best efforts to cause (i) their respective counsel to deliver an opinion relating to the Shelf Registration Statement and the Securities or Exchange Securities, as applicable, in customary form, (ii) their respective officers or trustees to execute and deliver all customary documents and certificates requested by Holders of at least a majority in aggregate liquidation amount of the Securities and Exchange Securities being sold, their Special Counsel or the managing underwriters (if any) and (iii) the Company's independent public accountants to provide a comfort letter in customary form, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. 5. Registration Expenses. The Company will bear all expenses --------------------- incurred in connection with the performance of the obligations of the Company and the Issuer under Sections 1, 2, 3 and 4 hereof and the Company will reimburse the Initial Purchasers and the Holders for the reasonable fees and disbursements of one firm of attorneys (in addition to local counsel, if any) chosen by the Holders of at least a majority in aggregate liquidation amount of the Securities and the Exchange Securities to be sold pursuant to each Registration Statement (the "Special Counsel") acting for the Initial Purchasers or Holders in connection therewith. 6. Indemnification. (a) In the event of the effectiveness of a --------------- Shelf Registration Statement or in connection with any prospectus delivery pursuant to an Exchange Offer Registration Statement by an Initial Purchaser or Exchanging Dealer, as applicable, the Company and the Issuer shall, jointly and severally, indemnify and hold harmless each Holder (including, without limitation, any Initial Purchaser or Exchanging Dealer), its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6(a) and Section 7 as a "Holder") from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of Securities or Exchange Securities), to which that Holder may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and shall reimburse each Holder promptly upon demand for any legal or other expenses reasonably incurred by that Holder in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that neither the -------- ------- Company nor the Issuer shall be liable in any such case to the extent 13 that any such loss, claim, damage, liability or action arises out of, or is based upon, (i) an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Holders' Information or (ii) a defect in a Exchange Offer Registration Statement or prospectus contained therein delivered to the person asserting such loss, claim, damage, liability or action after the Exchange Offer Registration Period; and provided, further, that with respect to any such untrue -------- ------- statement in or omission from any related preliminary prospectus, the indemnity agreement contained in this Section 6(a) shall not inure to the benefit of any Holder from whom the person asserting any such loss, claim, damage, liability or action received Securities or Exchange Securities to the extent that such loss, claim, damage, liability or action of or with respect to such Holder results from the fact that both (A) a copy of the final prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Securities or Exchange Securities to such person and (B) the untrue statement in or omission from the related preliminary prospectus was corrected in the final prospectus unless, in either case, such failure to deliver the final prospectus was a result of non-compliance by the Company or the Issuer with Section 4(d), 4(e), 4(f) or 4(g). (b) In the event of the effectiveness of a Shelf Registration Statement, each Holder shall indemnify and hold harmless the Company, the Issuer, their respective affiliates, their respective officers, trustees, directors, employees, representatives and agents, and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 6(b) and Section 7 as the "Company"), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Holders' Information furnished to the Company by such Holder, and shall reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that no such Holder shall be liable -------- ------- for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities or Exchange Securities pursuant to such Shelf Registration Statement. (c) Promptly after receipt by an indemnified party under this Section 6 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 6(a) or 6(b), 14 notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying -------- ------- party shall not relieve it from any liability which it may have under this Section 6 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, -------- further, that the failure to notify the indemnifying party shall not relieve it - ------- from any liability which it may have to an indemnified party otherwise than under this Section 6. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than the reasonable costs of investigation; provided, however, that an indemnified party -------- ------- shall have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 6(a) and 6(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such 15 settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. 7. Contribution. If the indemnification provided for in Section 6 ------------ is unavailable or insufficient to hold harmless an indemnified party under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company from the offering and sale of the Securities, on the one hand, and a Holder with respect to the sale by such Holder of Securities or Exchange Securities, on the other, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and such Holder on the other with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and a Holder on the other with respect to such offering and such sale shall be deemed to be in the same proportion as the total net proceeds from the offering of the Securities (before deducting expenses) received by or on behalf of the Company as set forth in the table on the cover of the Offering Memorandum, on the one hand, bear to the total proceeds received by such Holder with respect to its sale of Securities or Exchange Securities, on the other. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company or information supplied by the Company on the one hand or to any Holders' Information supplied by such Holder on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 7 shall be deemed to include, for purposes of this Section 7, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 7, an indemnifying party that is a Holder of Securities or Exchange Securities shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such indemnifying party to any purchaser exceeds the amount of any damages which such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 16 8. Rules 144 and 144A. The Company shall use its reasonable best ------------------ efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the written request of any Holder of Transfer Restricted Securities, make publicly available other information so long as necessary to permit sales of such Holder's securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder of Transfer Restricted Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Transfer Restricted Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon the written request of any Holder of Transfer Restricted Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to require the Company or Issuer to register any of its securities pursuant to the Exchange Act. 9. Underwritten Registrations. If any of the Transfer Restricted -------------------------- Securities covered by any Shelf Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate liquidation amount of such Transfer Restricted Securities included in such offering, subject to the consent of the Company (which shall not be unreasonably withheld or delayed), and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith. No Holder may participate in any underwritten registration hereunder unless such Holder (i) agrees to sell such Holder's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 10. Miscellaneous. (a) Amendments and Waivers. The provisions of ------------- ---------------------- this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company and the Issuer have obtained the written consent of Holders of a majority in aggregate liquidation amount of the Securities and the Exchange Securities, taken as a single class. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Securities or Exchange Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate liquidation amount of the Securities and the Exchange Securities being sold by such Holders pursuant to such Registration Statement. 17 (b) Notices. All notices and other communications provided for or ------- permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier guaranteeing next-day delivery: (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 10(b), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Trust Agreement, with a copy in like manner to Chase Securities Inc. and UBS Securities Inc.; (2) if to an Initial Purchaser, initially at its address set forth in the Purchase Agreement; and (3) if to the Company or the Issuer, initially at the address of the Company or the Issuer set forth in the Purchase Agreement. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient's telecopier machine, if sent by telecopier. (c) Successors And Assigns. This Agreement shall be binding upon the ---------------------- Company and its successors and assigns. (d) Counterparts. This Agreement may be executed in any number of ------------ counterparts (which may be delivered in original form or by telecopier) and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) Definition of Terms. For purposes of this Agreement, (a) the term ------------------- "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act. (f) Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Agreement shall be governed by and construed ------------- in accordance with the laws of the State of New York. 18 (h) Remedies. In the event of a breach by the Company, the Issuer or -------- by any Holder of any of their obligations under this Agreement, each Holder or the Company or the Issuer, as the case may be, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company, the Issuer and each Holder agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (i) No Inconsistent Agreements. Each of the Company and the Issuer -------------------------- represents, warrants and agrees that (i) it has not entered into, shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, (ii) it has not previously entered into any agreement which remains in effect granting any registration rights with respect to any of its debt securities to any person and (iii) without limiting the generality of the foregoing, without the written consent of the Holders of a majority in aggregate principal amount of the then outstanding Transfer Restricted Securities, it shall not grant to any person the right to request the Company or the Issuer to register any junior subordinated debt securities of the Company or any securities of any financing subsidiary of the Company under the Securities Act unless the rights so granted are not in conflict or inconsistent with the provisions of this Agreement. (j) No Piggyback on Registrations. Neither the Company, the Issuer ----------------------------- nor any of their respective security holders (other than the Holders of Transfer Restricted Securities in such capacity) shall have the right to include any securities of the Company or the Issuer in any Shelf Registration or Registered Exchange Offer other than Transfer Restricted Securities. (k) Severability. The remedies provided herein are cumulative and not ------------ exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 19 Please confirm that the foregoing correctly sets forth the agreement among the Company, the Issuer and you. Very truly yours, THE FIRST AMERICAN FINANCIAL CORPORATION ---------------------------------------------- By: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer FIRST AMERICAN CAPITAL TRUST I ---------------------------------------------- By: Thomas A. Klemens Title: Regular Trustee Accepted in New York, New York CHASE SECURITIES INC. By:____________________________ Title: UBS SECURITIES LLC By:____________________________ Title: ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. Each of the Company and the Issuer has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker- dealer for use in connection with any such resale. See "Plan of Distribution." ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Securities, where such Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Securities where such Securities were acquired as a result of market-making activities or other trading activities. Each of the Company and the Issuer has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until _______________, 199__, all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus./1/ Neither the Company nor the Issuer will receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the- counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date the Company and the Issuer will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company and the Issuer have jointly and severally agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any broker-dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. - ----------- /1/ In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus. ANNEX D [ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name:_______________________________________ Address:____________________________________ ____________________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. EX-10.2 7 GUARANTEE AGREEMENT -- APRIL 22, 1997 EXHIBIT 10.2 Composite Conformed Copy - -------------------------------------------------------------------------------- GUARANTEE AGREEMENT Between THE FIRST AMERICAN FINANCIAL CORPORATION (as Guarantor) and WILMINGTON TRUST COMPANY (as Trustee) dated as of April 22, 1997 - -------------------------------------------------------------------------------- CROSS-REFERENCE TABLE*
Section of Trust Indenture Act Section of of 1939, as amended Guarantee Agreement - ------------------- ------------------- 310(a).................................................. 4.1(a) 310(b).................................................. 4.1(c), 2.8 310(c).................................................. Inapplicable 311(a).................................................. 2.2(b) 311(b).................................................. 2.2(b) 311(c).................................................. Inapplicable 312(a).................................................. 2.2(a) 312(b).................................................. 2.2(b) 313..................................................... 2.3 314(a).................................................. 2.4 314(b).................................................. Inapplicable 314(c).................................................. 2.5 314(d).................................................. Inapplicable 314(e).................................................. 1.1, 2.5, 3.2 314(f).................................................. 2.1, 3.2 315(a).................................................. 3.1(d) 315(b).................................................. 2.7 315(c).................................................. 3.1 315(d).................................................. 3.1(d) 316(a).................................................. 1.1, 2.6, 5.4 316(b).................................................. 5.3 316(c).................................................. 8.2 317(a).................................................. Inapplicable 317(b).................................................. Inapplicable 318(a).................................................. 2.1(b) 318(b).................................................. 2.1 318(c).................................................. 2.1(a)
- ---------------- * This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions.
ARTICLE I. DEFINITIONS........................................................... 1 Section 1.1. Definitions.................................................. 1 ARTICLE II. TRUST INDENTURE ACT................................................... 4 Section 2.1. Trust Indenture Act; Application............................. 4 Section 2.2. List of Holders.............................................. 4 Section 2.3. Reports by the Guarantee Trustee............................. 4 Section 2.4. Periodic Reports to the Guarantee Trustee.................... 5 Section 2.5. Evidence of Compliance with Conditions Precedent............. 5 Section 2.6. Events of Default; Waiver.................................... 5 Section 2.7. Event of Default; Notice..................................... 5 Section 2.8. Conflicting Interests 6 ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE.................... 6 Section 3.1. Powers and Duties of the Guarantee Trustee................... 6 Section 3.2. Certain Rights of Guarantee Trustee.......................... 7 Section 3.3. Indemnity.................................................... 9 ARTICLE IV. GUARANTEE TRUSTEE..................................................... 9 Section 4.1. Guarantee Trustee: Eligibility............................... 9 Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee 10 ARTICLE V. GUARANTEE............................................................. 11 Section 5.1. Guarantee.................................................... 11 Section 5.2. Waiver of Notice and Demand.................................. 11 Section 5.3. Obligations Not Affected..................................... 11 Section 5.4. Rights of Holders............................................ 12 Section 5.5. Guarantee of Payment......................................... 12 Section 5.6. Subrogation.................................................. 12 Section 5.7. Independent Obligations...................................... 13 ARTICLE VI. COVENANTS AND SUBORDINATION........................................... 13 Section 6.1. Subordination................................................ 13 Section 6.2. Pari Passu Guarantees........................................ 13 ARTICLE VII. TERMINATION AND INDEMNIFICATION....................................... 13 Section 7.1. Termination.................................................. 13 Section 7.2. Indemnification.............................................. 13 .............................................................................. 13 ARTICLE VIII. MISCELLANEOUS......................................................... 14 Section 8.1. Successors and Assigns....................................... 14 Section 8.2. Amendments................................................... 14
Section 8.3. Notices...................................................... 14 Section 8.4. Benefit...................................................... 15 Section 8.5. Interpretation............................................... 16 Section 8.6. Governing Law................................................ 16
GUARANTEE AGREEMENT This GUARANTEE AGREEMENT, dated as of April 22, 1997, is executed and delivered by THE FIRST AMERICAN FINANCIAL CORPORATION, a California corporation (the "Guarantor") having its principal office at 114 East Fifth Street, Santa Ana, California 92701, and Wilmington Trust Company, a Delaware banking corporation, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Capital Securities and Common Securities (each as defined herein and together, the "Securities") of First American Capital Trust I, a Delaware statutory business trust (the "Trust"). WHEREAS, pursuant to an Amended and Restated Declaration of Trust, dated as of April 22, 1997 (the "Declaration"), among the Guarantor, as Sponsor, the Property Trustee and the Delaware Trustee named therein, the Regular Trustees named therein and the Holders from time to time of undivided beneficial ownership interests in the assets of the Trust, the Trust is issuing $100,000,000 aggregate liquidation amount of its 8.50% Capital Securities (liquidation amount $1,000 per Capital Security) (the "Capital Securities") representing undivided beneficial ownership interests in the assets of the Trust and having the terms set forth in the Declaration; WHEREAS, the Capital Securities will be issued by the Trust and the proceeds thereof, together with the proceeds from the issuance of the Trust's Common Securities (as defined herein), will be used to purchase the Debentures (as defined in the Declaration) of the Guarantor which will be deposited with Wilmington Trust Company, as Property Trustee under the Declaration, as trust assets; and WHEREAS, as incentive for the Holders to purchase Securities the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the Holders of the Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by each Holder of Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time of the Securities. ARTICLE I. DEFINITIONS Section 1.1. Definitions. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Declaration as in effect on the date hereof. 2 "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, that an Affiliate of the Guarantor shall not be deemed to be an Affiliate of the Trust. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Board of Directors" means either the board of directors of the Guarantor or any committee of that board duly authorized to act hereunder. "Common Securities" means the 8.50% Common Securities (liquidation amount $1,000 per Common Security) representing undivided beneficial ownership interests in the assets of the Trust. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided, however, that, except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received notice of default and shall not have cured such default within 90 days after receipt of such notice. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Securities, to the extent not paid or made by or on behalf of the Trust: (i) any accumulated and unpaid Distributions (as defined in the Declaration) required to be paid on the Securities, to the extent the Trust shall have funds on hand available therefor at such time, (ii) the redemption price, including all accrued and unpaid Distributions to the date of redemption (the"Redemption Price"), with respect to any Securities called for redemption by the Trust, to the extent the Trust shall have funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary termination, winding up or liquidation of the Trust, unless Debentures are distributed to the Holders, the lesser of (a) the aggregate of the liquidation amount of the Securities plus accrued and unpaid Distributions to the date of payment and (b) the amount of assets of the Trust remaining available for distribution to Holders in liquidation of the Trust after satisfaction of liabilities to creditors of the Trust as required by applicable law (in either case, the "Liquidation Distribution"). "Guarantee Trustee" means Wilmington Trust Company, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement, and thereafter means each such Successor Guarantee Trustee. "Holder" means any holder, as registered on the books and records of the Trust, of any Securities; provided, however, that in determining whether the holders of the requisite percentage of Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor or the Guarantee Trustee. 3 "Indenture" means the Junior Subordinated Indenture dated as of April 22, 1997, as supplemented and amended between the Guarantor and Wilmington Trust Company, as trustee. "List of Holders" has the meaning specified in Section 2.2(a). "Majority in Liquidation Amount" means, except as provided in the Trust Indenture Act, Holder(s) of outstanding Securities, voting together as a single class, or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities, voting separately as a class, who are the record owners of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all outstanding Securities of the relevant class. "Officers' Certificate" means, with respect to any Person, a certificate signed by the Chairman or a Vice Chairman of the Board of Directors of such Person or the President or a Vice President of such Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each officer, such condition or covenant has been complied with. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Responsible Officer" when used with respect to the Guarantee Trustee means any officer of the Guarantee Trustee within the Corporate Trust Office with direct responsibility for the administration of this Guarantee Agreement. "Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. 4 ARTICLE II. TRUST INDENTURE ACT Section 2.1. Trust Indenture Act; Application. (a) At such time, if any, as this Guarantee Agreement is qualified under the Trust Indenture Act, this Guarantee Agreement will be subject to the provisions of the Trust Indenture Act that are required to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions. (b) At such time, if any, as this Guarantee Agreement is qualified under the Trust Indenture Act, if and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. Section 2.2. List of Holders. (a) The Guarantor shall provide the Guarantee Trustee with a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders of the Securities ("List of Holders"): (i) semi-annually, not more than 15 days after January 15 and July 15 in each year of the names and addresses of the Holders as of such January 1 and July 1; and (ii) at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished, excluding from any such list names and addresses received by the Guarantee Trustee in its capacity as Security Registrar. (b) The Guarantee Trustee shall comply with its obligations under Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act. Section 2.3. Reports by the Guarantee Trustee. The Guarantee Trustee shall transmit to Holders such reports concerning the Guarantee Trustee and its actions under this Guarantee Agreement as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Guarantee Trustee shall, within sixty days after each May 15 following the first anniversary of the date of this Guarantee Agreement deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a). 5 Section 2.4. Periodic Reports to the Guarantee Trustee. The Guarantor shall provide to the Guarantee Trustee, the Securities and Exchange Commission and the Holders such documents, reports and information, if any, as required by Section 314 of the Trust Indenture Act and the compliance certificate required by Section 314 of the Trust Indenture Act, in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Delivery of such reports, information and documents to the Guarantee Trustee is for informational purposes only and the Guarantee Trustee's receipt of such shall not constitute constructive notice of any information contained therein, including the Guarantor's compliance with any of its covenants hereunder (as to which the Guarantee Trustee is entitled to rely exclusively on Officers' Certificates). Section 2.5. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. Section 2.6. Events of Default; Waiver. The Holders of a Majority in Liquidation Amount of the Securities may, by vote, on behalf of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom. Section 2.7. Event of Default; Notice. (a) The Guarantee Trustee shall, within 90 days after the Guarantee Trustee has knowledge of the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default actually known to the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, except in the case of a default in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected in withholding such notice if and so long as one or more Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer of the Guarantee Trustee shall have actual knowledge of such Event of Default. 6 Section 2.8. Conflicting Interests. The Declaration shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE Section 3.1. Powers and Duties of the Guarantee Trustee. (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising his or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. (b) If an Event of Default of which the Guarantee Trustee has knowledge has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the Holders. (c) The Guarantee Trustee, before the occurrence of any Event of Default of which the Guarantee Trustee has knowledge and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants or obligations shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an Event of Default of which the Guarantee Trustee has knowledge has occurred (that has not been cured or waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (d) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (i) prior to the occurrence of any Event of Default of which the Guarantee Trustee has knowledge and after the curing or waiving of all such Events of Default that may have occurred: 7 (A) the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof or of the Trust Indenture Act are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement; (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Amount of the Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) no provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. Section 3.2. Certain Rights of Guarantee Trustee. (a) Subject to the provisions of Section 3.1: (i) The Guarantee Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. 8 (ii) Any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate unless otherwise prescribed herein. (iii) Whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor. (iv) The Guarantee Trustee may consult with legal counsel of its selection, and the written advice or opinion of such legal counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in accordance with such advice or opinion. Such legal counsel may be legal counsel to the Guarantor or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction. (v) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such adequate security and indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided that, nothing contained in this Section 3.2(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default of which the Guarantee Trustee has knowledge, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement. (vi) The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (vii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder. 9 (viii) Whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive written instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (A) may request instructions from the Holders, (B) may refrain from enforcing such remedy or right or taking such other action until such written instructions are received, and (C) shall be protected in acting in accordance with such written instructions. (ix) The Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without gross negligence, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee Agreement. (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority. Section 3.3. Indemnity. The Guarantor agrees to indemnify the Guarantee Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Guarantee Trustee, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. ARTICLE IV. GUARANTEE TRUSTEE Section 4.1. Guarantee Trustee: Eligibility. (a) There shall at all times be a Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or other Person permitted by the Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such Person publishes reports of condition at least 10 annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then for the purposes of this Section 4.1(a)(ii), the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c). (c) If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee. (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. If an instrument of acceptance by a Successor Guarantee Trustee shall not have been delivered to the Guarantee Trustee within 30 days after such removal, the Guarantee Trustee being removed may petition any court of competent jurisdiction for the appointment of a Successor Guarantee Trustee. (c) The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. 11 ARTICLE V. GUARANTEE Section 5.1. Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Trust), as and when due, regardless of any defense, right of set-off or counterclaim which the Trust may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Trust to pay such amounts to the Holders. Section 5.2. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 5.3. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Trust of any express or implied agreement, covenant, term or condition relating to the Securities to be performed or observed by the Trust; (b) the extension of time for the payment by the Trust of all or any portion of the Distributions (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Debentures as provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Securities; (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Securities, or any action on the part of the Trust granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, 12 arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust; (e) any invalidity of, or defect or deficiency in, the Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing. Section 5.4. Rights of Holders. The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in Liquidation Amount of the Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Trust or any other Person. Section 5.5. Guarantee of Payment This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Trust) or upon distribution of Debentures to Holders as provided in the Declaration. Section 5.6. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Trust in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in 13 violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. Section 5.7. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Trust with respect to the Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof. ARTICLE VI. COVENANTS AND SUBORDINATION Section 6.1. Subordination. The obligations of the Guarantor under this Guarantee Agreement will constitute unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to all Senior Indebtedness (as defined in the Indenture) of the Guarantor, except those made pari passu or subordinate to such obligations expressly by their terms in the same manner as set forth in Article XIII of the Indenture. Section 6.2. Pari Passu Guarantees. The obligations of the Guarantor under this Guarantee Agreement shall rank pari passu with the obligations of the Guarantor under any similar Guarantee Agreements issued by the Guarantor on behalf of the holders of securities similar to the Securities issued by any trust, partnership or other entity affiliated with the Guarantor that is a financing entity of the Guarantor. ARTICLE VII. TERMINATION AND INDEMNIFICATION Section 7.1. Termination. This Guarantee Agreement shall terminate and be of no further force and effect upon (i) full payment of the Redemption Price of all Securities, (ii) the distribution of Debentures to the Holders in exchange for all of the Securities or (iii) full payment of all amounts payable in accordance with the Declaration upon liquidation of the Trust. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Securities or this Guarantee Agreement. Section 7.2. Indemnification. 14 The Guarantor agrees to indemnify the (i) Guarantee Trustee, (ii) each Affiliate of the Guarantee Trustee and (iii) any officers, directors, shareholders, members, partners, employees or agents of the Guarantee Trustee (each of the Persons in (i) through (iii) being referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary Indemnified Person harmless against, any and all loss, liability, damage, claim or expense, including taxes (other than taxes based on the income of such Fiduciary Indemnified Person) incurred without gross negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as set forth in this Section 7.2 shall survive the termination of this Guarantee Agreement and the removal or resignation of the Guarantee Trustee. ARTICLE VIII. MISCELLANEOUS Section 8.1. Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article VIII of the Indenture and pursuant to which the successor or assignee agrees in writing to perform the Guarantor's obligations hereunder, the Guarantor shall not assign its obligations hereunder. Section 8.2. Amendments. Except with respect to any changes which do not adversely affect the rights of the Holders or the Guarantee Trustee in any material respect (in which case no consent of the Holders or the Guarantee Trustee, as the case may be, will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than a Majority in Liquidation Amount of all the outstanding Securities and of the Guarantee Trustee. The provisions of Article 11 of the Declaration concerning meetings of the Holders shall apply to the giving of such approval. Section 8.3. Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantor may give notice to the Guarantee Trustee and the Holders: 15 The First American Financial Corporation 114 East Fifth Street Santa Ana, California 90271 Facsimile No.: (714)-836-1841 Attention: Mark R Amesen (b) if given to the Trust, in care of the Guarantee Trustee, at the Trust's (and the Guarantee Trustee's) address set forth below or such other address as the Guarantee Trustee on behalf of the Trust may give notice to the Holders and the Guarantor: First American Capital Trust I c/o The First American Financial Corporation 114 East Fifth Street Santa Ana, California 92071 Facsimile No.: (714)-836-1841 Attention: Mark R Amesen with a copy to: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington Delaware 19890-0001 Attention: Corporate Trust Administration Facsimile No.: 302-427-4749 Attention: Corporate Trust Administration (c) if given to any Holder, at the address set forth on the books and records of the Trust. All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. Section 8.4. Benefit. This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Securities. 16 Section 8.5. Interpretation. In this Guarantee Agreement, unless the context otherwise requires: (a) capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.1; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. Section 8.6. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. 17 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. The First American Financial Corporation By: /s/ THOMAS A. KLEMENS ------------------------------------- Name: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer Wilmington Trust Company as Guarantee Trustee By: /s/ EMMETT R. HARMON ------------------------------------- Name: Emmett R. Harmon Title: Vice President EX-10.3 8 FIRST AMERICAN PURCHASE AGREEMENT EXHIBIT 10.3 Composite Conformed Copy =============================================================================== FIRST AMERICAN CAPITAL TRUST I ------------------ 8.50% Capital Securities guaranteed by THE FIRST AMERICAN FINANCIAL CORPORATION PURCHASE AGREEMENT ------------------ Dated April 17, 1997 - ------------------------------------------------------------------------------- FIRST AMERICAN CAPITAL TRUST I ---------------- 8.50% Capital Securities PURCHASE AGREEMENT ------------------ April 17, 1997 CHASE SECURITIES INC. UBS SECURITIES LLC c/o Chase Securities Inc. 270 Park Avenue, 8th Floor New York, New York 10017-2070 Ladies and Gentlemen: First American Capital Trust I (the "Issuer"), a statutory business trust formed under the Business Trust Act (the "Delaware Act") of the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801 et -- seq.), proposes to issue and sell an aggregate of $100,000,000 8.50% Capital - --- Securities, Liquidation Amount $1,000 per Capital Security (the "Capital Securities"). The First American Financial Corporation (the "Company") hereby confirms its agreement with Chase Securities Inc. ("CSI") and UBS Securities LLC ("UBS") (together with CSI, the "Initial Purchasers") concerning the purchase of the Capital Securities from the Issuer by the several Initial Purchasers. The Capital Securities will be guaranteed by the Company, to the extent set forth in the Offering Memorandum (as defined below), with respect to distributions and amounts payable upon liquidation or redemption (the "Guarantee"), pursuant to the Guarantee Agreement (the "Guarantee Agreement"), to be dated as of the Closing Date (as defined below), executed and delivered by the Company and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as trustee (the "Guarantee Trustee") for the benefit of the holders from time to time of the Capital Securities. The proceeds from the sale of the Capital Securities to the Initial Purchasers will be aggregated with the entire proceeds from the sale by the Issuer to the Company of all of the Issuer's common securities, liquidation amount $1,000 per common security (the "Common Securities") and will be used by the Issuer to purchase the 8.50% Junior Subordinated Deferrable Interest Debentures due 2012 (the "Debentures") issued by the Company. The Capital Securities and the Common Securities will be issued pursuant to the Amended and Restated Declaration of Trust of the Issuer, to be dated as of the Closing Date (the "Trust Agreement"), among the Company, as Sponsor, the trustees named therein (the "Trustees") and the holders from time to time of the Capital Securities and the Common Securities, which 2 represent undivided beneficial interests in the assets of the Issuer. The Debentures will be issued pursuant to a Junior Subordinated Indenture, to be dated as of the Closing Date (the "Indenture"), between the Company and Wilmington Trust Company. as trustee (the "Indenture Trustee" and a Company Order (as defined in the Indenture), dated as of the Closing Date. The Capital Securities, the Guarantee and the Debentures are collectively referred to herein as the "Securities". This Agreement, the Indenture, the Trust Agreement, the Guarantee Agreement and the Registration Rights Agreement (as defined below) are referred to collectively as the "Transaction Documents". Capitalized terms used herein without definition have the respective meanings specified in the Offering Memorandum. The Capital Securities will be offered and sold to the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon exemptions from the registration requirements of the Securities Act. In connection with the sale of the Capital Securities, the Issuer and the Company have prepared a preliminary offering memorandum dated April 11, 1997 (the "Preliminary Offering Memorandum") and will prepare an offering memorandum dated the date hereof (the "Offering Memorandum"), each setting forth information concerning the Issuer, the Company, the Transaction Documents and the Securities. Copies of the Preliminary Offering Memorandum have been, and copies of the Offering Memorandum will be, delivered by the Company to the Initial Purchasers pursuant to the terms of this Agreement. Any references herein to the Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to include all amendments and supplements thereto, unless otherwise noted and shall be deemed to include the filing of any document under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that is, or is deemed to be, incorporated by reference in the Offering Memorandum. The Issuer and the Company hereby confirm that they have authorized the use of the Preliminary Offering Memorandum and the Offering Memorandum in connection with the offering and resale of the Capital Securities by the Initial Purchasers. The Issuer and the Company understand that the Initial Purchasers propose to make an offering of the Capital Securities only on the terms, subject to the conditions and in the manner set forth in the Offering Memorandum and Section 3 hereof, as soon as the Initial Purchasers deem advisable after this Agreement has been executed and delivered. Holders of the Capital Securities (including the Initial Purchasers and their direct and indirect transferees) will be entitled to the benefits of a Registration Rights Agreement, substantially in the form attached hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the Issuer and the Company will agree to file with the Securities and Exchange Commission (the "Commission") (i) a registration statement under the Securities Act (the "Exchange Offer Registration Statement") registering an issue of capital securities of the Issuer and related junior subordinated deferrable interest debentures and guarantees of the Company (collectively, the "Exchange Securities") which are identical in all material respects to the Securities (except that the Exchange Securities will not contain terms with respect to transfer restrictions) and (ii) under certain circumstances, a shelf registration statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration Statement"). 3 All references in this Agreement to financial statements and schedules and other information that is "contained", "included", "deemed included" or "stated" in the Offering Memorandum (and all other references of like import) shall be deemed to include all such financial statements and schedules and other information that are, or are deemed to be, incorporated by reference in the Offering Memorandum. Section 1. Representations and Warranties. The Issuer and the Company, ------------------------------ jointly and severally, represent and warrant to and agree with the Initial Purchasers that: (a) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, did not, and on the Closing Date the Offering Memorandum will not, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty -------- ------- is made as to information contained in or omitted from the Preliminary Offering Memorandum or the Offering Memorandum in reliance upon and in conformity with written information relating to the Initial Purchasers furnished to the Company by or on behalf of any Initial Purchaser specifically for use therein (the "Initial Purchasers' Information"). The documents incorporated by reference or deemed to be incorporated by reference in the Offering Memorandum (the "Exchange Act Reports"), when they became effective or were last amended or filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act and the Exchange Act as applicable, and the rules and regulations promulgated under the Securities Act and Exchange Act (the "Rules and Regulations") of the Commission, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and any further documents so filed and incorporated by reference or deemed to be incorporated by reference in the Offering Memorandum, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Securities Act and the Exchange Act and the Rules and Regulations, as applicable, and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (b) Each of the Capital Securities, the Guarantee and the Debentures satisfy the eligibility requirements of Rule 144A(d)(3) of the Rules and Regulations. (c) Each of the Preliminary Offering Memorandum and the Offering Memorandum, as of its respective date, contains all of the information that, if requested by a prospective purchaser of the Capital Securities, would be required to be provided to such prospective purchaser pursuant to Rule 144A(d)(4) of the Rules and Regulations. 4 (d) None of the Issuer, the Company, any of their respective affiliates (as such term is defined in Rule 501(b) of Regulation D of the Rules and Regulations ("Regulation D")), or any person acting on behalf of the foregoing (other than an Initial Purchaser) has, directly or indirectly, made or will, directly or indirectly, make offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act. (e) None of the Issuer, the Company or any of their respective affiliates (as such term is defined in Rule 501(b) of Regulation D) or any person (other than an Initial Purchaser) acting on the behalf of the foregoing has engaged or will engage, in connection with the offering of the Securities or any security of the same class or series as any of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D. The Company and the Issuer have not entered and will not enter into any contractual arrangement with respect to the distribution of any of the Securities except for the Transaction Documents. (f) Assuming the accuracy of the representations and warranties of the Initial Purchasers in Section 3 hereof and their compliance with the agreements set forth therein, it is not necessary, in connection with the issuance and sale of the Capital Securities to the Initial Purchasers, and the offer, resale and delivery of the Capital Securities by the Initial Purchasers in the manner contemplated by this Agreement and the Offering Memorandum, to register any of the Securities under the Securities Act or to qualify the Indenture, the Guarantee or the Trust Agreement under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). (g) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California with the power and authority to own, lease and operate its properties, to conduct its business and to execute, deliver and perform its obligations under each of the Transaction Documents. Each subsidiary of the Company that is listed on Schedule B hereto (such subsidiaries collectively called the "Material Subsidiaries") is a corporation duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization with power and authority to own, lease and operate its properties and conduct its business. (h) The Issuer has been duly formed and is validly existing in good standing as a business trust under the Delaware Act with the power and authority to own property and to conduct its business. (i) The Company and the Material Subsidiaries are duly qualified in or licensed to transact business by, and are in good standing as foreign corporations in, each jurisdiction in which they own or lease real property, maintain an office or conduct their respective businesses and in which the failure, individually or in the aggregate with all other failures to be so licensed or qualified or to be in good 5 standing, would reasonably be expected to have a material adverse effect on the condition (financial or otherwise), results of operations or business of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). (j) As of December 31, 1996, the Company had a duly authorized, issued and outstanding capitalization as set forth in the Offering Memorandum under the caption "Capitalization". (k) All of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and nonassessable. All of the outstanding shares of capital stock of each Material Subsidiary (other than First American Title Guaranty Holding Company and First American Home Buyers Protection Corporation) have been duly and validly authorized and issued, are fully paid and nonassessable and are owned, directly or indirectly, by the Company free and clear of any pledge, lien, security interest, charge, claim, restriction on voting or transfer or encumbrance of any kind, except that (i) all of the issued and outstanding shares of First American Title Insurance Company, First American Trust Company and First American Real Estate Information Services, Inc. have been pledged to secure the Company's indebtedness under the Credit Facility (as such term is defined in the Offering Memorandum) and (ii) the transfer of ownership of the capital stock of First American Title Insurance Company is subject to the prior approval of the California Department of Insurance. The Company owns 80% of the issued and outstanding shares of the capital stock of First American Title Guaranty Holding Company ("FATGHC"). The Company owns 79% of the issued and outstanding shares of the capital stock of First American Home Buyers Protection Corporation ("FAHBPC"). The outstanding shares of the capital stock of FATGHC and FAHBPC that are owned by the Company have been duly and validly authorized and issued, are fully paid and are nonassessable, and are owned, indirectly, by the Company free and clear of any pledge, lien, security interest, charge, claim, restriction on voting or transfer or encumbrance of any kind, except that the holders of the minority interests in FATGHC and FAHBPC have the right to "put" their minority interests to First American Title Insurance Company. (l) Each of the Company and the Issuer has full right, power and authority to execute and deliver each of the Transaction Documents to which it is a party and to perform its obligations thereunder; and all action required to be taken by the Company or the Issuer for the due and proper authorization, execution and delivery of each Transaction Document to which it is a party and the consummation of the transactions contemplated thereby have been duly and validly taken. (m) This Agreement has been duly authorized, executed and delivered by each of the Company and the Issuer and is a legal, valid and binding agreement of each of the Company and the Issuer enforceable against each of the Issuer and the Company in accordance with its terms, except to the extent that such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors' rights generally 6 and by general equitable principles (whether considered in a proceeding in equity or at law) (the "Enforceability Exceptions"). (n) The Registration Rights Agreement has been duly authorized by each of the Company and the Issuer and, on the Closing Date, will have been executed and delivered by each of the Issuer and the Company and upon such execution by each of the Issuer and the Company (assuming the due authorization, execution and delivery thereof by the other parties thereto) the Registration Rights Agreement will constitute a valid and legally binding obligation of each of the Issuer and the Company enforceable against each of the Issuer and the Company, except as enforcement thereof may be limited by the Enforceability Exceptions. (o) The Trust Agreement has been duly authorized by the Company and, on the Closing Date, will have been executed and delivered by the Company and the Regular Trustees (as defined in the Trust Agreement), and assuming the due authorization, execution and delivery of the Trust Agreement by the Delaware Trustee and the Property Trustee (each as defined in the Trust Agreement), the Trust Agreement will constitute a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by the Enforceability Exceptions. (p) The Guarantee Agreement has been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company, and assuming due authorization, execution and delivery thereof by the Guarantee Trustee, not in its individual capacity but solely as trustee, will constitute a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by the Enforceability Exceptions. (q) The Capital Securities have been duly authorized by the Issuer and, when executed, authenticated, issued and delivered in the manner provided for in the Trust Agreement and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable undivided beneficial interests in the assets of the Issuer and will be entitled to the benefits of the Trust Agreement (and to the extent set forth therein, the Indenture); the issuance of the Capital Securities is not subject to preemptive or other similar rights; and holders of Capital Securities will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit incorporated under the General Corporation Law of the State of Delaware. (r) The Common Securities have been duly authorized by the Issuer and, when executed, issued and delivered by the Issuer to the Company against payment therefor as described in the Offering Memorandum, will be validly issued, fully paid and nonassessable undivided beneficial interests in the assets of the Issuer and will be entitled to the benefits of the Trust Agreement; the issuance of the Common Securities is not subject to preemptive or other similar rights; and on the Closing Date, all of the 7 issued and outstanding Common Securities of the Issuer will be directly owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (s) The Indenture has been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company in accordance with its terms, and assuming due authorization, execution and delivery thereof by the Indenture Trustee, will constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by the Enforceability Exceptions. On the Closing Date, the Indenture will conform in all material respects to the requirements of the Trust Indenture Act and the rules and regulations of the Commission applicable to an indenture which is qualified thereunder. (t) The Debentures have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered as provided in the Indenture, and the Company Order, dated as of the Closing Date, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by the Enforceability Exceptions. (u) Except as disclosed in the Offering Memorandum, upon payment by the Issuer of the purchase price therefor, the Property Trustee will, on the Closing Date, have good and valid title to all such Debentures, free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by the Issuer. (v) Each Transaction Document conforms in all material respects to the description thereof contained in the Offering Memorandum. (w) Price Waterhouse LLP, who is reporting upon the financial statements incorporated or deemed incorporated by reference in the Offering Memorandum, are and were independent public accountants as required by the Securities Act and the Rules and Regulations during the periods covered by the financial statements which are incorporated or deemed incorporated in the Offering Memorandum. (x) The consolidated financial statements of the Company incorporated or deemed incorporated by reference in the Offering Memorandum fairly present in all material respects the financial condition of the Company and its consolidated subsidiaries as of the respective dates indicated and the consolidated results of operations and changes in stockholders' equity of the Company and its consolidated subsidiaries for the periods specified. The consolidated financial statements of the Company incorporated or deemed incorporated by reference in the Offering Memorandum have been prepared in all material respects in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the 8 periods involved (except as indicated in the notes thereto), and the supporting schedules, if any, incorporated or deemed incorporated by reference in the Offering Memorandum present fairly in accordance with GAAP the information required to be stated therein. The summary historical consolidated financial data of the Company included in the Offering Memorandum fairly present in all material respects the information shown therein and have been compiled on a basis consistent with that of the consolidated audited financial statements of the Company incorporated or deemed incorporated by reference in the Offering Memorandum. (y) The execution, delivery and performance by the Company and the Issuer of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Capital Securities and compliance by the Company and the Issuer with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not conflict with or result in a breach or violation of any of the material terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries or the Issuer pursuant to, any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of its subsidiaries or the Issuer is a party or by which the Company or any of its subsidiaries or the Issuer is bound or to which any of the property or assets of the Company or any of its subsidiaries or the Issuer is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of its Material Subsidiaries, the Trust Agreement or any statute or any judgment, order, decree, rule or regulation of any court or arbitrator or governmental agency or body having jurisdiction over the Company or any of its Material Subsidiaries or the Issuer or any of their properties or assets; and no consent, approval, authorization or order of, or filing or registration with, any such court or arbitrator or governmental agency or body under any such statute, judgment, order, decree, rule or regulation is required for the execution, delivery and performance by the Company and the Issuer of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Capital Securities and compliance by the Company and the Issuer with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, orders, filings, registrations or qualifications (i) which shall have been obtained or made prior to the Closing Date and (ii) as may be required to be obtained or made under the Securities Act and applicable state securities laws as provided in the Registration Rights Agreement. (z) Since the respective dates as of which information is given in the Offering Memorandum, except as may be otherwise stated therein (i) there has been no material adverse change or any development involving a prospective material adverse change in the condition, financial or otherwise, or in the earnings, business affairs, management or business prospects of the Company, whether or not arising in the ordinary course of business, (ii) the Company has not incurred any material liability or obligation, direct or contingent, other than in the ordinary course of business, (iii) the Company has not entered into any material transaction other than in 9 the ordinary course of business and (iv) except for the issuance of 57,105 shares of the Company's common stock pursuant to its stock bonus plans, there has not been any change in the capital stock or long-term debt of the Company, or any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. (aa) There are no legal or governmental proceedings pending to which the Company, any of its subsidiaries or the Issuer is a party or of which any property or assets of the Company, any of subsidiaries or the Issuer is the subject which, singularly or in the aggregate, if determined adversely to the Company, any of its subsidiaries or the Issuer, could reasonably be expected to have a Material Adverse Effect; and to the best knowledge of the Company, no such proceedings are, to the best knowledge of the Company, threatened or contemplated by governmental authorities or threatened by others. (ab) No action has been taken and no statute, rule, regulation or order has been enacted, adopted or issued by any governmental agency or body which prevents the issuance of the Capital Securities or suspends the sale of the Capital Securities in any jurisdiction; no injunction, restraining order or order of any nature by any federal or state court of competent jurisdiction has been issued with respect to the Company, any of its subsidiaries or the Issuer which would prevent or suspend the issuance or sale of the Capital Securities or the use of the Preliminary Offering Memorandum or the Offering Memorandum in any jurisdiction; no action, suit or proceeding is pending against or, to the best knowledge of the Company, threatened against or affecting the Company, any of its subsidiaries or the Issuer before any court or arbitrator or any governmental agency, body or official, domestic or foreign, which could reasonably be expected to interfere with or adversely affect the issuance of the Capital Securities or in any manner draw into question the validity or enforceability of any of the Transaction Documents or any action taken or to be taken pursuant thereto; and the Company and the Issuer have complied with any and all requests by any securities authority in any jurisdiction for additional information to be included in the Preliminary Offering Memorandum and the Offering Memorandum. (ac) Neither the Company nor any of its Material Subsidiaries is (i) in violation of its charter or by-laws, (ii) in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any material term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject or (iii) in violation in any material respect of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject. (ad) The Company and each of its subsidiaries holds such licenses, certificates, consents, orders, approvals, permits and other authorizations from governmental authorities (including, without limitation, insurance licenses from the 10 insurance regulatory agencies of the various states where it conducts business ("Insurance Licenses")) which are necessary to own or lease, as the case may be, and to operate their respective properties and to carry on their respective business as presently conducted, except for such licenses, certificates, consents, orders, approvals, permits or other authorizations the failure to hold which could not reasonably be expected to have a Material Adverse Effect; the Company and each of its subsidiaries has fulfilled and performed all obligations necessary to maintain such licenses, certificates, consents, orders, approvals, permits and other authorizations (including, without limitation, the Insurance Licenses), except where the failure to so fulfill or perform such obligations could not reasonably be expected to have a Material Adverse Effect. There is no pending, or to the best knowledge of the Company threatened, action, suit, proceeding or investigation (and, to the best knowledge of the Company, no facts exist which the Company believes could reasonably be the basis for any such action, suit, proceeding or investigation) that may reasonably be expected to lead to the revocation, termination or suspension of any such license, certificate, consent, order, approval, permit or other authorization (including, without limitation, the Insurance Licenses), except where such revocation, termination or suspension could not reasonably be expected to have a Material Adverse Effect; and no insurance regulatory agency or body has issued any order or decree restricting or prohibiting the payment of dividends by the Company's insurance company subsidiaries to the Company. (ae) All ceded reinsurance and retrocessional agreements to which the Company's insurance company subsidiaries are a party are in full force and effect. Neither the Company nor any of such subsidiaries has received any notice from any of the other parties to such agreements that such other party intends not to perform in any material respect such agreement and none of the Company and such subsidiaries has any reason to believe that any of the other parties to such agreements will be unable to perform such agreements, except to the extent that (i) the Company or such subsidiary has established appropriate reserves on its financial statements or (ii) such nonperformance could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and each of the Company and its insurance company subsidiaries is entitled to give effect in its underwriting results in its most recently filed statutory financial statements in conformity with the insurance department of the state of domicile of each such subsidiary in effect at such time of preparation for reinsurance ceded pursuant to such agreements. (af) Neither the Issuer nor the Company is, or after giving effect to the consummation of the transactions contemplated herein, will be, and neither the Company nor the Issuer is directly or indirectly controlled by, or acting on behalf of any person which is, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). (ag) Other than pursuant to this Agreement or as disclosed in the Offering Memorandum under the caption "Plan of Distribution", there are no contracts, agreements or understandings between either the Issuer or the Company and any 11 person that give rise to a valid claim against the Issuer, the Company or any Initial Purchaser for a brokerage commission, finder's fee or other like payment. (ah) Except as set forth in the Registration Rights Agreement or as described in the Offering Memorandum and except for common share piggyback registration rights granted to John B. Ward in respect of the 137,143 shares of the Company's common stock received by him as partial consideration for the sale of Nationwide Field Services-Ward Associates, Inc. to the Company, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities to be covered by the Exchange Offer Registration Statement or the Shelf Registration Statement. Section 2. Sale and Delivery to the Initial Purchasers; Closing. (a) On ---------------------------------------------------- the basis of the representations, warranties and agreements herein contained, and subject to the terms and conditions herein set forth, the Issuer agrees to issue and sell to each Initial Purchaser, severally and not jointly, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Issuer, at the purchase price of $ 1,000 per Capital Security, an aggregate of $100,000,000 Capital Securities (except as otherwise provided in this Agreement, to be allocated to the Initial Purchasers in the number of Capital Securities set forth opposite the name of each Initial Purchaser in Schedule 1 hereto). The Issuer shall not be obligated to deliver any of the Capital Securities except upon payment for all of the Capital Securities to be purchased as provided herein. (b) As compensation to the Initial Purchasers for their commitments hereunder and in view of the fact that the proceeds of the sale of the Capital Securities and the Common Securities will be used to purchase the Debentures, the Company hereby agrees to pay on the Closing Date to CSI, for the accounts of the Initial Purchasers, a commission of $ 10.00 per Capital Security purchased by the Initial Purchasers by wire transfer of immediately available funds to a bank account designated in writing to the Company by CSI at least one business day prior to the Closing Date. (c) Payment of the purchase price for, and delivery of certificates for, the Capital Securities shall be made at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, at 10:00 A.M., New York City time, on April 22, 1997 or such later date and time not more than seven full business days thereafter as you, the Company and the Issuer shall mutually determine (such date and time of payment and delivery being herein called the "Closing Date"). On the Closing Date, payment of the purchase price for the Capital Securities shall be made to the Issuer by wire or book-entry transfer of same-day funds to such account or accounts as the Issuer shall specify prior to the Closing Date or by such other means as the parties hereto shall agree prior to the Closing Date against delivery to the Property Trustee as custodian for The Depository Trust Company ("DTC") of the certificates evidencing the Capital Securities. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition 12 of the obligations of the Initial Purchasers hereunder. Upon delivery, the Capital Securities sold to Qualified Institutional Buyers shall be in global form and Capital Securities sold to Accredited Investors (as defined in Section 3) shall be in certificated form, in each case registered in such names and in such denominations as CSI on behalf of the Initial Purchasers shall have requested in writing not less than two full business days prior to the Closing Date. The Company agrees to make one or more global certificates evidencing the Capital Securities available for inspection by CSI on behalf of the Initial Purchasers in New York, New York at least 24 hours prior to the Closing Date. (d) It is understood that each Initial Purchaser has authorized CSI, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Capital Securities that it has agreed to purchase. You may (but shall not be obligated to) make payment of the purchase price for the Capital Securities to be purchased by any Initial Purchaser whose funds shall not have been received by the Closing Date, but such payment shall not relieve such Initial Purchaser from its obligations hereunder. Section 3. Resale of the Securities. (a) The Initial Purchasers have ------------------------ advised the Company and the Issuer that they propose to offer the Capital Securities for resale upon the terms and subject to the conditions set forth herein and in the Offering Memorandum. Each Initial Purchaser, severally and not jointly, represents and warrants to, and agrees with, the Company and the Issuer that (i) it is purchasing the Capital Securities pursuant to a private sale exempt from registration under the Securities Act, (ii) it has not solicited offers for, or offered or sold, and will not solicit offers for, or offer or sell, the Capital Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act and (iii) it has solicited and will solicit offers for the Capital Securities only from, and has offered or sold and will offer, sell or deliver the Capital Securities, as part of its initial offering, only to (A) persons whom it reasonably believes to be qualified institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A under the Securities Act, or if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to it that each such account is a Qualified Institutional Buyer to whom notice has been given that such sale or delivery is being made in reliance on Rule 144A and in each case, in transactions in accordance with Rule 144A and (B) a limited number of other accredited investors ("Accredited Investors") as defined in Rule 501(a)(1), (2), (3) or (7) under Regulation D that are institutional investors in private sales exempt from registration under the Securities Act. Each Initial Purchaser, severally and not jointly, agrees that, prior to or simultaneously with the confirmation of sale by such Initial Purchaser to any purchaser of any of the Capital Securities purchased by such Initial Purchaser from the Issuer pursuant hereto, such Initial Purchaser shall furnish to that purchaser a copy of the Offering Memorandum (and any amendment or supplement thereto that the Company shall have furnished to such Initial Purchaser prior to the date of such confirmation of sale). In addition to the foregoing, each Initial Purchaser acknowledges and agrees that the Company and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Sections 5(d) and (h), counsel for the Company and for the Initial Purchasers, respectively, may rely upon the accuracy of the representations and warranties of the Initial Purchasers and their compliance with their 13 agreements contained in this Section 3, and each Initial Purchaser hereby consents to such reliance. (b) The Company acknowledges and agrees that the Initial Purchasers may sell Capital Securities to any affiliate of an Initial Purchaser and that any such affiliate may sell Capital Securities purchased by it to an Initial Purchaser, in each case in accordance with the terms of this Agreement. Section 4. Certain Covenants of the Issuer and the Company. The Issuer ----------------------------------------------- and the Company covenant with each Initial Purchaser as follows: (a) The Issuer and the Company will promptly deliver to each Initial Purchaser and counsel for the Initial Purchasers, without charge, as many copies of the Preliminary Offering Memorandum, the Offering Memorandum, any amendments or supplements thereto, the documents incorporated or deemed incorporated by reference in the Offering Memorandum and the Transaction Documents as such Initial Purchaser and their counsel may reasonably request. (b) Prior to making any amendment or supplement to the Offering Memorandum, the Company will furnish a copy thereof to each of the Initial Purchasers and counsel of the Initial Purchasers and will not effect such amendment or supplement to which the Initial Purchasers shall reasonably object by notice to the Company after a reasonable period of review. (c) If at any time prior to completion of the distribution of the Capital Securities by the Initial Purchasers any event shall occur or condition exist as a result of which it is necessary, in the reasonable opinion of the Initial Purchasers, counsel for the Initial Purchasers or counsel for the Company, to amend or supplement the Offering Memorandum in order that the Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading or if, in the reasonable opinion of the Initial Purchasers, counsel to the Initial Purchasers or counsel to the Company, such amendment or supplement is necessary to comply with applicable law, the Issuer and the Company will, subject to paragraph (b) of this Section 4, promptly prepare such amendment or supplement as may be necessary to correct such untrue statement or omission or to effect such compliance (in form and substance reasonably agreed upon by counsel to the Initial Purchasers), so that as so amended or supplemented, the statements in the Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading or so that such Offering Memorandum as so amended or supplemented will comply with applicable law, as the case may be, and furnish to the Initial Purchasers such number of copies of such amendment or supplement as the Initial Purchasers may reasonably request. The Issuer and the Company agree to notify the Initial Purchasers in writing to suspend use of the Offering Memorandum as 14 promptly as practicable after the occurrence of an event specified in this paragraph (c), and the Initial Purchasers hereby agree upon receipt of such notice from the Issuer and the Company to suspend use of the Offering Memorandum until the Issuer and the Company have amended or supplemented the Offering Memorandum to correct such misstatement or omission or to effect such compliance. (d) Except following the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, the Company and the Issuer will not, and will cause their affiliates not to, and will not authorize or knowingly permit any person acting on their behalf to, solicit any offer to buy or offer to sell any of the Securities by means of any form of general solicitation or general advertising within the meaning of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; and the Company and the Issuer will not offer, sell, contract to sell or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act to cease to be applicable to the offering and sale of the Securities as contemplated by this Agreement and the Offering Memorandum; (e) So long as any of the Securities are outstanding and "restricted securities" within the meaning of Rule 144(a)(3) of the Rules and Regulations, the Company will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) of the Rules and Regulations. This covenant is intended to be for the benefit of the holders, and the prospective purchasers designated by such holders, from time to time of such restricted securities. For so long as the Securities are outstanding and so long as the Initial Purchasers are making a market for the Capital Securities, the Company will furnish to the Initial Purchasers copies of any annual reports, quarterly reports and current reports filed by the Company with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by the Commission, and such other documents, reports and information as shall be furnished by the Company to the Indenture Trustee or the Property Trustee or to the holders of the Debentures or the Capital Securities pursuant to the Trust Agreement or the Indenture or the Exchange Act or any Rule or Regulation. (f) For so long as the Securities are outstanding, the Company agrees to file with the Commission, in a timely manner, all forms and reports required to be filed by it under the Exchange Act. (g) Each Capital Security (and each Debenture distributed to holders of Capital Securities pursuant to the terms of the Trust Agreement) will bear a legend (and with respect to the Debentures a similar legend) substantially in the following form until 15 such legend shall no longer be necessary or advisable because the Capital Securities (and the Debentures) are no longer subject to the restrictions on transfer described herein: "THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE LATER OF THE DATE WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR) EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSE (II)(D) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE PROPERTY TRUSTEE FOR SUCH SECURITIES TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND SUBSTANCE." (h) The Company will, or will cause the Issuer to, arrange for the registration and qualification of the Capital Securities for offering and sale under the applicable securities or "blue sky" laws of such states and other U.S. jurisdictions as the Initial Purchasers may reasonably designate in connection with the resale of Capital Securities as contemplated by this Agreement and the Offering Memorandum and will 16 continue such qualifications in effect for as long as may be reasonably required to complete the distribution of the Capital Securities; provided -------- that the Company shall not be required to qualify as a foreign corporation or consent to the service of process under the laws of any such state (except service of process with respect to the offering and sale of the Capital Securities). The Company shall, or shall cause the Issuer to, promptly advise the Initial Purchasers of the receipt by the Company or the Issuer, as the case may be, of any order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum or any notification with respect to the suspension of the qualification or exemption from qualification of the Capital Securities for offering or sale in any jurisdiction or the institution of any proceeding for such purpose and shall use its best efforts to prevent the issuance of any such order preventing or suspending the use of the Preliminary Offering Memorandum or the Offering Memorandum or suspending any such qualification and, if any such suspension is issued, to obtain the lifting thereof at the earliest possible time (i) Neither the Issuer nor the Company shall, directly or indirectly, for a period commencing on the date hereof and ending on the 30th day after the Closing Date, except with the prior written consent of CSI, offer to sell, pledge, sell, grant any option, warrant or other right to purchase, or otherwise transfer or dispose of (or agree to do any of the foregoing) (a) any trust certificates or other securities of the Issuer or any similar trust, (b) any preferred stock or any other security of the Company that is substantially similar to the Capital Securities or (c) any other securities which are convertible into, or exercisable or exchangeable for, any of the securities described in (a) and (b) above. The foregoing sentence shall not apply to (i) the issuance of the Common Securities to the Company by the Issuer, (ii) the issuance of the Capital Securities being sold hereunder and the sale thereof pursuant hereto, (iii) the issuance of the Debentures to the Issuer by the Company or (iv) the issuance of the Exchange Securities. (j) The Company and the Issuer agree that no future offer and sale of securities of the Company or the Issuer of any class will be made if, as a result of the doctrine of "integration" referred to in Rule 502 of Regulation D, such offer and sale could reasonably have been expected, at the time of such sale, based upon public laws, Commission releases and Commission no-action letters available at such time, to render invalid the exemption from the registration requirements of the Securities Act relied upon in connection with the transactions contemplated by this Agreement. (k) In connection with the original distribution of the Capital Securities, the Company agrees that, prior to any offer or resale of the Capital Securities by the Initial Purchasers, the Initial Purchasers and counsel for the Initial Purchasers shall have the right to make, and promptly receive from the Company adequate information with respect to, reasonable inquiries into the business of the Company and its subsidiaries. 17 (l) In connection with the offering of the Capital Securities, the Company and the Issuer agree to make their officers, trustees, independent accountants and legal counsel reasonably available upon request by the Initial Purchasers. (m) During the period from the Closing Date until two years after the Closing Date, without the prior written consent of the Initial Purchasers, neither the Company nor the Issuer, will, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Capital Securities that have been reacquired by them, except for Securities purchased by the Company or any of its affiliates and resold in a transaction registered under the Securities Act. (n) The Company and the Issuer will do and perform all things required to be done and performed by it under this Agreement that are within their control prior to or after the Closing Date, and to use their reasonable best efforts to satisfy all conditions precedent on their part to the delivery of the Capital Securities. (p) Prior to the Closing Date, not to issue any press release or other communication directly or indirectly or hold any press conference with respect to the Company, its condition, financial or otherwise, or earnings, business affairs or business prospects (except for routine oral marketing communications in the ordinary course of business and consistent with the past practices of the Company and of which the Initial Purchasers are notified), without the prior written consent of the Initial Purchasers, unless in the judgment of the Company and its counsel, and after notification to the Initial Purchasers, such press release or communication is required by law. Section 5. Conditions of Initial Purchasers' Obligation. The respective -------------------------------------------- obligations of the several Initial Purchasers hereunder are subject to the accuracy, on and as of the date hereof and the Closing Date, of the representations and warranties of the Company and the Issuer contained herein, to the accuracy of the statements of the Company and the Issuer and their respective officers or trustees made in any certificates delivered pursuant hereto, to the performance by the Company and the Issuer of their respective obligations hereunder, and to each of the following additional terms and conditions: (a) The Offering Memorandum (and any amendments or supplements thereto) shall have been printed and copies distributed to the Initial Purchasers as promptly as practicable on or following the date of this Agreement or at such other date and time as to which the Initial Purchasers may agree; and no stop order suspending the sale of the Capital Securities in any jurisdiction shall have been issued and no proceeding for that purpose shall have been commenced or shall be pending or threatened. (b) None of the Initial Purchasers shall have discovered and disclosed to the Company on or prior to the Closing Date that the Offering Memorandum or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion of counsel for the Initial Purchasers, is material or omits to state any fact 18 which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of each of the Transaction Documents and the Offering Memorandum, and all other legal matters relating to the Transaction Documents and the transactions contemplated thereby, shall be satisfactory in all material respects to the Initial Purchasers, and the Company shall have furnished to the Initial Purchasers all documents and information that they or their counsel may reasonably request to enable them to pass upon such matters. (d) White & Case shall have furnished to the Initial Purchasers their written opinion, as counsel to the Company, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially to the effect set forth in Annex B hereto. (e) Craig I. DeRoy shall have furnished to the Initial Purchasers his written opinion, as General Counsel to the Company, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially in the form of Annex C hereto. (f) Morris James Hitchens & Williams shall have furnished to the Initial Purchasers their written opinion, as counsel to the Issuer, the Indenture Trustee, the Property Trustee, the Delaware Trustee and the Guarantee Trustee, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers and to the effect that the Delaware Trustee is a Delaware banking corporation, has been duly incorporated and is validly existing in good standing as a banking corporation under the laws of the State of Delaware and has the corporate power to act as trustee of a Delaware business trust under the laws of the State of Delaware, 12 Del. (S) 3801 et seq, and substantially --- -- --- to the effect set forth in Annex D hereto. (g) The Initial Purchasers shall have received from Simpson Thacher & Bartlett, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to such matters as the Initial Purchasers may reasonably require, and the Company and the Issuer shall have furnished to such counsel such documents and information as they reasonably request for the purpose of enabling them to pass upon such matters. (h) The Company shall have furnished to the Initial Purchasers a letter (the "Initial Letter") of Price Waterhouse LLP, addressed to the Initial Purchasers and dated the date hereof, in form and substance satisfactory to the Initial Purchasers, substantially to the effect set forth in Annex E hereto. 19 (i) The Company shall have furnished to the Initial Purchasers a letter (the "Bring-Down Letter") of Price Waterhouse LLP, addressed to the Initial Purchasers and dated the Closing Date (i) confirming that they are independent public accountants with respect to the Company and its subsidiaries within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of Certified Public Accountants ("AICPA") and its interpretations and rulings thereunder, (ii) stating, as of the date of the Bring-Down Letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Offering Memorandum, as of a date not more than five business days prior to the date of the Bring-Down Letter), that the conclusions and findings of such accountants with respect to the financial information and other matters covered by the Initial Letter are accurate and (iii) confirming in all material respects the conclusions and findings set forth in the Initial Letter. In addition, the Company shall have received letters from such accountants consenting to the use, in connection with the offering of the Capital Securities, of the audited financial statements of the Company prepared by such accountants and incorporated by reference in the Offering Memorandum. (j) The Company shall have furnished to the Initial Purchasers a certificate, dated the Closing Date, of its president and its chief financial officer stating that (A) such officers have carefully examined the Offering Memorandum, (B) in their opinion, the Offering Memorandum, as of its date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and since the date of the Offering Memorandum, no event has occurred which should have been set forth in a supplement or amendment to the Offering Memorandum so that the Offering Memorandum (as so amended or supplemented) would not include any untrue statement of a material fact and would not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and (C) as of the Closing Date, the representations and warranties of the Company in this Agreement are true and correct in all material respects, the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date, and subsequent to the date of the most recent financial statements contained or incorporated by reference in the Offering Memorandum, there has been no material adverse change in the financial position or results of operation of the Company or any of its subsidiaries, or any change, or any development including a prospective change, in or affecting the condition (financial or otherwise), results of operations or business of the Company and its subsidiaries taken as a whole, except as set forth in the Offering Memorandum. (k) The Issuer shall have furnished to the Initial Purchasers a certificate, dated the Closing Date, of its Regular Trustees stating that (A) such trustees have carefully examined the Offering Memorandum, (B) in their opinion, the Offering Memorandum, as of its date, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light 20 of the circumstances under which they were made, not misleading, and since the date of the Offering Memorandum, no event has occurred which should have been set forth in a supplement or amendment to the Offering Memorandum so that the Offering Memorandum (as so amended or supplemented) would not include any untrue statement of a material fact and would not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and (C) as of the Closing Date, the representations and warranties of the Issuer in this Agreement are true and correct in all material respects, the Issuer has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder on or prior to the Closing Date. (l) The Initial Purchasers shall have received a counterpart of the Registration Rights Agreement which shall have been executed and delivered by a duly authorized officer of the Company and the Issuer. (m) Each of the Transaction Documents shall have been duly executed and delivered by the parties thereto, and the Capital Securities and the Debentures shall have been duly executed and delivered by the Issuer and the Company and duly authenticated by the Property Trustee and the Indenture Trustee, respectively. (n) If any event shall have occurred that requires the Company under Section 4(c) to prepare an amendment or supplement to the Offering Memorandum, such amendment or supplement shall have been prepared, the Initial Purchasers shall have consented to its use, and copies thereof shall have been delivered to the Initial Purchasers reasonably in advance of the Closing Date. (o) There shall not have occurred any invalidation of Rule 144A under the Securities Act by any court or any withdrawal or proposed withdrawal of any of the rules and regulations by the Commission or any amendment or proposed amendment thereof by the Commission which in the judgment of the Initial Purchasers would materially impair the ability of the Initial Purchasers to purchase, hold or effect resales of the Capital Securities as contemplated hereby. (p) Subsequent to the execution and delivery of this Agreement or, if earlier, the dates as of which information is given in the Offering Memorandum (exclusive of any amendment or supplement thereto), there shall not have been any change in the capital stock or long-term debt or any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), results of operations, business or prospects of the Company and its subsidiaries taken as a whole, the effect of which, in any such case described above, is, in the judgment of the Initial Purchasers, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or delivery of the Capital Securities on the terms and in the manner contemplated by this Agreement and the Offering Memorandum (exclusive of any amendment or supplement thereto). 21 (q) No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date, prevent the issuance or sale of the Capital Securities; and no injunction, restraining order or order of any other nature by any federal or state court of competent jurisdiction shall have been issued as of the Closing Date which would prevent the issuance or sale of the Capital Securities. (r) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall have occurred in the rating accorded the Capital Securities or any of the Company's debt securities or preferred stock by any "nationally recognized statistical rating organization", as such term is defined by the Commission for purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no such organization shall have publicly announced that it has under surveillance or review (other than an announcement with positive implications of a possible upgrading), its rating of the Capital Securities or any of the Company's debt securities or preferred stock. (s) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange, the American Stock Exchange or the over-the-counter market shall have been suspended or limited, or minimum prices shall have been established on any such exchange or market by the Commission, by any such exchange or by any other regulatory body or governmental authority having jurisdiction, or trading in any securities of the Company on any exchange or in the over-the-counter market shall have been suspended or (ii) any moratorium on commercial banking activities shall have been declared by federal or New York state authorities or (iii) an outbreak or escalation of hostilities or a declaration by the United States of a national emergency or war or (iv) a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) the effect of which, in the case of this clause (iv), is, in the judgment of the Initial Purchasers, so material and adverse as to make it impracticable or inadvisable to proceed with the sale or the delivery of the Capital Securities on the terms and in the manner contemplated by this Agreement and in the Offering Memorandum (exclusive of any amendment or supplement thereto). 6. Termination. The obligations of the Initial Purchasers hereunder may ----------- be terminated by the Initial Purchasers, in their absolute discretion, by notice given to and received by the Company prior to delivery of and payment for the Capital Securities if, prior to that time, any of the events described in Section 5(p), (q), (r), (s) or (t) shall have occurred and be continuing. 7. Defaulting Initial Purchasers. (a) If, on the Closing Date, any ----------------------------- Initial Purchaser defaults in the performance of its obligations under this Agreement, the non-defaulting Initial Purchasers may make arrangements for the purchase of the Capital Securities which such defaulting Purchaser agreed but failed to purchase by other persons satisfactory to the Company and the non-defaulting Initial Purchasers, but if no such arrangements are made within 36 hours after such default, this Agreement shall terminate without liability on the part 22 of the non-defaulting Initial Purchasers, the Issuer or the Company, except that the Company and the Issuer will continue to be liable for the payment of expenses to the extent set forth in Sections 8 and 12 and except that the provisions of Sections 9 and 10 shall not terminate and shall remain in effect. As used in this Agreement, the term "Initial Purchasers" includes, for all purposes of this Agreement unless the context otherwise requires, any party not listed in Schedule 1 hereto that, pursuant to this Section 7, purchases Capital Securities which a defaulting Initial Purchaser agreed but failed to purchase. (b) Nothing contained herein shall relieve a defaulting Initial Purchaser of any liability it may have to the Company, the Issuer or any non-defaulting Initial Purchaser for damages caused by its default. If other persons are obligated or agree to purchase the Capital Securities of a defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or the Company may postpone the Closing Date for up to seven full business days in order to effect any changes that in the opinion of counsel for the Company or counsel for the Initial Purchasers may be necessary in the Offering Memorandum or in any other document or arrangement, and the Company and the Issuer agree to promptly prepare any amendment or supplement to the Offering Memorandum that effects any such changes. 8. Reimbursement of Initial Purchasers' Expenses. If (a) this Agreement --------------------------------------------- shall have been terminated pursuant to Section 7, (b) the Company or the Issuer shall fail to tender any of the Securities for delivery to the Initial Purchasers for any reason permitted under this Agreement or (c) the Initial Purchasers shall decline to purchase the Capital Securities for any reason permitted under this Agreement, the Company and the Issuer shall reimburse the Initial Purchasers for such out-of-pocket expenses (including reasonable fees and disbursements of counsel) as shall have been reasonably incurred by the Initial Purchasers in connection with this Agreement and the proposed purchase and resale of the Capital Securities. If this Agreement is terminated pursuant to Section 7 by reason of the default of one or more of the Initial Purchasers, the Company and the Issuer shall not be obligated to reimburse any defaulting Initial Purchaser on account of such expenses. 9. Indemnification. (a) The Company and the Issuer shall, jointly and --------------- severally, indemnify and hold harmless each Initial Purchaser, its affiliates, their respective officers, directors, employees, representatives and agents, and each person, if any, who controls any Initial Purchaser within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 9(a) and Section 10 as an Initial Purchaser), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, without limitation, any loss, claim, damage, liability or action relating to purchases and sales of the Capital Securities), to which that Initial Purchaser may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto or in any information provided by the Company pursuant to Section 4(e) or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances 23 under which they were made, not misleading, and shall reimburse each Initial Purchaser promptly upon demand for any legal or other expenses reasonably incurred by that Initial Purchaser in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that --------- ------- the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with any Initial Purchasers' Information; and provided, further, --------- ------- that with respect to any such untrue statement in or omission from the Preliminary Offering Memorandum, the indemnity agreement contained in this Section 9(a) shall not inure to the benefit of any such Initial Purchaser to the extent that the sale to the person asserting any such loss, claim, damage, liability or action was an initial resale by such Initial Purchaser and any such loss, claim, damage, liability or action of or with respect to such Initial Purchaser results from the fact that both (A) to the extent required by applicable law, a copy of the Offering Memorandum was not sent or given to such person at or prior to the written confirmation of the sale of such Capital Securities to such person and (B) the untrue statement in or omission from the Preliminary Offering Memorandum was corrected in the Offering Memorandum unless, in either case, such failure to deliver the Offering Memorandum was a result of non-compliance by the Company with Section 4(a). For purposes of the last proviso to the immediately preceding sentence, the term "Offering Memorandum" shall not be deemed to include the documents incorporated therein by reference, and no Initial Purchaser shall be obligated to send or give any supplement or amendment to any document incorporated by reference in any Preliminary Offering Memorandum or the Offering Memorandum to any person. (b) Each Initial Purchaser, severally and not jointly, shall indemnify and hold harmless the Company, its affiliates, the Issuer, their respective officers, trustees, directors, employees, representatives and agents, and each person, if any, who controls the Company or the Issuer within the meaning of the Securities Act or the Exchange Act (collectively referred to for purposes of this Section 9(b) and Section 10 as the Company), from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company may become subject, whether commenced or threatened, under the Securities Act, the Exchange Act, any other federal or state statutory law or regulation, at common law or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum or the Offering Memorandum or in any amendment or supplement thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any Initial Purchasers' Information provided by such Initial Purchaser and shall reimburse the Company promptly upon demand for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending or preparing to defend against or appearing as a third party witness in connection with any such loss, claim, damage, liability or action as such expenses are incurred. 24 (c) Promptly after receipt by an indemnified party under this Section 9 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Section 9(a) or 9(b), notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying --------- ------- party shall not relieve it from any liability which it may have under this Section 9 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and, provided, further, that the failure to notify the indemnifying party --------- ------- shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 9. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 9 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that an indemnified party shall have the --------- ------- right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel for the indemnified party will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based upon advice of counsel to the indemnified party) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based upon advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm of attorneys (in addition to any local counsel) at any one time for all such indemnified party or parties. Each indemnified party, as a condition of the indemnity agreements contained in Sections 9(a) and 9(b), shall use all reasonable efforts to cooperate with the indemnifying party in the defense of any such action or claim. No indemnifying party shall be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought 25 hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding and contains no findings of fault or culpability or failure to act by or on behalf of the Indemnified Party. The obligations of the Company and the Initial Purchasers in this Section 9 and in Section 10 are in addition to any other liability that the Company or the Initial Purchasers, as the case may be, may otherwise have, including in respect of any breaches of representations, warranties and agreements made herein by any such party. 10. Contribution. If the indemnification provided for in Section 9 is ------------ unavailable or insufficient to hold harmless an indemnified party under Section 9(a) or 9(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other from the offering of the Capital Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Initial Purchasers on the other with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchasers on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds from the offering of the Capital Securities purchased under this Agreement (before deducting expenses) received by or on behalf of the Company, on the one hand, and the total discounts and commissions received by the Initial Purchasers with respect to the Capital Securities purchased under this Agreement, on the other, bear to the total gross proceeds from the sale of the Capital Securities under this Agreement, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company information supplied by the Company on the one hand or to any Initial Purchasers' Information on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Initial Purchasers agree that it would not be just and equitable if contributions pursuant to this Section 10 were to be determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 10 shall be deemed to include, for purposes of this Section 10, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 10, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchaser with respect to the Capital Securities purchased by it under 26 this Agreement exceeds the amount of any damages which such Initial Purchaser has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers' obligations to contribute as provided in this Section 10 are several in proportion to their respective purchase obligations and not joint. 11. Persons Entitled to Benefit of Agreement. This Agreement shall inure ---------------------------------------- to the benefit of and be binding upon the Initial Purchasers, the Company, the Issuer and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except as provided in Sections 9 and 10 with respect to affiliates, officers, trustees, directors, employees, representatives, agents and controlling persons of the Company, the Issuer and the Initial Purchasers and in Section 4(e) with respect to holders and prospective purchasers of the Capital Securities. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 11, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. 12. Expenses. The Company and the Issuer agree with the Initial -------- Purchasers to pay (a) the costs incident to the authorization, issuance, sale, preparation and delivery of the Securities and any taxes payable in that connection; (b) the costs incident to the preparation, printing and distribution of the Preliminary Offering Memorandum, the Offering Memorandum and any amendments or supplements thereto; (c) the costs of reproducing and distributing each of the Transaction Documents; (d) the costs incident to the preparation, printing and delivery of the certificates evidencing the Securities, including stamp duties and transfer taxes, if any, payable upon issuance of the Securities; (e) the fees and expenses of the Company's counsel and independent accountants; (f) the fees and expenses of qualifying the Capital Securities under the securities laws of the several jurisdictions as provided in Section 4(g) and of preparing, printing and distributing Blue Sky Memoranda (including related reasonable fees and expenses of counsel for the Initial Purchasers); (g) any fees charged by rating agencies for rating the Capital Securities; (h) the fees and expenses of the Trustees and any paying agent (including related fees and expenses of any counsel to such parties); (i) the cost of qualifying the Capital Securities with DTC and other costs and expenses incident to the performance of the obligations of the Company under this Agreement which are not otherwise specifically provided for in this Section 12; provided, however, that except as provided in this Section 12 and Section --------- ------- 8, the Initial Purchasers shall pay their own costs and expenses. 13. Survival. The respective indemnities, rights of contribution, -------- representations, warranties and agreements of the Company, the Issuer and the Initial Purchasers contained in this Agreement or made by or on behalf of the Company, the Issuer or the Initial Purchasers pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Capital Securities and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any 27 investigation made by or on behalf of any of them or any of their respective affiliates, officers, directors, employees, representatives, agents or controlling persons. 14. Notices, etc. All statements, requests, notices and agreements ------------ hereunder shall be in writing, and: if to the Initial Purchasers, shall be delivered or sent by mail or telecopy transmission to Chase Securities Inc., 270 Park Avenue, New York, New York 10017, Attention: Mr. Louis DeCaro (telecopier no.: (212) 270- ---------------- 6170); or if to the Company or the Issuer, shall be delivered or sent by mail or telecopy transmission to the address of the Company set forth in the Offering Memorandum, Attention: Mark R Arnesen (telecopier no.: 714-836- -------------- 1841); provided that any notice to an Initial Purchaser pursuant to Section 9(c) -------- shall also be delivered or sent by mail to such Initial Purchaser at its address set forth on the signature page hereof. Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. The Company and the Issuer shall be entitled to act and rely upon any request, consent, notice or agreement given or made on behalf of the Initial Purchasers by CSI. 15. Definition of Terms. For purposes of this Agreement, (a) the term ------------------- "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act. 16. Initial Purchasers' Information. The parties hereto acknowledge and ------------------------------- agree that the Initial Purchasers' Information consists solely of the following information in the Preliminary Offering Memorandum and the Offering Memorandum: (i) the last paragraph on the front cover page concerning the terms of the offering by the Initial Purchasers; (ii) the legend on the inside front cover page concerning stabilizing activities by the Initial Purchasers; and (iii) the statements concerning the Initial Purchasers contained in (i) the second sentence of the fifth paragraph and (ii) paragraph seven and under the heading "Plan of Distribution". 17. Governing Law. This Agreement shall be governed by and construed in ------------- with the laws of the State of New York. 18. Counterparts. This Agreement may be executed in one or more ------------ counterparts (which may include counterparts delivered by telecopier) and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. 28 19. Amendments. No amendment or waiver of any provision of this ---------- Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto. 20. Headings. The headings herein are inserted for convenience of -------- reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement among the Company, the Issuer and the several Initial Purchasers in accordance with its terms. Very truly yours, FIRST AMERICAN CAPITAL TRUST By The First American Financial Corporation, as Sponsor By /s/ THOMAS A. KLEMENS ------------------------ Name: Thomas A. Klemens Title: Regular Trustee THE FIRST AMERICAN FINANCIAL CORPORATION By /s/ THOMAS A. KLEMENS ----------------------------------------- Name: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer Accepted: CHASE SECURITIES INC. By /s/ LOUIS DE CARO ---------------------- Authorized Signatory Address for notices pursuant to Section 9(c): Chase Securities Inc. 270 Park Avenue New York, New York 10017 Attention: Mr. Louis DeCaro Telecopier No: (212) 270-6710 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement among the Company, the Issuer and the several Initial Purchasers in accordance with its terms. Very truly yours, FIRST AMERICAN CAPITAL TRUST By The First American Financial Corporation, as Sponsor By ------------------------ Name: Thomas A. Klemens Title: Regular Trustee THE FIRST AMERICAN FINANCIAL CORPORATION By ----------------------------------------- Name: Thomas A. Klemens Title: Executive Vice President and Chief Financial Officer Accepted: CHASE SECURITIES INC. By /s/ LOUIS DE CARO ---------------------- Authorized Signatory Address for notices pursuant to Section 9(c): Chase Securities Inc. 270 Park Avenue New York, New York 10017 Attention: Mr. Louis DeCaro Telecopier No: (212) 270-6710 UBS SECURITIES LLC By RICHARD M MESSINA --------------------- Authorized Signatory RICHARD M. MESSINA VICE PRESIDENT Address for notices pursuant to Section 9(c): UBS Securities LLC 299 Park Avenue New York, New York 10022 Attention: Matthew Grayson Telecopier No: (212) 821-4816 SCHEDULE 1
Principal Amount Initial Purchasers of Capital Securities ------------------ --------------------- Chase Securities Inc. $ 50,000,000 UBS Securities LLC 50,000,000 ------------ Total $100,000,000
SCHEDULE 2 Material Subsidiaries --------------------- First American Trust Company First American Title Insurance Company First American Title Guaranty Holding Company First American Home Buyers Protection Corporation First American Title Insurance Company of New York First American Flood Data Services, Inc. First American Real Estate Information Services, Inc. Annex A Form of Registration Rights Agreement ANNEX B Form of White & Case Opinion White & Case shall have furnished to the Initial Purchasers their written opinion, as counsel to the Company, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially to the effect set forth below: (a) The Company has full right, power and authority to execute and deliver each of the Transaction Documents to which it is a party and to perform its obligations thereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery of each of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby have been duly and validly taken. (b) This Agreement has been duly authorized, executed and delivered by the Company. (c) Each of the Indenture, the Trust Agreement, the Guarantee Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by the Company, and each of the Indenture, the Trust Agreement, the Guarantee Agreement and the Registration Rights Agreement constitutes a legal, valid and binding agreement of the Company, enforceable against the Company and the Trustee in accordance with its terms, subject to the Enforceability Exceptions. (d) The Debentures have been duly authorized, executed, issued and delivered by the Company and, when the Debentures have been duly authenticated by the Indenture Trustee and paid for by the Issuer, will constitute legal, valid and binding obligations of the Company, entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions. (e) Each Transaction Document conforms in all material respects to the description thereof contained in the Offering Memorandum. (f) The statements set forth in the Offering Memorandum under the captions "Description of Capital Securities", "Description of Junior Subordinated Debentures", "Description of Guarantee", "Relationship Among the Securities, the Junior Subordinated Debentures and the Guarantee" and "Benefit Plan Considerations" insofar as they purport to describe the provisions of the law and documents referred to therein are accurate. (g) Assuming the accuracy of the representations, warranties and agreements of the Company and of the Initial Purchasers contained in this Agreement, the issuance and sale of the Capital Securities and the offer, resale and delivery of the 2 Capital Securities in the manner contemplated by this Agreement and the Offering Memorandum, are exempt from the registration requirements of the Securities Act, and it is not necessary to qualify the Indenture under the Trust Indenture Act. (h) Neither the Issuer nor the Company nor any of its subsidiaries is an "investment company" or a company "controlled by" an investment company within the meaning of the Investment Company Act and the rules and regulations of the Commission thereunder, without taking account of any exemption under the Investment Company Act arising out of the number of holders of the Company's securities. (i) Subject to the qualifications set forth therein, the statements contained in the Offering Memorandum under the caption "Certain United States Federal Income Tax Consequences," to the extent they constitute matters of United States federal income tax law and legal conclusions with respect thereto, are accurate in all material respects. In addition, such counsel shall state that, although they have not undertaken, except as otherwise indicated in their opinion, to determine independently, and do not assume any responsibility for the accuracy or completeness of the Statements in the Offering Memorandum, as counsel for the Company, they reviewed the Offering Memorandum and the documents incorporated or deemed incorporated by reference therein (the "Exchange Act Documents"), participated in the preparation of the Offering Memorandum and in discussions with the Initial Purchasers and representatives of the Company and its independent public accountants and advised the Company as to the requirements of the Securities Act and the applicable rules and regulations thereunder. Such counsel shall also state that they reviewed certificates of certain officers of the Company and the letter from the Company's independent accountants. Such counsel shall state that nothing that came to their attention that has caused them to believe that any part of the Offering Memorandum (including the Exchange Act Documents) contained any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that such counsel need not express an opinion with respect to the financial statements and notes and schedules thereto or any other statistical or financial data included in the Offering Memorandum). 3 ANNEX C [Form of Opinion of Craig I. DeRoy] Craig I. DeRoy, shall have furnished to the Initial Purchasers his written opinion, as general counsel to the Company, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially to the effect set forth below: (a) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of California; and the Company and each of its Material Subsidiaries is duly qualified or licensed to do business and is in good standing as a foreign corporation in each jurisdiction in which its ownership or lease of property, maintenance of an office or the conduct of its businesses requires such qualification, and has all power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged (except where the failure to so qualify or be licensed or have such power or authority would not, singularly or in the aggregate, have a Material Adverse Effect). (b) The Company has an authorized capitalization as set forth in the Offering Memorandum. (c) All of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and were not issued in violation of the preemptive rights of any other stockholder of the Company; and all of the issued and outstanding shares of capital stock of each of the Company's Material Subsidiaries (other than First American Title Guaranty Holding Company and First American Home Buyers Protection Corporation) are owned of record by the Company or one or more of its subsidiaries, and all such shares of such capital stock are duly and validly issued, fully paid and non-assessable, except that (i) all of the issued and outstanding shares of First American Title Insurance Company, First American Trust Company and First American Real Estate Information Services, Inc. have been pledged to secure the Company's indebtedness under the Credit Facility (as such term is defined in the Offering Memorandum) and (ii) the transfer of ownership of the capital stock of First America Title Insurance Company is subject to the prior approval of the California Department of Insurance. The Company owns 80% of the issued and outstanding shares of the capital stock of First American Title Guaranty Holding Company ("FATGHC"). The Company owns 79% of the issued and outstanding shares of the capital stock of First American Home Buyers Protection Corporation ("FAHBPC"). The outstanding shares of the capital stock of FATGHC and FAHBPC that are owned by the Company have been duly and validly authorized and issued, are fully paid and are nonassessable, and are owned, indirectly, by the Company free and clear of any pledge, lien, security interest, charge, claim, restriction on voting or transfer or encumbrance of any kind, except that the holders of the minority interests in FATGHC and FAHBPC have the right to "put" their minority interests to First American Title Insurance Company. 4 (d) The execution, delivery and performance by the Company and the Issuer of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Capital Securities and compliance by the Company and the Issuer with the material terms thereof and the consummation of the transactions contemplated by the Transaction Documents will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries or the Issuer pursuant to, any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which the Company or any of its subsidiaries or the Issuer is a party or by which the Company or any of its subsidiaries or the Issuer is bound or to which any of the property or assets of the Company or any of its subsidiaries or the Issuer is subject, nor will such actions result in any violation of the provisions of the charter or by-laws of the Company or any of its Material Subsidiaries, the Trust Agreement or any statute or any judgment, order, decree, rule or regulation of any court or arbitrator or governmental agency or body having jurisdiction over the Company or any of its Material Subsidiaries or the Issuer or any of their properties or assets; and no consent, approval, authorization or order of, or filing or registration with, any such court or arbitrator or governmental agency or body under any such statute, judgment, order, decree, rule or regulation is required for the execution, delivery and performance by the Company and the Issuer of each of the Transaction Documents, the issuance, authentication, sale and delivery of the Capital Securities and compliance by the Company and the Issuer with the terms thereof and the consummation of the transactions contemplated by the Transaction Documents, except for such consents, approvals, authorizations, filings, registrations or qualifications (i) which have been obtained or made prior to the Closing Date and (ii) as may be required to be obtained or made under the Securities Act and applicable state securities laws. (e) To the best knowledge of such counsel, there are no pending actions or suits or judicial, arbitral, rule-making, administrative or other proceedings to which the Company or any of its subsidiaries or the Issuer is a party or of which any property or assets of the Company or any of its subsidiaries or the Issuer is the subject which (A) singularly or in the aggregate, if determined adversely to the Company or any of its subsidiaries or the Issuer, could reasonably be expected to have a Material Adverse Effect or (B) questions the validity or enforceability of any of the Transaction Documents or any action taken or to be taken pursuant thereto; and to the best knowledge of such counsel, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (f) Neither the Company nor any of its Material Subsidiaries is (A) in violation of its charter or by-laws, (B) in default in any material respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any material term, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument to which it is a party or by which it is bound or to which any of its material property or assets is subject or (C) in violation 5 in any material respect of any law, ordinance, governmental rule, regulation or court decree to which it or its material property or assets may be subject. ANNEX D [Form of Morris James Hitchens & Williams Opinion] Morris James Hitchens & Williams shall have furnished to the Initial Purchasers their written opinion, as counsel to the Indenture Trustee, the Property Trustee, the Guarantee Trustee and the Delaware Trustee, addressed to the Initial Purchasers and dated the Closing Date, in form and substance reasonably satisfactory to the Initial Purchasers, substantially to the effect set forth below: (a) Wilmington Trust Company is a banking corporation duly incorporated and validly existing under the laws of the State of Delaware. (b) The execution, delivery and performance by Wilmington Trust Company, as property trustee (the "Property Trustee") of the Trust Agreement, as Guarantee Trustee, of the Guarantee Agreement, as the Indenture Trustee, of the Indenture have been duly authorized by all necessary corporate action on the part of the Property Trustee, the Guarantee Trustee and the Indenture Trustee, respectively. The Trust Agreement, the Guarantee Agreement and the Indenture have been duly executed and delivered by the Property Trustee, the Guarantee Trustee and the Indenture Trustee, respectively. (c) The execution, delivery and performance of the Trust Agreement, the Guarantee Agreement and the Indenture by the Property Trustee, the Guarantee Trustee and the Indenture Trustee, respectively, do not conflict with or constitute a breach of the applicable organizational documents or by-laws of the Property Trustee, the Guarantee Trustee or the Indenture Trustee, respectively, or the terms of any indenture or other agreement or instrument known to such counsel and to which the Property Trustee, the Guarantee Trustee or the Indenture Trustee, respectively, is a party or is bound or any judgment, order or decree known to such counsel to be applicable to the Property Trustee, the Guarantee Trustee or the Indenture Trustee, respectively, of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Property Trustee, the Guarantee Trustee or the Indenture Trustee, respectively. (d) No consent, approval or authorization of, or registration with or notice to, any federal or Delaware banking authority is required for the execution, delivery or performance by the Property Trustee, the Guarantee Trustee or the Indenture Trustee of the Trust Agreement, the Guarantee Agreement or the Indenture, respectively. (e) The Issuer has been duly created and is validly existing in good standing as a business trust under the Delaware Act, and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Issuer as a business trust have been made. 2 (f) Under the Delaware Act and the Trust Agreement, the Issuer has the trust power and authority to own its property and conduct its business, all as described in the Offering Memorandum. (g) The Trust Agreement constitutes a valid and binding obligation of the Company and the Trustees, and is enforceable against the Company and the Trustees in accordance with its terms, subject, as to enforcement, to the effect upon the Trust Agreement of (i) bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation, fraudulent transfer and other similar laws relating to the rights and remedies of creditors generally, (ii) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law), and (iii) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (h) Under the Delaware Act and the Trust Agreement, the Issuer has the trust power and authority (i) to execute and deliver, and to perform its obligations under, this Agreement and the Registration Rights Agreement and (ii) to issue and perform its obligations under the Capital Securities and the Common Securities. (i) Under the Delaware Act and the Trust Agreement, the execution and delivery by the Issuer of this Agreement and the Registration Rights Agreement, and the performance by the Issuer of its obligations hereunder and thereunder, have been duly authorized by all necessary trust action on the part of the Issuer. (j) The Capital Securities have been duly authorized by the Trust Agreement and are duly and validly issued and, subject to the qualifications set forth herein, fully paid and nonassessable undivided beneficial interests in the assets of the Issuer and are entitled to the benefits of the Trust Agreement. The holders of the Capital Securities, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. Such counsel may note that the holders of Capital Securities may be obligated, pursuant to the Trust Agreement, (i) to provide indemnity and/or security in connection with and pay taxes or governmental charges arising from transfers or exchanges of certificates for Capital Securities and the issuance of replacement certificates for Capital Securities, and (ii) to provide security or indemnity in connection with requests of or directions to the Property Trustee to exercise its rights and powers under the Trust Agreement. (k) Under the Delaware Act and the Trust Agreement, the issuance of the Capital Securities is not subject to preemptive rights. (l) The issuance and sale by the Issuer of the Capital Securities, the execution, delivery and performance by the Issuer of this Agreement and the Registration Rights Agreement, the consummation by the Issuer of the transactions contemplated hereby and thereby and compliance by the Issuer with its obligations 3 hereunder and thereunder, and the performance by the Company, as sponsor, of its obligations under the Trust Agreement (A) do not violate (i) any of the provisions of the certificate of trust of the Issuer or the Trust Agreement or (ii) any applicable Delaware law or administrative regulation (except that such counsel need express no opinion with respect to the securities laws of the State of Delaware) and (B) do not require any consent, approval, license, authorization or validation of, or filing or registration with, any Delaware legislative, administrative or regulatory body under the laws or administrative regulations of the State of Delaware (except that such counsel need express no opinion with respect to the securities laws of the state of Delaware). (m) Assuming that the Issuer derives no income from or in connection with sources within the State of Delaware and has no assets, activities (other than maintaining the Delaware Trustee and the filing of documents with the Secretary of State of the State of Delaware) or employees in the State of Delaware, the holders of the Capital Securities (other than those holders of Capital Securities who reside or are domiciled in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Issuer, and the Issuer will not be liable for any income tax imposed by the State of Delaware. ANNEX E [Form of Initial Comfort Letter] The Company shall have furnished to the Initial Purchasers a letter of Price Waterhouse LLP, addressed to the Initial Purchasers and dated the date of the Purchase Agreement, in form and substance satisfactory to the Initial Purchasers, substantially to the effect set forth below: (a) they are independent certified public accountants with respect to the Company within the meaning of Rule 101 of the Code of Professional Conduct of the AICPA and its interpretations and rulings; (b) in their opinion, the audited financial statements included or incorporated by reference in the Offering Memorandum and reported on by them comply in form in all material respects with the accounting requirements of the Exchange Act and the related published rules and regulations of the Commission thereunder that would apply to the Offering Memorandum if the Offering Memorandum were a prospectus included in a registration statement on Form S-3 under the Securities Act (except that certain supporting schedules are omitted); (c) based upon the procedures detailed in such letter with respect to the period subsequent to the date of the last available balance sheet, including reading of minutes and inquiries of certain officials of the Company who have responsibility for financial and accounting matters, nothing has come to their attention that causes them to believe that (A) at a specified date not more than three business days prior to the date of such letter, there was any change in capital stock, increase in long-term debt or decrease in net current assets as compared with the amounts shown in the December 31, 1996 unaudited balance sheet included or incorporated by reference in the Offering Memorandum or (B) for the period from ______________ __, 199_ to a specified date not more than five business days prior to the date of such letter, there were any decreases, as compared with the corresponding period in the preceding year, in net sales, income from operations, EBITDA or net income, except in all instances for changes, increases or decreases that the Offering Memorandum discloses have occurred or which are set forth in such letter, in which case the letter shall be accompanied by an explanation by the Company as to the significance thereof unless said explanation is not deemed necessary by the Initial Purchasers]; and (e) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company) set forth in the Offering Memorandum agrees with the accounting records of the Company, excluding any questions of legal interpretation. EX-27 9 FINANCIAL DATA SCHEDULE -- ARTICLE 5
7 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 138,647,000 0 0 10,366,000 0 0 210,916,000 165,429,000 0 24,472,000 1,095,445,000 246,925,000 0 0 0 39,846,000 0 0 11,562,000 359,032,000 1,095,445,000 819,872,000 13,379,000 3,389,000 0 41,049,000 0 0 34,982,000 13,600,000 21,382,000 0 0 0 21,382,000 1.85 0 0 0 0 0 0 0 0
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