Exhibit (4)(f)
AMENDMENT NO. 5
AMENDMENT NO. 5 dated as of February 16, 1996 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
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lenders party thereto (the "Lenders") and THE CHASE MANHATTAN BANK (NATIONAL
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ASSOCIATION), as agent (the "Agent") for the Lenders (such Amendment and
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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 and Amendment No. 4 thereto dated as of June 1, 1995,
being herein called the "Credit Agreement").
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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
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Agreement shall have the same meanings when used herein.
Section 2. Amendments of Credit Agreement. Effective as of the
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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 terms in the appropriate alphabetical order:
"Amendment No. 5" shall mean Amendment No. 5 dated as
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of February 16, 1996 to this Agreement.
"Arbitrage Loans" shall mean loans made by any financial
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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 certificates of deposit rated
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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.
"Insured Depository Subsidiary" shall mean any subsidiary of
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the Company that is an "insured depository institution" within the
meaning of 12 U.S.C. ss.1813(c)(2).
B. Section 1.01 of the Credit Agreement is amended by
changing the defined terms "Applicable Margin" and "Capital
Expenditures" to read as follows:
"Applicable Margin" shall mean, with respect to Bank
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Loans:
(a) with respect to such Loans that are Base Rate
Loans, zero; and
(b) with respect to such Loans that are Eurodollar
Loans,
(i) for any period commencing on the first date of a
fiscal quarter of the Company (the "Current Fiscal Quarter")
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immediately following the date on which the Company shall have
delivered a certificate of a senior financial officer of the
Company demonstrating in reasonable detail (based upon
financial statements of the Company for the fiscal quarter
most recently ended that have been delivered to the Lenders
pursuant to Section 8.01(a) or (b) hereof) (each a "Rate
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Certificate") that the Pro Forma Fixed Charge Coverage Ratio
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for the most recently completed Computation Period is less
than 1.40:1.0 to and including the last day of the Current
Fiscal Quarter, 1% per annum;
(ii) if the Company shall have delivered a Rate
Certificate demonstrating in reasonable detail that the Pro
Forma Fixed Charge Coverage Ratio for the most recently
completed Computation Period is equal to or
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greater than 1.40:1.0, then for the Current Fiscal
Quarter,
(x) for each day of the Current Fiscal Quarter on
which the Company shall have either or both of an S&P
Claims Paying Rating and a Moody's Financial Strength
Rating, the per annum margin set forth below opposite
the relevant ratings category for such day:
Ratings Category Applicable Margin
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S&P Claims Paying Rating 0.50%
is A or above and Moody's
Financial Strength Rating
is A2 or above ("Category A
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Period")
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S&P Claims Paying Rating 0.625%
is A- or above and Moody's
Financial Strength Rating
is A3 or above ("Category B
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Period"), but a Category A
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Period is not in effect
S&P Claims Paying Rating 0.75%
is BBB or above and Moody's
Financial Strength Rating is Baa2
or above ("Category C Period"),
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but neither a Category A Period
nor a Category B Period is in
effect
S&P Claims Paying Rating 1.00%,
is BBB- or below or the
Moody's Financial Strength
Rating is Baa3 or below
("Category D Period")
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provided that (A) if the Company shall have only one such
rating on any such day, the Applicable Margin set forth above
opposite such rating shall apply for such day and (B) if the
Company shall have an S&P Claims
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Paying Rating and a Moody's Financial Strength Rating in
different ratings category for any such day, the Applicable
Margin set forth above for the lower ratings category shall
apply for such day; and
(iii) if the Company shall have neither an S&P Claims
Paying Rating nor a Moody's Financial Strength Rating on any
day during the Current Fiscal Quarter, the per annum margin
set forth below opposite the Adjusted Leverage Ratio, measured
as at the end of the immediately preceding fiscal quarter of
the Company (based upon financial statements of the Company
for the fiscal quarter most recently ended that have been
delivered to the Lenders pursuant to Section 8.01(a) or (b)
hereof and set forth in reasonable detail in the certificate
of a senior financial officer of the Company delivered
pursuant to the last paragraph of Section 8.01 hereof):
Adjusted Leverage Ratio Applicable Margin
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< 30% 0.80%
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> 30% 1.00%.
"Capital Expenditures" shall mean, for any period,
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expenditures (including, without limitation, the aggregate amount of
Capital Lease Obligations incurred during such period) made by the
Company or any of its Consolidated Subsidiaries to acquire or construct
fixed assets, plant and equipment (including renewals, improvements and
replacements, but excluding (a) repairs, (b) asset purchases of title
plants, (c) expenditures made pursuant to the Riverside Acquisition,
(d) expenditures made in connection with the replacement, substitution
or restoration of assets to the extent financed from insurance proceeds
or with awards of compensation arising from a taking by eminent domain
or condemnation, (e) the FARETSI Building Purchase and (f) expenditures
made in respect of the purchase of real property by the Company or any
of its Subsidiaries for occupancy or use in their respective
businesses) during such period computed in accordance with GAAP.
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"Moody's Financial Strength Rating" shall mean the
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rating assigned to an insurance company by Moody's Investors
Services, Inc. with regard to its "financial strength".
"S&P Claims Paying Rating" shall mean the rating assigned to
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an insurance company by Standard & Poor's Corporation with regard to
its "claims paying ability".
C. Section 3.02(d) of the Credit Agreement (which was
added to the Credit Agreement by Section 3.J of Amendment No. 2
thereto dated as of November 22, 1994) is deleted in its
entirety.
D. Section 8 of the Credit Agreement is amended and
restated in its entirety to read as follows:
"Section 8. Covenants of the Company. The Company covenants
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and agrees with the Lenders and the 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
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deliver to each of the Lenders:
(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, to the extent
that they relate to the Company on a parent
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company stand alone basis, 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;
(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 each Material
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Subsidiary which is not an Insurance Company, but only to the extent
that consolidated statements are prepared by such Material Subsidiary
for such period, consolidated statements of income and consolidated
statements of stockholders' equity of such Material Subsidiary 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 balance sheets of such Material Subsidiary and
its Consolidated Subsidiaries as at the end of such period, setting
forth in each case in comparative form the corresponding consolidated
figures for the corresponding period in the preceding fiscal year,
accompanied by a certificate of a senior financial officer of such
Material Subsidiary, which certificate shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of such Material
Subsidiary and its Consolidated Subsidiaries 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);
(d) as soon as available and in any event within 90 days after
the end of each fiscal year of each Material Subsidiary which is not an
Insurance Company, consolidated statements of income and consolidated
statements of stockholders' equity and cash flow of such Material
Subsidiary and its Consolidated Subsidiaries for such fiscal year and
the related consolidated balance sheets of such Material Subsidiary and
its Consolidated Subsidiaries as at the end of such fiscal year,
setting forth in each case in comparative form the corresponding
consolidated figures for the preceding fiscal year, and accompanied by
a certificate of a senior financial officer of such Material
Subsidiary, which certificate shall state that said consolidated
financial statements fairly present the consolidated financial
condition and results of operations of such Material Subsidiary and its
Consolidated Subsidiaries in accordance with generally accepted
accounting principles, consistently applied, as at the end of, and for,
such fiscal year;
(e) as soon as available and in any event within 45 days
after the end of each of the first three quarterly
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fiscal periods of each fiscal year of each Insurance Company which is a
Material Subsidiary (other than an indirect Material Subsidiary of the
Company which is not required to file a Statutory Statement with any
Applicable Insurance Regulatory Authority), Statutory Statements of
such Insurance Company (prepared in accordance with statutory
accounting practices required or permitted by the Applicable Insurance
Regulatory Authority) for such fiscal period, accompanied by (i) a
certificate of a senior financial officer of such Insurance Company
which certificate shall state that such financial statements present
the financial condition of such Insurance Company in accordance with
statutory accounting practices required or permitted by the Applicable
Insurance Regulatory Authority and (ii) a certificate of a senior
financial officer of such Insurance Company, affirming the adequacy of
Reserves of such Insurance Company as at the end of such fiscal
quarter;
(f) as soon as available and in any event within 60 days after
the end of each fiscal year of each Insurance Company which is a
Material Subsidiary (other than an indirect Material Subsidiary of the
Company which is not required to file a Statutory Statement with any
Applicable Insurance Regulatory Authority), the annual Statutory
Statement of such Insurance Company (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 applicable state, accompanied by (i) a
certificate of a senior financial officer of such Insurance Company
stating that said Statutory Statement presents the financial condition
of such Insurance Company in accordance with the statutory accounting
practices required or permitted by the applicable Insurance Regulatory
Authority, and (ii) a certificate of a senior financial officer of such
Insurance Company, affirming the adequacy of Reserves of such Insurance
Company as at the end of such fiscal year;
(g) to the extent prepared by the Company and as soon as
available and in any event within 90 days after the end of each fiscal
year of each Material Subsidiary which is an Insurance Company which is
not required to file a Statutory Statement with any Applicable
Insurance Regulatory Authority (i) except with respect to Midland Title
Security, Inc. and
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First American Title Company of Nevada, consolidated statements of
income and consolidated statements of stockholders' equity of such
Material Subsidiary and its Consolidated Subsidiaries for such fiscal
year and the related consolidated balance sheets of such Material
Subsidiary and its Consolidated Subsidiaries as at the end of such
fiscal year, setting forth in each case in comparative form the
corresponding consolidated figures for the preceding fiscal year, and
accompanied by a certificate of a senior financial officer of such
Material Subsidiary, which certificate shall state that said
consolidated financial statements fairly present the consolidated
financial condition and results of operations of such Material
Subsidiary and its Consolidated Subsidiaries in accordance with
generally accepted accounting principles, consistently applied, as at
the end of, and for, such fiscal year; and (ii) with respect to each of
Midland Title Security, Inc. and First American Title Company of
Nevada, consolidated balance sheets of such Material Subsidiary and its
Consolidated Subsidiaries as at the end of such fiscal year, setting
forth in comparative form the corresponding consolidated figures for
the preceding fiscal year, and accompanied by a certificate of a senior
financial officer of such Material Subsidiary, which certificate shall
state that said consolidated balance sheets fairly present the
consolidated financial condition of such Material Subsidiary and its
Consolidated Subsidiaries in accordance with generally accepted
accounting principles, consistently applied, as at the end of such
fiscal year;
(h) 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;
(i) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed;
(j) as soon as possible, and in any event within 20 days after
the Company knows or has reason to believe that any of the events or
conditions specified below with
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respect to any Plan or Multiemployer Plan has occurred or exists, a
statement signed by a senior financial officer of the Company setting
forth details respecting such event or condition and the action, if
any, that the Company or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by the Company or an ERISA Affiliate with
respect to such event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard
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of Section 412 of the Code or Section 302 of ERISA, including,
without limitation, the failure to make on or before its due
date a required installment under Section 412(m) of the Code
or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code); and any request for a waiver
under Section 412(d) of the Code for any Plan;
(ii) the distribution of a notice of intent to terminate
any Plan pursuant to Section 4041(c) of ERISA or any action
taken by the Company or an ERISA Affiliate to terminate any
Plan pursuant to Section 4041(c) of ERISA;
(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company
or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by PBGC with respect to such
Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by the Company or any ERISA Affiliate that
results in liability of the Company or any ERISA Affiliate in
excess of $250,000 under Section 4201 or 4204 of ERISA
(including the obligation
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to satisfy secondary liability as a result of a purchaser
default) or the receipt by the Company or any ERISA Affiliate
of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against the Company or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding
will or could reasonably be expected to result in any material
liability of the Company or any ERISA Affiliate, which
material liability will be, or could reasonably be expected to
be, payable while this Agreement is in effect and which
proceeding is not dismissed within 30 days; and
(vi) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the
trust of which such Plan is a part if the Company or an ERISA
Affiliate fails to timely provide security to the Plan in
accordance with the provisions of said Sections;
(k) 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; and (ii) 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
Bank Regulatory Authority) with respect to the Company, First American
Trust or First Security Thrift;
(l) 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
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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);
(m) 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;
(n) 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 (i) list all Subject Property (as such
term is defined in Section 8.23 hereof) acquired by the Company and its
Subsidiaries during the most recently ended fiscal quarter and (ii)
list all Investments made by the Company and its Subsidiaries pursuant
to Section 8.08(d) hereof during the most recently ended fiscal
quarter;
(o) promptly upon their becoming available, each Call Report
of each Bank Subsidiary prepared for or filed with any Applicable Bank
Regulatory Authority;
(p) immediately, but in any event no later than five
days after the Company knows that any Applicable Bank
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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. ss.1831o, a notice
identifying such designation and describing in reasonable detail the
computations necessary to determine such designation;
(q) 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; and
(r) 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.
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 8.07, 8.08, 8.09, 8.10, 8.11, 8.12, 8.13
and 8.14 hereof, as of the end of the respective quarterly fiscal period or
fiscal year (such certificate to include, with respect to said Section 8.11, (I)
a description in reasonable detail of the assumptions underlying the estimates
used in determining Pro Forma Fixed Charges for the Computation Period
commencing on the day next following the last day of such fiscal period or
fiscal year and a certification that
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such assumptions and estimates are reasonable and were made in good faith and
(II) if such Computation Period commences on or after July 1, 1995, a
description in reasonable detail of any material differences between such
assumptions and the corres ponding assumptions underlying the estimates used in
determining Pro Forma Fixed Charges for the then next preceding Computation
Period and the reasons therefor).
8.02 Litigation. The Company will promptly give to each Lender
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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
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cause each of its Material Subsidiaries to:
(i) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises (provided that
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nothing in this Section 8.03 shall prohibit any transaction expressly
permitted under Section 8.05 hereof); 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.
(b) The Company will, and will cause each of its
Subsidiaries to:
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(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
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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 Prohibition of Fundamental Changes.
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(a) The Company will not, nor will it permit any of its
Material Subsidiaries to, enter into any transaction of merger or consolidation
or amalgamation, or liquidate, wind up or
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dissolve itself (or suffer any liquidation or dissolution). The Company will
not, nor will it permit any of its Subsidiaries to, acquire any business or
Property (including, without limitation, title plant assets) from, or capital
stock (including, without limitation, the capital stock of any Subsidiary of the
Company held by minority shareholders) of, or be a party to any acquisition of,
any Person except for:
(i) any such acquisition (which acquisition may be an
Investment in a Corporate Affiliate), the consideration for which is
paid solely in shares of common stock of the Company with a Book Value
which, on the date of such acquisition (when added to the Book Value of
all such other common stock issued as consideration pursuant to this
clause (i)) does not exceed 15% of the total assets of the Company and
its Subsidiaries (on a consolidated basis) on such date;
(ii) any such acquisition which is required to be made by
FATICO, First American Home Buyers Protection Corporation or First
American Title Guaranty Holding Company under the Minority Stockholders
Put Documents, and then only on or after the date so required
to be made;
(iii) any such acquisition (which acquisition may be an
Investment in a Corporate Affiliate, but shall not include an
acquisition referred to in clause (ii) above) made after the date of
Amendment No. 5, the consideration for which is either paid in cash or
through the assumption of Indebtedness; provided that (x) in the case
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of each such acquisition (the "Subject Acquisition"), the sum of all
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such consideration paid or assumed pursuant to this clause (iii) for
the Subject Acquisition and all other such acquisitions effected on or
after the date of Amendment No. 5 does not exceed a total aggregate
amount of $100,000,000, (y) for any Subject Acquisition for which the
consideration paid or assumed equals or exceeds $35,000,000, the
Majority Lenders shall have consented thereto and (z) the aggregate
amount of Investments permitted under this clause (iii) in First
Security Thrift shall not exceed $5,000,000 in the aggregate;
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(iv) purchases of inventory and office supplies to be
sold or used in the ordinary course of business;
(v) the Riverside Acquisition;
(vi) Investments permitted under Section 8.08 hereof;
and
(vii) Capital Expenditures permitted under Section 8.14
hereof.
(b) The Company will not, nor will it permit any of its
Material Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or a substantial part of its
business or Property, whether now owned or hereafter acquired (including,
without limitation, receivables and leasehold interests), provided that the
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Company and its Material Subsidiaries may sell or dispose of any Property in the
ordinary course of business and obsolete or worn-out Property no longer used or
useful in its business.
(c) Notwithstanding the foregoing provisions of this
Section 8.05:
(i) any Subsidiary of the Company (other than FATICO, First
American Trust and FARETSI) may be merged or consolidated with or into:
(x) the Company if the Company shall be the continuing or surviving
corporation or (y) any other such Subsidiary; provided that if any such
--------
transaction shall be between a Subsidiary and a Wholly Owned
Subsidiary, the Wholly Owned Subsidiary shall be the continuing or
surviving corporation;
(ii) any Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any or all of its Property (upon voluntary
liquidation or otherwise) to the Company or a Wholly Owned Subsidiary
of the Company; and
(iii) the Company or any Subsidiary of the Company may merge or
consolidate with any other Person (which is not a Subsidiary of the
Company) if (x) in the case of a merger or
-18-
consolidation of the Company, the Company is the surviving corporation
and, in any other case, the surviving corporation is a Wholly Owned
Subsidiary of the Company and (y) after giving effect thereto no
Default would exist hereunder.
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 September 30, 1994 and, to the
extent that any such Lien secures Indebtedness the aggregate principal
or face amount of which equals or exceeds (or may equal or exceed)
$1,000,000, listed in Schedule I to Amendment No. 2;
(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 Section 9(h)
hereof;
(e) pledges or deposits under worker's compensation,
unemployment insurance and other social security
legislation;
-19-
(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 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 April 21, 1992, 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 real and/or tangible personal Property used
primarily in the ordinary course of the business of the Company and its
Subsidiaries and acquired after April 21, 1992;
(j) Liens upon the real and/or tangible personal Property
acquired by FATICO pursuant to the Riverside Acquisition created no
later than 90 days from the date of such acquisition solely for the
purpose of securing the Indebtedness permitted by Section 8.07(e)
hereof representing, or incurred to finance, the cost of such Property;
provided that no such Lien shall extend to or cover any Property of
--------
FATICO other than the Property so acquired and improvements thereon;
(k) Liens upon the Property of First American Trust
and Southwest Title and Trust Company which are created in
-20-
the ordinary course of their respective financial services
businesses as such businesses are conducted as of April 21,
1992;
(l) 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;
(m) 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
(n) 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, nor will it permit
------------
any of its Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness except:
(a) Indebtedness to the Lenders hereunder;
(b) Indebtedness outstanding on September 30, 1994 and, to the
extent that any such Indebtedness has an aggregate principal or face
amount which equals or exceeds (or may equal or exceed) $1,000,000,
listed in Schedule I to Amendment No. 2;
(c) Indebtedness of the Company and its Subsidiaries
secured by Liens permitted under Section 8.06(i) hereof up
to but not exceeding $45,000,000 at any one time
outstanding;
(d) Indebtedness of the Company incurred or assumed
pursuant to any acquisition expressly permitted by
clause (iii) of Section 8.05(a) hereof;
-21-
(e) Indebtedness of FATICO incurred pursuant to the Riverside
Acquisition in an aggregate amount up to but not exceeding $6,000,000
at any one time outstanding; provided that the aggregate principal
amount of Indebtedness permitted by this clause (e) shall not exceed
75% of the fair market value (as determined in good faith by a senior
financial officer of the Company) of the real and/or tangible personal
Property acquired by FATICO pursuant to the Riverside Acquisition;
(f) Indebtedness of the Company to any Subsidiary of the
Company, Indebtedness of any Subsidiary of the Company (the "Debtor
------
Subsidiary") to the Company or another Subsidiary of the Company that
----------
is the direct or indirect parent entity of the Debtor Subsidiary, and
Indebtedness of direct Wholly Owned Subsidiaries of the Company to
their respective Wholly Owned Subsidiaries;
(g) Indebtedness of FATICO to FARETSI;
(h) Arbitrage Loans;
(i) Indebtedness representing Capital Lease
Obligations to the extent permitted by Section 8.14 hereof;
(j) Indebtedness of FATICO, First American Title
Guaranty Holding Company and First American Home Buyers
Protection Corporation with respect to Minority Stockholders
Put Obligations;
(k) Indebtedness of FARETSI and FATICO to the Company
representing intercompany loans made by the Company from net proceeds
received by the Company from its Equity Issuances;
(l) 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;
-22-
(m) Indebtedness of the Company or any of its Subsidiaries in
respect of letters of credit (or similar instruments) and guarantees
issued in connection with settlement or administration of claims made
against the Company or any of its Subsidiaries 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;
(n) additional Indebtedness of the Company and its
Subsidiaries (other than to each other) up to but not
exceeding $25,000,000 at any one time outstanding; and
(o) any extension, renewal or refinancing of the
foregoing.
8.08 Investments. The Company will not, nor will it permit any
-----------
of its Subsidiaries to, make or permit to remain outstanding any Investments
except:
(a) The Company may make or have outstanding the
following:
(i) Permitted Investments;
(ii) operating deposit accounts with banks;
(iii) Investments by the Company in capital
stock of Subsidiaries of the Company to the extent
outstanding on the Amendment No. 2 Effective Date
(as defined in Amendment No. 2), and disclosed on
Schedule II thereto;
(iv) Investments by the Company in FATICO as
contemplated by Section 8.18 hereof;
(v) Interest Rate Protection Agreements
(including those required by Section 8.15 hereof) so
long as the aggregate outstanding notional principal
amount of all transactions under such Agreements does
not exceed an amount equal to the sum of the
aggregate outstanding principal amount
-23-
of the Bank Loans plus the aggregate outstanding
unused amount of the New Revolving Credit
Commitments at any time;
(vi) [intentionally omitted]
(vii) Investments by the Company in its
capacity as a "qualified intermediary" (as such
term is defined on April 21, 1992 in Internal Revenue
Service Reg. section 1.103(k)-1(g)(4)) in tax
deferred exchanges arranged by First American Trust
in the ordinary course of First American Trust's
financial services business;
(viii) Investments by the Company required to be
made in any Subsidiary of the Company by any
Applicable Bank Regulatory Authority or any
Applicable Insurance Regulatory Authority; and
(ix) Investments of the Company outstanding on
December 31, 1991, so long as any such Investments
(other than any such Investments in its Subsidiaries)
are not "rolled over", renewed or extended subsequent
to such date.
(b) Any Insurance Company may make or have
outstanding the following:
(i) Permitted Investments (without regard to
maturity limitations);
(ii) operating deposit accounts with banks;
(iii) Investments by such Insurance Company in
capital stock of Subsidiaries of such Insurance
Company to the extent outstanding on the Amendment
No. 2 Effective Date (as defined in Amendment No.
2) and disclosed on Schedule II thereto and
additional Investments by FATICO, First American
Title Guaranty Holding Company and First American
Home Buyers Protection Corporation in the capital
stock of First American Title Guaranty Holding
-24-
Company and First American Home Buyers Protection
Corporation required to be made pursuant to
Minority Stockholders Put Obligations;
(iv) Investments in Investment Grade Debt
Securities, provided that the aggregate amount of all
such Investments made by the Insurance Companies in
the securities of any one issuer does not exceed 5%
of the Combined Investment
Portfolio;
(v) Investments made in the ordinary course of
the title insurance business in connection with
settlement of title insurance claims (subject to the
requirements of Section 8.23 hereof);
(vi) [intentionally omitted]
(vii) Investments required to be made in any
Subsidiary of any Insurance Company by any Applicable
Bank Regulatory Authority or any Applicable Insurance
Regulatory Authority;
(viii) Investments of such Insurance Company
outstanding on December 31, 1991, so long as any such
Investments (other than Investments in its
Subsidiaries) are not "rolled over", renewed or
extended subsequent to such date; and
(ix) FATICO may (notwithstanding Section 8.05
hereof) exchange the capital stock of North American
Title Insurance Company held by it for approximately
17% of the capital stock of North American Asset
Development Corporation.
(c) Any Subsidiary of the Company which is not an
Insurance Company (other than First Security Thrift) may make
or have outstanding the following:
(i) Permitted Investments (without regard to
maturity limitations);
-25-
(ii) operating deposit accounts with banks;
(iii) Investments by such Subsidiary in
capital stock of Subsidiaries of such Subsidiary
to the extent outstanding on the Amendment No. 2
Effective Date (as defined in Amendment No. 2) and
disclosed on Schedule II thereto;
(iv) [intentionally omitted]
(v) Investments by FARETSI with respect to
the intercompany Indebtedness permitted by
clause (g) of Section 8.07 hereof;
(vi) Investments made by First American Trust
and Southwest Title and Trust Company in the ordinary
course of their respective financial services
businesses as such businesses are conducted on April
21, 1992;
(vii) Investments in Investment Grade Debt
Securities, provided that any such Investment does
not result in any such Subsidiary holding Investments
of more than $1,000,000 in any one issuer;
(viii) Investments required to be made in any
Subsidiary of such Subsidiary by any Applicable Bank
Regulatory Authority or any Applicable Insurance
Regulatory Authority; and
(ix) Investments of such Subsidiary out standing
on December 31, 1991, so long as any such Investments
(other than Investments in its Subsidiaries) are not
"rolled over", renewed or extended subsequent to such
date.
(d) Additional Investments (including, without
limitation, Investments in Corporate Affiliates) may be made
by the Company and its Subsidiaries (other than First Security
Thrift) in an aggregate amount not exceeding an amount equal
to 25% of Stockholders'
-26-
Equity, provided that (w) with respect to Investments made by
--------
the Insurance Companies, such Investments are admitted assets,
assets acquired in settlement of claims, or non-admitted
assets in an aggregate amount not exceeding $5,000,000, (x)
the aggregate amount of all such Investments made by the
Company and its Subsidiaries in any one issuer shall not
exceed $5,000,000, (y) no more than 60% of the aggregate
amount permitted for such Investments in this subsection (d)
shall be in equity securities and (z) any such Investment in
equity securities otherwise permitted by clause (y) above
shall not result in either the Company or any of its
Subsidiaries holding more than a 20% ownership interest in any
one issuer of equity securities.
(e) First Security Thrift may make or have
outstanding the following:
(i) Permitted Investments (without regard to
maturity limitations);
(ii) operating deposit accounts with banks;
(iii) Investments in Investment Grade Debt
Securities, provided that the aggregate amount of all
--------
such Investments made by First Security Thrift in the
securities of any one issuer does not exceed
$1,000,000;
(iv) Investments in commercial and
residential real estate loans or mortgages, provided
--------
that any such Investments shall be within the legal
lending guidelines prescribed by the Federal Deposit
Insurance Corporation (or any successor thereto);
(v) Investments made in the ordinary course
of the secured lending business in connection with
foreclosures on secured loans (subject to the
requirements of Section 8.23 hereof); and
-27-
(vi) Investments of First Security Thrift
outstanding on December 31, 1991.
(f) In addition to the other Investments permitted by
this Section 8.08, the Company and its Subsidiaries may make
Investments in their respective direct or indirect
Subsidiaries, provided that any Investments in First Security
--------
Thrift after the date of Amendment No. 5 shall be subject to
the limitation set forth in Section 8.05(a)(iii)(z) hereof.
(g) In addition to the other Investments permitted by
this Section 8.08, the Company and its Subsidiaries may (1)
make any Investment which is expressly permitted to be made
pursuant to clauses (i) and (iii) of Section 8.05(a) hereof
and (2) contribute shares of capital stock of a Subsidiary
acquired by the Company in an acquisition referred to in
clause (i) or (iii) of Section 8.05(a) hereof to any other
Subsidiary of the Company (either directly or indirectly
through other Subsidiaries of the Company) and such Subsidiary
may hold the resulting Investment in such acquired Subsidiary
(but may not increase the same except to the extent permitted
by paragraph (f) above).
(h) In addition to the other Investments permitted by
this Section 8.08, each of the Company and its Subsidiaries
may make Investments in intercompany Indebtedness that is
permitted to be owed to it under Section 8.07 hereof.
(i) In addition to the other Investments permitted by
this Section 8.08, the Company and its Subsidiaries may make
new loans and advances subsequent to April 21, 1992 (in
addition to those loans and advances already outstanding
pursuant to clauses (a)(ix), (b)(viii) and (c)(ix) of this
Section 8.08), maturing not more than 90 days from the
respective dates such new loans and advances are made, to
their respective officers, employees and agents in the
ordinary course of business, provided that (x) the aggregate
--------
amount (as to the Company and all of its
-28-
Subsidiaries) of all such new loans and advances shall not
exceed $2,500,000 at any one time outstanding and (y) any such
new loan or advance to any such officer or employee shall not
exceed $250,000 at any one time outstanding.
(j) In addition to the other Investments permitted by
this Section 8.08, the interests of (i) First American Title
Company of Los Angeles in The 520 North Central Joint Venture,
(ii) National Survey Services, Inc. in the Bock & Clark
Partnership, (iii) First American Title Guaranty Holding
Company in the Harrison-Webster Investment Group and (iv)
Southwest Title Land Company in the joint ventures and limited
partnerships specified in Schedule II to Amendment No. 2.
(k) In addition to the other Investments permitted by
this Section 8.08, the Company or any of its Subsidiaries may
be a general partner in a partnership or joint venture after
the date of Amendment No. 5, provided that (i) the aggregate
--------
amount of Indebtedness of each such partnership or joint
venture shall be included in the Adjusted Leverage Ratio and
(ii) the amount of Investments by each such partnership or
joint venture shall be subject to the other limitations set
forth in this Section 8.08.
(l) In addition to the other Investments permitted by
this Section 8.08, the Company and its Subsidiaries may incur
Arbitrage Loans.
8.09 Stockholders' Equity. The Company will not permit
--------------------
Stockholders' Equity to be less than $265,000,000 at any time.
8.10 Adjusted Leverage Ratio. The Company will not permit the
-----------------------
Adjusted Leverage Ratio to exceed 0.40 to 1 at any time.
8.11 Pro Forma Fixed Charge Coverage Ratio. The Company will
-------------------------------------
not permit the Pro Forma Fixed Charge Coverage Ratio
-29-
for the Computation Period commencing on the first day of any fiscal quarter of
the Company to be less than 1.25 to 1.
8.12 Minimum Combined Earnings. The Company will not permit,
-------------------------
as at the last day of each fiscal year of the Company (commencing with the
fiscal year ending on December 31, 1996), the Combined Earnings to be less than
$20,000,000 plus (for each fiscal year ending after December 31, 1996) an
----
additional $20,000,000.
8.13 Minimum FATICO Surplus, Etc.. The Company will not permit
---------------------------
(a) FATICO Surplus to be less than $150,000,000 at any time and (b) FATICO
Unassigned Surplus to be less than $80,000,000 at any time.
8.14 Capital Expenditures. The Company will not permit the
--------------------
aggregate amount of Capital Expenditures by the Company and its Consolidated
Subsidiaries at any time during any fiscal year to exceed 20% of the Base Amount
for such fiscal year less Dividend Payments paid in such fiscal year (other than
any such Dividend Payments made with the proceeds of New Loans not later than
five Business Days after the Borrowing thereof under Amendment No. 2).
8.15 Interest Rate Protection Agreements. At all times during
-----------------------------------
the three-year period following the date that the Company entered into the
Interest Rate Protection Agreement required by Section 8.15 of the Existing
Credit Agreement, the Company will maintain in full force and effect such
Interest Rate Protection Agreement or one or more Interest Rate Protection
Agreements with one or more of the Lenders (and/or with a bank or other
financial institution having capital, surplus and undivided profits of at least
$500,000,000), which effectively enables the Company (in a manner satisfactory
to the Majority Lenders), as at any date, to protect itself against the Prime
Rate exceeding 9% per annum as to a notional principal amount at least equal to
$22,500,000.
8.16 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 of
-30-
Amendment No. 5 or (b) expand into any new markets or product lines
substantially different from those in which it was engaged as of the date of
Amendment No. 5. Notwithstanding the foregoing, (i) no Insurance Subsidiary
shall engage in any business other than the ownership and management of
insurance operations and businesses reasonably related or incidental thereto,
(ii) First Security Thrift shall not engage in any business other than the
ownership and management of thrift operations and businesses reasonably related
or incidental thereto and (iii) First American Capital Management, Inc. ("First
-----
American Capital Management"), a Wholly Owned Subsidiary of the Company, may
- ---------------------------
provide investment advisory services to First American Trust and a proprietary
family of mutual funds and, in that connection, First American Capital
Management and First American Trust may engage in activities reasonably related
or incidental thereto.
8.17 Transactions with Affiliates. Except as expressly
----------------------------
permitted by this Agreement, the Company will not, nor will it permit any of its
Subsidiaries to, directly or indirectly: (a) make any Investment in an Affiliate
(other than Investments required to be made in (i) The 520 North Central Joint
Venture by First American Title Company of Los Angeles pursuant to the express
terms of The 520 North Central Joint Venture Agreement, (ii) the Bock & Clark
Partnership by National Survey Services, Inc. pursuant to the express terms of
the Bock & Clark Partnership Agreement and (iii) the Harrison-Webster Investment
Group by First American Title Guaranty Holding Company pursuant to the express
terms of the Harrison-Webster Partnership Agreement); (b) transfer, sell, lease,
assign or otherwise dispose of any Property to an Affiliate; (c) merge into or
consolidate with or purchase or acquire Property from an Affiliate; or (d) enter
into any other transaction directly or indirectly with or for the benefit of an
Affiliate (including, without limitation, guarantees and assumptions of
obligations of an Affiliate); provided that (x) any Affiliate who is an
--------
individual may serve as a director, officer or employee of the Company or any of
its Subsidiaries and receive reasonable compensation (whether paid in cash,
securities or other benefits) for his or her services in such capacity and (y)
the Company and its Subsidiaries may enter into transactions (other than
extensions of credit by the Company or any of its Subsidiaries to
-31-
an Affiliate) providing for the leasing of Property, the rendering or receipt of
services or the purchase or sale of inventory and other Property in the ordinary
course of business if the monetary or business consideration arising therefrom
would be substantially as advantageous to the Company and its Subsidiaries as
the monetary or business consideration which would obtain in a comparable
transaction with a Person not an Affiliate.
8.18 Use of Proceeds, Etc. The Company confirms that it used
--------------------
the proceeds of the Loans hereunder solely to repay the Specified Debt (together
with all fees, commissions and expenses payable in connection with such
repayment) in compliance with all applicable legal and regulatory requirements
and to make capital contributions in FATICO; provided that neither the Agent nor
any Lender shall have any responsibility as to the use of any of such proceeds.
8.19 Certain Obligations Respecting Subsidiaries. The Company
-------------------------------------------
will, and will cause each of its Material Subsidiaries to, take such action from
time to time as shall be necessary to ensure that the Company and each of its
Material Subsidiaries at all times owns (subject only to the Lien of the Pledge
Agreement) (a) at least the same percentage of the issued and outstanding shares
of each class of stock of each of its Wholly Owned Subsidiaries and its Material
Subsidiaries as was owned on April 21, 1992 and (b) at least 90% of the issued
and outstanding shares of each class of stock of each of its other Material
Subsidiaries as was owned on April 21, 1992. Without limiting the generality of
the foregoing, except as expressly permitted by Section 8.05 hereof, the Company
will not and will not permit any of its Material Subsidiaries to sell, transfer
or otherwise dispose of any shares of stock or any other ownership interest in
any Material Subsidiary owned by them, any of FATICO, First American Trust and
FARETSI or permit any of its Material Subsidiaries to issue any shares of stock
of any class whatsoever to any Person (other than to the Company or any Material
Subsidiary of the Company which owns 100% of the issued and outstanding capital
stock of such Material Subsidiary). In the event that any such additional shares
of stock shall be issued by any of FATICO, First American Trust and FARETSI, the
Company agrees forthwith to deliver to the Agent pursuant to the Pledge
-32-
Agreement the certificates evidencing such shares of stock, accompanied by
undated stock powers executed in blank and shall take such other action as the
Agent shall request to perfect the security interest created therein pursuant to
the Pledge Agreement. The Company will not permit any of its Material
Subsidiaries to enter into, after the date hereof, any indenture, agreement,
instrument or other arrangement (other than an arrangement mandated by
Applicable Bank Regulatory Authorities or Applicable Insurance Regulatory
Authorities) 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.
In addition (to the extent not required by applicable law), the Company will
not, and will not permit any of its Material Subsidiaries to, enter into any
capital maintenance or other agreement which requires the Company or such
Material Subsidiary to make a cash equity or other capital contribution to any
Material Subsidiary.
8.20 Modifications of Certain Documents.
----------------------------------
(a) The Company will not, nor will it permit any of its
Subsidiaries to, without the prior consent of the Agent (with the approval of
the Majority Lenders), consent to any modification, supplement or waiver of any
of the material provisions of the Minority Stockholders Put Documents, any
documents governing the ESOT Indebtedness, any of the Tax Sharing Agreements,
The 520 North Central Joint Venture Agreement, the Bock & Clark Partnership
Agreement or the Harrison-Webster Partnership Agreement or the joint venture or
partnership agreement for any Investment by Southwest Title Land Company
referred to in Section 8.08(j) hereof.
(b) The Company will not, nor will it permit any of its
Subsidiaries to, without the prior consent of the Agent (with the approval of
the Majority Lenders), enter into or consent to any amendment, supplement or
other modification of any of the Outstanding Debt Documents that:
-33-
(i) increases or extends the term of the commitments
thereunder, or extends the time or waives any requirement
for the reduction or termination of such commitments;
(ii) extends the date fixed for the payment of principal of or
interest on any loan or fee thereunder (other than pursuant to any
extension, renewal or refinancing permitted under Section 8.07(o)
hereof);
(iii) increases the amount of any such payment of
principal;
(iv) increases the rate at which interest is payable
thereon or any fee is payable thereunder;
(v) alters the rights or obligations of the Company to
prepay any loans thereunder; or
(vi) modifies the number or percentage of lenders or holders of
subject debt required to make any determinations or waive any rights
thereunder or modify any provisions thereof.
8.21 [intentionally omitted]
8.22 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 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 $15,000,000.
8.23 Foreclosure; Etc. The Company will not, nor will it
----------------
permit any of its Subsidiaries to, acquire ownership or control of any
commercial real property 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
-34-
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" 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.
8.24 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
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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.
8.25 [intentionally omitted]
8.26 [intentionally omitted]
8.27 [intentionally omitted]
8.28 [intentionally omitted]"
E. Section 9 of the Credit Agreement is amended by (i)
inserting the word "or" at the end of clause (m) thereof and (ii) inserting the
following new clauses (n) and (o), immediately following said clause (m), to
read as follows:
"(n) Any Insured Depository Subsidiary shall be
or become "undercapitalized", "significantly
undercapitalized" or "critically undercapitalized"
within the meaning of 12 U.S.C. ss.1831o(b), as amended,
restated or redesignated from time to time; or
(o) The Borrower or any of its Subsidiaries
(including, without limitation, any Insured Depository
Subsidiary) shall submit a "capital restoration plan" under 12
U.S.C. ss.1831o(e)(2), as amended, restated or redesignated
from time to time, with respect to any Insured Depository
Subsidiary;".
F. 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
-36-
Agreement as amended hereby and (unless the context otherwise requires) to this
Amendment.
G. Each reference in the Credit Agreement to any section
which, pursuant to this Amendment or any prior amendment to the Credit
Agreement, has been "intentionally omitted" shall be deleted.
H. Except as hereby expressly amended, the Credit
Agreement shall remain in full force and effect.
Section 3. Effectiveness of Amendments. The amend ments
---------------------------
provided for by Section 2 hereof shall become effective as of December 31, 1995
(except for the amendments to the definition of "Applicable Margin" which shall
take effect on the date of this Amendment) 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 each of the Lenders
(other than the Fixed Rate Lender); 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 continuing.
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.
-37-
Section 6. New York Law. This Amendment shall be governed by
------------
and construed in accordance with the laws of the State of New York.
-38-
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/ PARKER S. KENNEDY
------------------------------
Title: President
By /s/ THOMAS A. KLEMENS
------------------------------
Title: Vice President
Chief Financial Officer
-39-
THE CHASE MANHATTAN BANK, N.A.
By /s/ ROBERT A. FOSTER
---------------------------
Title: Vice President
-40-
FIRST INTERSTATE
BANK OF CALIFORNIA
By /s/ MARLA W. JOHNSON
---------------------------
Title: Vice President
-41-
IMPERIAL BANK
By /s/ ARNOLD ONAGA
------------------------
Title: Vice President
-42-
SANWA BANK CALIFORNIA
By /s/ ART DUNBAR
----------------------------
Title: Vice President
-43-
UNION BANK
By /s/ SUSAN M. RUSSELL
---------------------------
Title:
-44-
NBD BANK
By /s/ RICHARD J. JOHNSEN
----------------------------
Title: Vice President
-45-
THE CANADA LIFE
ASSURANCE COMPANY
INCE & CO., as Nominee for
The Canada Life Assurance Company
By /s/ H. VON SORPE
-----------------------------------
Title: Partner
-46-
THE CHASE MANHATTAN BANK, N.A.,
as Agent
By /s/ ROBERT A. FOSTER
------------------------------
Title: Vice President