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EXHIBIT 10.3(g)
FORM
OF
SALARY DEFERRAL AGREEMENT BY AND BETWEEN
THE CORPORATION AND ITS EXECUTIVE OFFICERS
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EXHIBIT 10.3(g)
FORM
OF
SALARY DEFERRAL AGREEMENT BY AND BETWEEN
THE CORPORATION AND ITS EXECUTIVE OFFICERS
SALARY DEFERRAL AGREEMENT
THIS AGREEMENT, dated as of ____, 1996, 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 31 1996; 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:
ARTICLE I.
DEFINITIONS
When used in this Agreement, the following words and phrases have the
indicated meanings:
1.1 "Common Stock" means the $5.00 par value common stock of First
American Corporation.
1.2 "Deferrable Compensation" means all compensation payable to Executive
for services.
1.3 "Deferred Compensation Account" means the account established by the
Company for each Executive for compensation deferred pursuant to this
Agreement which bears interest as described in Article 3 below. The
maintenance of individual Deferred Compensation Accounts is for
bookkeeping purposes only.
1.4 "Deferred Compensation Election Form" means the form by which eligible
Executives elect to have a portion of their salary deferred pursuant to
this Agreement.
1.5 "Market Value" means the closing price of the shares of Common Stock on
the National Association of Securities Dealers Automated Quotation
System (NASDAQ) on the day on
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which such value is to be determined or, if no such shares were traded
on such day, on the next preceding day on which such shares were
traded; provided, however, that if at any relevant time the shares of
Common Stock are not traded on the NASDAQ, then "Market Value" shall be
determined by reference to the closing "asked" price of the shares in
the over-the-counter market as reported by any other national exchange
or quotation service.
1.6 "Stock Account" means the account established by the Company for each
Executive, the performance of which shall be measured by reference to
the Market Value of Common Stock. The maintenance of individual Stock
Accounts is for bookkeeping purposes only.
1.7 "Valuation Date" means each business day.
ARTICLE II.
AMOUNT OF DEFERRAL
$_____ of the Executive's 1997 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 Articles 3 and 4 hereof, (the "Deferred Compensation") will be payable
to the Executive, the Executive's designated beneficiary, or the Executive's
estate as set forth in Articles 5, 7, and 8 of this Agreement.
ARTICLE III.
ELECTION FORM AND HYPOTHETICAL INVESTMENTS
3.1 Election Form. Executive must make a valid election by executing and
filing with the Human Resources Committee a Deferred Compensation
Election Form stating the amount of the Deferable Compensation to be
credited to the Executive's Deferred Compensation Account and Stock
Account, respectively.
3.2 Deferred Compensation Account. Interest will be credited to the
Executive's Deferred Compensation Account on December 31 of each year.
Interest will accrue at a rate equal to that earned on one-year
treasury notes of the U. S. Government determined as of the prior
December 31. 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 installment
payments will include principal and interest credited to the
Executive's account as of the prior year-end and
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all interest accrued subsequently in the year of payment.
3.3 Stock Account. Amounts in an Executive's Stock Account are
hypothetically invested in units of Common Stock. Amounts deferred into
a Stock Account are recorded as units of Common Stock, and fractions
thereof, with one unit equating to a single share of Common Stock.
Thus, the value of one unit shall be the Market Value of a single share
of Common Stock. The use of units is merely a bookkeeping convenience;
the units are not actual shares of Common Stock. The Company will not
reserve or otherwise set aside any Common Stock for or to any Stock
Account.
ARTICLE IV
INVESTMENTS IN THE STOCK ACCOUNT
4.1 Election Into the Stock Account. If an an Executive elects to defer
compensation into his or her Stock Account, the amount so deferred
shall be credited to his or her Stock Account, as of the date such
amounts are otherwise payable. Executive's Stock Account shall be
credited with that number of units of Common Stock, and fractions
thereof, obtained by dividing the dollar amount to be deferred into the
Stock Account by the Market Value of the Common Stock as of such date.
4.2 Dividend Equivalents. Effective as of the payment date for each cash
dividend on the Common Stock, the Stock Account of each Executive who
had a balance in his or her Stock Account on the record date for such
dividend shall be credited with a number of units of Common Stock, and
fractions thereof, obtained by dividing (i) the aggregate dollar amount
of such cash dividend payable in respect of such Executive's Stock
Account (determined by multiplying the dollar value of the dividend
paid upon a single share of Common Stock by the number of units of
Common Stock held in the Executive's Stock Account on the record date
for such dividend) by (ii) the Market Value of the Common Stock on the
payment date for such cash dividend.
4.3 Stock Dividends. Effective as of the payment date for each stock
dividend on the Common Stock, additional units of Common Stock shall be
credited to the Stock Account of each Executive who had a balance in
his or her Stock Account on the record date for such dividend. The
number of units that shall be credited to the Stock Account of such an
Executive shall equal the number of shares of Common Stock, and
fractions thereof, which the Executive would have received as stock
dividends had he or she been the owner on the record date for such
stock dividend of the number of shares of Common Stock equal to the
number of units credited to his or her Stock Account on such record
date.
4.4 Adjustment. If, as a result of a reclassification, recapitalization,
merger, reorganization, or other change in the Company's structure
affecting the Common Stock, the outstanding shares of Common Stock
shall be changed into a greater number or smaller number of shares, the
number of units credited to an Executive's Stock Account shall be
appropriately adjusted on the same basis.
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4.5 Distributions. Amounts in respect of units of Common Stock shall be
distributed in cash. The number of units to be distributed from an
Executive's Stock Account shall be valued by multiplying the number of
such units by the Market Value of the Common Stock as of the Valuation
Date immediately preceding the date such distribution is to occur.
4.6 Responsibility for Investment Choices. Each Executive is solely
responsible for any decision to defer compensation into his or her
Stock Account and accepts all investment risks entailed by such
decision, including the risk of loss and a decrease in the value of the
amounts he or she elects to defer into his or her Stock Account.
4.7 Liquidation of Stock Account. Upon the date that an Executive's Stock
Account is terminated pursuant to Section 5 hereof, the entire balance,
if any, of the Executive's Stock Account shall automatically be
transferred to his or her Deferred Compensation Account. For purposes
of valuing the units of Common Stock subject to such a transfer, the
approach described in Section 4.5 shall be used.
ARTICLE V
PAYMENT OF DEFERRED COMPENSATION
5.1 Payment. 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.
5.2 Change in Control. Notwithstanding the foregoing, the Company will pay
the Executive the Deferred Compensation in a lump sum as soon as
practicable but within 30 days after termination of employment if there
is a Change in Control or Potential Change in Control of the Company as
defined in the 1991 Employee Stock Incentive Plan and, within two (2)
years after such Change in Control or Potential Change in Control has
occurred, the Executive's employment is terminated:
(a) involuntarily, other than an involuntary termination for cause or
other than occurring as the result of death or disability, or
(b) voluntarily, following:
(i) any reduction in the Executive's (a) base salary from the level
immediately preceding the Change in Control or Potential Change in
Control, or (b) annual bonus opportunity available immediately
preceding the Change in Control or Potential 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 Potential Change in Control or any increase in Executive's
required travel amounting to a constructive relocation, or
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(iii) any material reduction in the level of responsibility,
position (including status, office, title, reporting
relationships or working conditions), authority or duties of
Executive in existence immediately preceding the Change in
Control or Potential Change in Control or any assignment to
Executive of duties inconsistent in any material respect with
the highest level of Executive's position, authority,
responsibilities or status as in effect during the six (6)
months immediately preceding the Change in Control or
Potential Change in Control without the prior written consent
of Executive, or
(iv) any material reduction in the aggregate fringe benefits and
perquisites available to Executive immediately preceding the
Change in Control or Potential Change in Control not offset by
salary or annual bonus increases, or
(c) voluntarily if, following a Change in Control or Potential 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, at any time, 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.
5.3 Termination for Cause. For purposes hereof, a termination will be
considered to be "for cause" if it occurs in conjunction with a
determination by the Company that Employee has committed an act of
gross negligence or willful misconduct materially injurious to the
Company, gross dereliction of duties after notice to Employee and
failure to correct the deficiencies within a period of thirty (30)
days, or fraud in his or her capacity as an employee of the Company or
a subsidiary thereof. For purposes of this Agreement, disability will
be considered to have the same meaning as that provided in the
Company's long-term disability plan for provision of long-term
disability benefits. In the event that the Company takes the position
that a termination has occurred "for cause," it will so notify Employee
in writing at the time of such termination.
5.4 Effective Date; Continuous Employment. 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 5, 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.
ARTICLE VI
BENEFICIARY
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
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written notice to the Director, Compensation and Benefits.
ARTICLE VII
DEATH OF EXECUTIVE
7.1 30 day payment period. 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. As soon as
practical following such thirty-day period, the unpaid Deferred
Compensation will be paid to the designated beneficiary in a lump sum.
7.2 Payment to Contingent Beneficiary.If the designated beneficiary predeceases
the Executive, the unpaid Deferred Compensation will be paid to the
contingent beneficiary, if living, or the Executive's estate in a lump sum
as soon as practical.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 or, if the contingent beneficiary does
not survive the Executive, the estate of the designated beneficiary in a
lump sum as soon as practical.
ARTICLE VIII
PAYMENT UPON HARDSHIP
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 8, 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 and that would result in severe financial
hardship to the Executive if early withdrawal were not permitted. Any early
withdrawal approved by the Human Resources Committee is limited to the amount
necessary to meet the emergency. The circumstances that will constitute an
unforeseeable 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 would not itself 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 8 and will furnish to the Human Resources Committee
such information as the Executive deems appropriate and as the Company and
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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 8, and the amount of such payment,
will be conclusive and binding on the Executive and Company.
ARTICLE IX
CREDITORS
9.1 No Set Aside of Funds. 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.
9.2 No Assignment. 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.
ARTICLE X
OTHER PLANS
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 First American Corporation Supplemental Executive Retirement Program,
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.
ARTICLE XI
MISCELLANEOUS
11.1 Not an Employment Agreement. 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 employment at any time for any
reason, unless there is a written employment agreement to the contrary.
11.2. Binding Effect. This Agreement will be binding upon any successor to
the Company by merger, consolidation, purchase or otherwise.
11.3. Entire Agreement. 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.
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11.4. Governance. 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:
--------------------------------------------
Martin E. Simmons
Executive Vice President-Administration,
General Counsel, and Corporate Secretary
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EXHIBIT A
TO SALARY DEFERRAL AGREEMENT
DATED AS OF _______, 1996
INSTRUCTIONS: Select one (1) Method of Payment and one (1) Commencement date for
each event listed and then initial the Exhibit where indicated. The "FIXED DATE"
event is optional and should not be completed unless some form of distribution
is desired prior to retirement or termination.
EVENT TRIGGERING PAYMENT
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Early Retirement
----------------
- ---------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT COMMENCEMENT DATE
- ---------------------------------------------------------------------------------------------------------------
[ ] Lump Sum = deferred amount plus accrued [ ] February 1 of the year following effective
interest. date of early retirement.
[ ] Annual Installments [ ] February 1 of the year following a fixed date
Select 2-10: = after early retirement. Insert year:
account balance plus interest credited
thereto divided by number of installments
outstanding.
- ---------------------------------------------------------------------------------------------------------------
Normal Retirement
-----------------
- ---------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT COMMENCEMENT DATE
- ---------------------------------------------------------------------------------------------------------------
[ ] Lump Sum = deferred amount plus accrued [ ] February 1 of the year following effective
interest. date of normal retirement.
[ ] Annual Installments [ ] February 1 of the year following a fixed date
Select 2-10: = after normal retirement. Insert year:
account balance plus interest credited
thereto divided by number of installments
outstanding.
- -----------------------------------------------------------------------------------------------------------
Executive's Initials
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EVENT TRIGGERING PAYMENT
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Voluntary or Involuntary Termination
------------------------------------
- ---------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT COMMENCEMENT DATE
- ---------------------------------------------------------------------------------------------------------------
[ ] Lump Sum = deferred amount plus accrued [ ] February 1 of the year following effective
interest. date of voluntary or involuntary termination.
[ ] Annual Installments [ ] February 1 of the year following a fixed date
Select 2-10: = after voluntary or involuntary termination.
account balance plus interest credited Insert year:
thereto divided by number of installments
outstanding.
- ---------------------------------------------------------------------------------------------------------------
Disability Termination
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- ---------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT COMMENCEMENT DATE
- ---------------------------------------------------------------------------------------------------------------
[ ] Lump Sum = deferred amount plus accrued [ ] February 1 of the year following effective
interest. date of disability termination.
[ ] Annual Installments [ ] February 1 of the year following a fixed date
Select 2-10: = after disability termination. Insert year:
account balance plus interest credited
thereto divided by number of installments
outstanding.
- ---------------------------------------------------------------------------------------------------------------
Executive's Initials
THE TERM "EFFECTIVE DATE" MEANS THE EXECUTIVE'S LAST DAY OF EMPLOYMENT.
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EVENT TRIGGERING PAYMENT
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Fixed Date
----------
Full Payment (Optional)
- ---------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT COMMENCEMENT DATE
- ---------------------------------------------------------------------------------------------------------------
[ ] Lump Sum = deferred amount plus accrued [ ] February 1 following fixed date. Insert year:
interest. 2001
[ ] Annual Installments
Select 2-10:5=
account balance plus interest credited thereto divided by number of
installments outstanding.
- ---------------------------------------------------------------------------------------------------------------
Fixed Date
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Partial Payment (Optional)
- ---------------------------------------------------------------------------------------------------------------
METHOD OF PAYMENT COMMENCEMENT DATE
- ---------------------------------------------------------------------------------------------------------------
[ ] Lump Sum = partial payment amount with [ ] February 1 following fixed date. Insert year:
the remainder to be paid as indicated by the
first appropriate event triggering payment.
Amount: $ or %
[ ] Annual Installments
Select 2-10: = payment amount divided by number of installments
outstanding with the remainder to be paid as indicated by the first
appropriate event triggering payment.
- ---------------------------------------------------------------------------------------------------------------
Executive's Initials
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