1
EXHIBIT 10.3(h)
SALARY DEFERRAL AGREEMENT
THIS AGREEMENT, dated as of December __, 199___, between First
American Corporation (the "Company") and
(the "Executive").
WITNESSETH:
WHEREAS, the Executive is serving as an executive of the Company at an
annual rate of $ _____________ as of December __, 199___; and
WHEREAS, the Executive and the Company desire to enter into an
agreement with respect to the deferred payment of a portion of the Executive's
salary upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Company and the Executive hereby agree as follows:
1. $__________ of the Executive's 199___ annual salary will be deferred
by the Company, in equal installments, from the semi-monthly salary
payments paid to the Executive during such year. The deferred salary
is subject to FICA tax at the time the salary payments are made.
However, the Executive and the Company agree that the FICA tax will be
paid out of the remaining non-deferred balance, if any, of the
Executive's semi-monthly salary payments or, if the remaining
non-deferred balance is not sufficient to pay the FICA tax, by the
Executive's personal check payable to the Company and delivered to the
Payroll Department of the Company. Such deferred salary plus interest
computed and accrued as set forth in Article 2 hereof (the "Deferred
Compensation") will be payable to the Executive, the Executive's
designated beneficiary, or the Executive's estate as set forth in this
Agreement.
2. Interest will be credited to the Executive's account on______________.
Interest will accrue at a rate equal to that ear on one-year treasury
notes of the U. S. Government determined as of December 31, 199___.
Interest will accrue on the average daily balance of the Executive's
account beginning with the date on which the deferred compensation or
accrued interest is credited to the Executive's account and ending
with the date on which the deferred compensation or accrued interest
is actually paid.
The Executive may elect payment of the account balance either in
installments or in a lump sum. Installment payments will be computed
by dividing the combined total of deferred compensation and credited
interest, as of the prior year-end, by the number of installments
remaining. Lump-sum and final
125
2
installment payments will include principal and interest credited to
the Executive's account as of the prior year-end and all interest
accrued subsequently in the year of payment.
3. Deferred Compensation will be paid to the executive following the
first to occur of the listed events and in accordance with the method
of payment and commencement date selected by the Executive on the
attached Exhibit A which is made a part of this Agreement.
Notwithstanding the foregoing, the Company will immediately pay the
Executive the Deferred Compensation in a lump sum in the event of a
Change in Control of the Company as defined in the 1991 Stock Option
Plan and in the event the Executive's employment is terminated, as
defined below, within two (2) years after the Change in Control has
occurred:
(a) involuntarily, other than an involuntary termination for cause
or other than occurring as the result of death, disability, or
terminating at or after attaining normal retirement age, or
(b) voluntarily, following:
(i) any reduction in the Executive's (a) base salary from
the level existing at the time of the most recent
Change in Control, (b) combined base salary and
annual bonus from that for the year immediately
preceding the Change in Control, or (c) annual bonus
opportunity available immediately preceding the
Change in Control, or
(ii) any relocation to which the Executive has not agreed
to an office of the Company more than thirty-five
(35) miles from the office where Executive was
located at the time of any Change in Control or any
increase in Executive's required travel amounting to
a constructive relocation, or
(iii) any material reduction in the level of
responsibility, position (including status, office,
title, reporting relationships or working
conditions), authority or duties of Executive
immediately preceding the Change in Control, or
(iv) any material reduction in the aggregate fringe
benefits and perquisites available to Executive
immediately preceding the Change in Control not
offset by salary or annual bonus increases, or
(c) voluntarily if, following a Change in Control, any successor
or acquiror of Company either announces that it will not honor
or cause the Company to honor the terms of this Agreement or
if, at any time, the Company fails to confirm in writing to
the Executive within fifteen (15) business days of a request
by Executive that it will honor and will cause the Company to
honor the terms of this Agreement.
126
3
The Executive should notify Human Resources immediately upon the
occurrence of the triggering event to ensure timely payment. For
purposes of Exhibit A, the term "effective date" means the Executive's
last day of employment.
For purposes of this Article 3, the Executive will be deemed to be
continuously employed by the Company or any affiliate of the Company
if the Executive is re-employed by the Company or an affiliate of the
Company within four weeks of the date the Executive's employment first
ceased.
4. The Executive will have the right to designate a beneficiary who, in
the event of the Executive's death prior to the payment of any or all
of the Deferred Compensation pursuant to this Agreement, will receive
the unpaid Deferred Compensation. Such designation will be made by
the Executive on the form attached hereto. The Executive may, at any
time, change or revoke such designation by written notice to the
Director, Compensation and Benefits.
5. (a) If the Executive dies prior to the receipt of any or all of
the Deferred compensation, no deferred Compensation will be
paid for a period of thirty days from the date the Director,
Compensation and Benefits, receives written notice of the
Executive's death.
(b) As soon as practical following such thirty-day period, the
unpaid Deferred Compensation will be paid to the designated
beneficiary in a lump sum.
(c) If the designated beneficiary predeceases the Executive, the
unpaid Deferred Compensation plus accrued interest will be
paid to the contingent beneficiary, if living, or the
Executive's estate in a lump sum as soon as practical.
(d) If the designated beneficiary dies after the Executive but
prior to the payment of the Deferred Compensation and has not
elected to receive such Deferred Compensation, no Deferred
Compensation will be paid for a period of thirty days from the
date the Director, Compensation and Benefits receives written
notice of the death of the designated beneficiary. The
Deferred Compensation plus accrued interest will then be paid
to the contingent beneficiary, if living, or the estate of the
designated beneficiary in a lump sum as soon as practical.
6. The Company will pay to the Executive during the term of the
Executive's employment that portion of the Deferred Compensation that
will be necessary to meet a financial hardship arising from an
unforeseen emergency. For purposes of this Article 6, such emergency
payment will be made only in instances of hardship arising from an
unanticipated emergency that is caused by an event beyond the control
of the Executive or the Executive's beneficiary and that would result
in sever financial hardship to the individual if early withdrawal were
not permitted. Any early withdrawal approved by the Human
127
4
Resources Committee is limited to the amount necessary to meet the
emergency. The circumstances that will constitute an unforesseeable
emergency will depend upon the facts of each case, but, in any case,
payment may not be made to the extent that such hardship is or may be
relieved:
(a) through reimbursement or compensation by insurance or
otherwise,
(b) by liquidation of the Executive's assets, to the extent the
liquidation of such assets owuld not istelf cause severe
financial hardship, or
(c) by cessation of deferrals under this Agreement.
Examples of what are not considered to be unforeseeable emergencies
include the need to send an Executive's child to college or the desire
to purchase a home. The Executive will apply to the Human Resources
Committee for any emergency payment under this Article 6 and will
furnish to the Human Resources Committee such information as the
Executive deems appropriate and as the Company and counsel for the
Company deem necessary and appropriate to make such determination.
The determination of the Human Resources Committee as to whether a
payment is warranted under this Article 6, and the amount of such
payment, will be conclusive and binding on the Executive and Company.
7. The Deferred Compensation will be paid out of the general funds of the
Company and no funds will be set aside therefor. The Deferred
Compensation will be subject to the claims of the Company's general
creditors. The Executive will have the status of a general unsecured
creditor of the Company and this Agreement constitutes a mere promise
by the Company to make Deferred Compensation payments in the future.
It is the intention of the parties that this Agreement is to be
unfunded for tax purposes and for purposes of Title I of ERISA.
8. Any right under this Agreement to receive Deferred Compensation will
not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment or garnishment
by creditors of the Executive or the Executive's beneficiary. Any
attempted assignment will be null and void.
9. Any amount of salary deferred pursuant to this Agreement will be
included in the Executive's compensation base for purposes of
determining entitlements under the Master Retirement Plan Supplemental
Executive Retirement Plan, the Life Insurance Plan and Short and Long
Term Disability Plans. Salary deferred under this Agreement will not
be eligible for deferral under the FIRST Plan.
10. The Executive and the Company acknowledge that this Agreement is not
an employment agreement between the Executive and the Company, and the
Company and the Executive each have the right to terminate the
Executive's
128
5
employment at any time for any reason, unless there is a written
employment agreement to the contrary.
11. This Agreement will be binding upon any successor to the Company by
merger, consolidation, purchase or otherwise.
12. This Agreement, together with the Executive's beneficiary designation,
constitutes the entire agreement between the Company and the Executive
regarding the Deferred Compensation and will not be modified except
upon the written agreement of the Company and the Executive.
13. This Agreement will be governed in accordance with the laws of the
State of Tennessee.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
Executive
Social Security Number
FIRST AMERICAN CORPORATION
By:
Title:
Beneficiary: Name, Relationship, and Social Security Number
Contingent or Secondary Beneficiary: Name, Relationship, and Social Security
Number (if the beneficiary designated above is not living at the time of the
death of the employee)
Executive
129