EXHIBIT (10)(p)
Composite Conformed Copy
THE FIRST AMERICAN FINANCIAL CORPORATION
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
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Page
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ARTICLE I TITLE AND DEFINITIONS............................................ 1
1.1 Title.......................................................... 1
1.2 Definitions.................................................... 1
ARTICLE II PARTICIPATION.................................................... 3
ARTICLE III DEFERRAL ELECTIONS............................................... 4
3.1 Elections to Defer Compensation................................ 4
3.2 Investment Elections........................................... 5
ARTICLE IV DEFERRAL ACCOUNTS AND TRUST FUNDING.............................. 5
4.1 Deferral Accounts.............................................. 5
4.2 Trust Funding.................................................. 6
ARTICLE V VESTING.......................................................... 6
ARTICLE VI DISTRIBUTIONS.................................................... 7
6.1 Distribution of Deferred Compensation and Discretionary
Company Contributions.......................................... 7
6.2 Early Distributions............................................ 9
6.3 Inability to Locate Participant................................ 10
6.4 Payment of Policy Premiums..................................... 10
ARTICLE VII ADMINISTRATION................................................... 10
7.1 Committee...................................................... 10
7.2 Committee Action............................................... 10
7.3 Powers and Duties of the Committee............................. 11
7.4 Construction and Interpretation................................ 11
7.5 Information.................................................... 12
7.6 Compensation, Expenses and Indemnity........................... 12
7.7 Quarterly Statements........................................... 12
7.8 Disputes....................................................... 12
ARTICLE VIII MISCELLANEOUS.................................................. 13
8.1 Unsecured General Creditor..................................... 13
8.2 Restriction Against Assignment................................. 13
8.3 Withholding.................................................... 14
8.4 Amendment, Modification, Suspension or Termination............. 14
8.5 Governing Law.................................................. 14
8.6 Receipt or Release............................................. 14
8.7 Payments on Behalf of Persons Under Incapacity................. 14
8.8 Limitation of Rights and Employment Relationship............... 15
8.9 Headings....................................................... 15
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THE FIRST AMERICAN FINANCIAL CORPORATION
DEFERRED COMPENSATION PLAN
WHEREAS, The First American Financial Corporation (the "Company")
desires to establish The First American Financial Corporation Deferred
Compensation Plan to provide supplemental retirement income benefits for a
select group of management and highly compensated employees through deferrals of
salary, commissions and bonuses effective as of January 1, 1998;
NOW, THEREFORE, effective as of January 1, 1998, the Plan is hereby
adopted to read as follows:
ARTICLE I
TITLE AND DEFINITIONS
1.1 Title.
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This Plan shall be known as The First American Financial Corporation
Deferred Compensation Plan.
1.2 Definitions.
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Whenever the following words and phrases are used in this Plan, with
the first letter capitalized, they shall have the meanings specified below.
(a) "Account" or "Accounts" shall mean a Participant's Deferral
Account.
(b) "Base Salary" shall mean a Participant's annual base salary,
excluding bonus, incentive and all other remuneration for services rendered to
Company and prior to reduction for any salary contributions to a plan
established pursuant to Section 125 of the Code or qualified pursuant to Section
401(k) of the Code.
(c) "Beneficiary" or "Beneficiaries" shall mean the person or
persons, including a trustee, personal representative or other fiduciary, last
designated in writing by a Participant in accordance with procedures established
by the Committee to receive the benefits specified hereunder in the event of the
Participant's death (other than the death benefits described in Section
6.1(b)(1) unless such person is designated as a beneficiary under the Policy
described therein). No beneficiary designation shall become effective until it
is filed with the Committee. Any designation shall be revocable at any time
through a written instrument filed by the Participant with the Committee with or
without the consent of the previous Beneficiary. If there is no Beneficiary
designation in effect, then the person designated to receive the death benefit
specified in Section 6.1(c)(1) shall be the Beneficiary. However, no designation
of a Beneficiary other than the Participant's spouse shall be valid unless
consented to in writing by such spouse. If there is no such designation or if
there is no surviving designated Beneficiary, then the Participant's surviving
spouse shall be the Beneficiary. If there is no surviving spouse to receive any
benefits payable in accordance with the preceding sentence, the duly appointed
and currently acting personal representative of the Participant's estate (which
shall include either the Participant's probate estate or living trust) shall be
the Beneficiary. In any case where there is
no such personal representative of the Participant's estate duly appointed and
acting in that capacity within 90 days after the Participant's death (or such
extended period as the Committee determines is reasonably necessary to allow
such personal representative to be appointed, but not to exceed 180 days after
the Participant's death), then Beneficiary shall mean the person or persons who
can verify by affidavit or court order to the satisfaction of the Committee that
they are legally entitled to receive the benefits specified hereunder. In the
event any amount is payable under the Plan to a minor, payment shall not be made
to the minor, but instead be paid (a) to that person's living parent(s) to act
as custodian, (b) if that person's parents are then divorced, and one parent is
the sole custodial parent, to such custodial parent, or (c) if no parent of that
person is then living, to a custodian selected by the Committee to hold the
funds for the minor under the Uniform Transfers or Gifts to Minors Act in effect
in the jurisdiction in which the minor resides. If no parent is living and the
Committee decides not to select another custodian to hold the funds for the
minor, then payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the estate for the
minor is duly appointed and currently acting within 60 days after the date the
amount becomes payable, payment shall be deposited with the court having
jurisdiction over the estate of the minor. Payment by Company pursuant to any
unrevoked Beneficiary designation, or to the Participant's estate if no such
designation exists, of all benefits owed hereunder shall terminate any and all
liability of Company.
(d) "Board of Directors" or "Board" shall mean the Board of Directors
of The First American Financial Corporation.
(e) "Bonuses" shall mean such additional amounts of income as Company
may determine to pay to an employee, as determined in the sole and absolute
discretion of Company.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) "Committee" shall mean the Committee appointed by the Board to
administer the Plan in accordance with Article VII.
(h) "Commissions" shall mean a Participant's remuneration earned from
Company which is dependent on sales activity and is not related to Base Salary
or Bonuses.
(i) "Company" shall mean The First American Financial Corporation and
any successor corporations. Company shall include each corporation which is a
member of a controlled group of corporations (within the meaning of Section
414(b) of the Code) of which The First American Financial Corporation is a
component member, if the Board provides that such corporation shall participate
in the Plan.
(j) "Compensation" shall mean Base Salary, Commissions and Bonuses
that the Participant is entitled to receive for services rendered to the
Company.
(k) "Deferral Account" shall mean the bookkeeping account maintained
by the Committee for each Participant that is credited with amounts equal to (1)
the portion of the Participant's Compensation that he or she elects to defer,
and (2) interest pursuant to Section 4.1.
(l) "Distributable Amount" shall mean the balance in the Participant's
Deferral Account.
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(m) "Early Distribution" shall mean an election by a Participant in
accordance with Section 6.2 to receive a withdrawal of amounts from his or her
Deferral Account prior to the time in which such Participant would otherwise be
entitled to such amounts.
(n) "Effective Date" shall mean January 1, 1998.
(o) "Eligible Employee" shall mean such management and highly
compensated employees as are designated by the Company for participation in this
Plan.
(p) "Fund" or "Funds" shall mean one or more of the investment funds
selected by the Committee pursuant to Section 3.2(b).
(q) "Initial Election Period" for an Eligible Employee shall mean the
30-day period immediately prior to November 14, 1997 or the 30-day period
following the time an employee shall be designated by the Company as an Eligible
Employee.
(r) "Interest Rate" shall mean, for each Fund, an amount equal to the
net rate of gain or loss on the assets of such Fund during each month.
(s) "Participant" shall mean any Eligible Employee who becomes a
Participant in accordance with Section 2.1.
(t) "Payment Date" shall mean the time as soon as practicable after
the earlier of (1) the first day of the month following the end of the calendar
quarter in which the Participant's employment terminates for any reason, or (2)
the Scheduled Withdrawal Date.
(u) "Plan" shall mean The First American Financial Corporation
Deferred Compensation Plan set forth herein, now in effect, or as amended from
time to time.
(v) "Plan Year" shall mean the 12 consecutive month period beginning
on each January 1 and ending on December 31.
(w) "Policy" shall mean an insurance policy purchased in accordance
with the terms of this Plan.
(x) "Scheduled Withdrawal Date" shall mean the distribution date
elected by the Participant for an in-service withdrawal of all amounts of
Compensation deferred in a given Plan Year, and earnings and losses attributable
thereto, as set forth on the election form for such Plan Year.
(y) "Trust" shall mean The First American Financial Corporation
Deferred Compensation Plan Trust.
ARTICLE II
PARTICIPATION
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An Eligible Employee shall become a Participant in the Plan by (1)
electing to defer a portion of his or her Compensation in accordance with
Section 3.1, (2) filing a life insurance application form along with his or her
deferral election form, and (3) complying with such medical underwriting
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requirements as determined by the life insurance carrier selected by the
Company. An Eligible Employee who completes the requirements of the preceding
sentence shall commence participation in this Plan as of the first day of the
month in which Compensation is deferred. In the event it is determined by the
Committee, that the proposed life insurance policy cannot be obtained in a cost
efficient manner after medical underwriting requirements have been met, the
Participant shall not be eligible to receive death benefits in accordance with
Section 6.1(c) of the Plan. Notwithstanding any provision to the contrary, if it
is determined or reasonably believed, based on a judicial or administrative
determination or an opinion of Company's legal counsel that a Plan Participant
is not a management or highly compensated employee, such individual shall cease
to be a Participant and his Distributable Amount shall be paid to him in a lump
sum as soon as practicable after the determination is made that he is not a
management or highly compensated employee.
ARTICLE III
DEFERRAL ELECTIONS
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3.1 Elections to Defer Compensation. A Participant who has elected to
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suspend his deferrals or Base Salary or Commissions may make deferrals in future
Plan Years in accordance with this Section 3.1.
(a) Initial Election Period. Subject to the provisions of Article II,
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each Eligible Employee may elect to defer Base Salary, Bonuses and/or
Commissions by filing with the Committee an election that conforms to the
requirements of this Section 3.1, on a form provided by the Committee, no later
than the last day of his or her Initial Election Period.
(b) General Rule. The amount of Compensation which an Eligible
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Employee may elect to defer is such Compensation earned on or after the time at
which the Eligible Employee elects to defer in accordance with Sections 1.2(q)
and 3.1(a) and shall be a flat dollar amount or percentage which shall not
exceed 100% of the Eligible Employee's Base Salary, Bonuses and Commissions,
provided that the total amount deferred by a Participant shall be limited in any
calendar year, if necessary, to satisfy Social Security tax (including
Medicare), income tax and employee benefit plan withholding requirements as
determined in the sole and absolute discretion of the Committee. The minimum
contribution which may be made in any Plan Year by an Eligible Employee shall
not be less than $5,000, provided such minimum contribution can be satisfied
from either Base Salary and/or Bonus and/or Commission deferrals.
(c) Duration of Compensation Deferral Election. An Eligible
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Employee's initial election to defer Base Salary and Commissions must be filed
before November 14, 1997 and is to be effective January 1, 1998. A Participant
may elect to suspend his election to defer Base Salary or Commissions once
during any Plan Year with respect to amounts of Base Salary or Commissions which
have not been paid, provided said Participant gives the Company 20 days prior
written notice of his election. A Participant may increase, decrease or
terminate a deferral election with respect to Base Salary or Commissions for any
subsequent Plan Year by filing a new election on or before November 1, which
election shall be effective on the first day of the next following Plan Year. An
Eligible Employee's Initial Election to defer Bonuses must be filed by November
14, 1997. Any subsequent election with respect to Bonuses must be filed by
November 1 of the year prior to the year that the Bonus is earned. Bonuses are
deemed earned at such time as Company communicates its determination of Bonuses
to the affected Eligible Employee. All elections with respect to Bonuses are for
one Plan
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Year. In the case of an employee who becomes an Eligible Employee after November
1, 1997, such Eligible Employee shall have 30 days from the date he or she has
become an Eligible Employee to make an Initial Election with respect to Base
Salary, Bonuses and/or Commissions. Such election shall be for the remainder of
the Plan Year, in the event the Plan Year has commenced.
(d) Elections other than Elections during the Initial Election
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Period. Subject to the limitations of Section 3.1(b) above, any Eligible
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Employee who fails to elect to defer Compensation during his or her Initial
Election Period may subsequently become a Participant, and any Eligible Employee
who has terminated a prior Compensation deferral election may elect to again
defer Compensation, by filing an election, on a form provided by the Committee,
to defer Compensation as described in Sections 3.1(b) and 3.1(c) above. An
election to defer Compensation must be filed in a timely manner in accordance
with Section 3.1(c).
3.2 Investment Elections.
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(a) At the time of making the deferral elections described in Section
3.1, the Participant shall designate, on a form provided by the Committee, the
types of investment funds the Participant's Account will be deemed to be
invested in for purposes of determining the amount of earnings to be credited to
that Account. In making the designation pursuant to this Section 3.2, the
Participant may specify that all or any multiple of his Deferral Account (equal
to or greater than 10% in whole percentage increments) be deemed to be invested
in one or more of the types of investment funds provided under the Plan as
communicated from time to time by the Committee. Effective as of the end of any
calendar month, a Participant may change the designation made under this Section
3.2 by filing an election, on a form provided by the Committee, at least 30 days
prior to the end of such quarter. If a Participant fails to elect a type of fund
under this Section 3.2, he or she shall be deemed to have elected the Money
Market type of investment fund.
(b) Although the Participant may designate the type of investments, ,
the Committee shall not be bound by such designation. The Committee shall select
from time to time, in its sole discretion, commercially available investments of
each of the types communicated by the Committee to the Participant pursuant to
Section 3.2(a) above to be the Funds. The Interest Rate of each such
commercially available investment fund shall be used to determine the amount of
earnings or losses to be credited to Participant's Account under Article IV.
ARTICLE IV
DEFERRAL ACCOUNTS AND TRUST FUNDING
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4.1 Deferral Accounts.
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The Committee shall establish and maintain a Deferral Account for each
Participant under the Plan. Each Participant's Deferral Account shall be further
divided into separate subaccounts ("investment fund subaccounts"), each of which
corresponds to an investment fund elected by the Participant pursuant to Section
3.2(a). A Participant's Deferral Account shall be credited as follows:
(a) As of the last day of each month, the Committee shall credit the
investment fund subaccounts of the Participant's Deferral Account with an amount
equal to Compensation deferred by the Participant during each pay period ending
in that month in accordance with the Participant's election
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under Section 3.2(a); that is, the portion of the Participant's deferred
Compensation that the Participant has elected to be deemed to be invested in a
certain type of investment fund shall be credited to the investment fund
subaccount corresponding to that investment fund;
(b) As of the last day of each month, each investment fund subaccount
of a Participant's Deferral Account shall be credited with earnings or losses in
an amount equal to that determined by multiplying the balance credited to such
investment fund subaccount as of the last day of the preceding month by the
Interest Rate for the corresponding fund selected by the Company pursuant to
Section 3.2(b).
(c) In the event that a Participant elects for a given Plan Year's
deferral of Compensation to have a Scheduled Withdrawal Date, all amounts
attributed to the deferral of Compensation for such Plan Year shall be accounted
for in a manner which allows separate accounting for the deferral of
Compensation and investment gains and losses associated with such Plan Year's
deferral of Compensation.
4.2 Trust Funding.
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The Company has created a Trust with First American Trust Company
serving as initial trustee. The Company shall cause the Trust to be funded each
year. The Company shall contribute to the Trust an amount equal to the amount
deferred by each Participant for the Plan Year. The Company may also contribute
such additional amounts as it shall deem necessary or appropriate.
Although the principal of the Trust and any earnings thereon shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan Participants and Beneficiaries as
set forth therein, neither the Participants nor their Beneficiaries shall have
any preferred claim on, or any beneficial ownership in, any assets of the Trust
prior to the time such assets are paid to the Participants or Beneficiaries as
benefits and all rights created under this Plan shall be unsecured contractual
rights of Plan Participants and Beneficiaries against the Company. Any assets
held in the Trust will be subject to the claims of Company's general creditors
under federal and state law in the event of insolvency as defined in Section
4.2(a) of the Trust.
The assets of the Plan and Trust shall never inure to the benefit of
the Company and the same shall be held for the exclusive purpose of providing
benefits to Participants and their beneficiaries, deferring reasonable expenses
of administering the Plan and Trust.
ARTICLE V
VESTING
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A Participant's Deferral Account shall be 100% vested at all times.
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ARTICLE VI
DISTRIBUTIONS
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6.1 Distribution of Deferred Compensation and Discretionary Company
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Contributions.
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(a) Distribution Without Scheduled Withdrawal Date. In the case of a
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Participant who terminates employment with Company and has an Account balance of
$25,000 or more, the Distributable Amount shall be paid to the Participant (and
after his or her death to his or her Beneficiary) from among the following
optional forms of benefit as elected by the Participant on the form provided by
Company during his or her Initial Election Period:
(1) A lump sum distribution beginning on the Participant's
Payment Date.
(2) Substantially equal quarterly installments over five (5)
years beginning on the Participant's Payment Date.
(3) Substantially equal quarterly installments over ten (10)
years beginning on the Participant's Payment Date.
(4) Substantially equal quarterly installments over fifteen (15)
years beginning on the Participant's Payment Date.
A Participant may modify the optional form of benefit that he or
she has previously elected, provided such modification occurs at least one (1)
year before the Participant terminates employment with Company.
In the event a Participant fails to elect an optional form of
benefit during his or her Initial Election Period, the Participant's
Distributable Amount will be distributed in a lump sum beginning on his or her
Payment Date.
In the case of a Participant who terminates with Company and has
an Account balance of less than $25,000, the Distributable Amount shall be paid
to the Participant (and after his or her death to his or her Beneficiary) in a
lump sum distribution on the Participant's Payment Date.
The Participant's Account shall continue to be credited with
earnings pursuant to Section 4.1 of the Plan until all amounts credited to his
or her Account under the Plan have been distributed.
(b) Distribution With Scheduled Withdrawal Date. In the case of a
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Participant who has elected a Scheduled Withdrawal Date for a distribution while
still in the employ of the Company, such Participant shall receive his or her
Distributable Amount, but only with respect to those deferrals of Compensation
and earnings on such deferrals of Compensation as shall have been elected by the
Participant to be subject to the Scheduled Withdrawal Date in accordance with
Section 1.2(x) of the Plan. A Participant's Scheduled Withdrawal Date with
respect to amounts of Compensation deferred in a given Plan Year can be no
earlier than two years from the last day of the Plan Year for which the
deferrals of Compensation are made. A Participant may extend the Scheduled
Withdrawal Date for the deferral of Compensation for any Plan Year, provided
such extension occurs at least one year before the Scheduled Withdrawal Date and
is for a period of not less than two years from the Scheduled
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Withdrawal Date. The Participant shall have the right to twice modify any
Scheduled Withdrawal Date, provided the second such modification shall only be
effective if consented to by Company. In the event a Participant terminates
employment with Company prior to a Scheduled Withdrawal Date, other than by
reason of death, the portion of the Participant's Account associated with
Scheduled Withdrawal Dates which have not occurred prior to such termination
shall be distributed in a lump sum.
(c) Death Benefit. In the case of a Participant who dies while
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employed by the Company, the following benefits shall be provided:
(1) that portion of the death benefit of any life insurance
policy purchased by the Company to insure the life of the Participant and which
is subject to a "Split-Dollar Life Insurance Agreement" (as described therein)
(the "Policy") which is equal to the following amounts:
(i) If a Participant elects during his first twelve months
of Plan Participation (whether or not such election occurs during more than
one Plan Year) to defer Base Salary only, such Participant's death benefit
shall equal his Base Salary deferrals annualized over the first twelve
months of Plan Participation multiplied by fifteen. This amount shall
constitute the Participant's death benefit for the remainder of his
participation in the Plan.
(ii) If a Participant elects during his first twelve months
of Plan Participation (whether or not such election occurs during more than
one Plan Year) to defer Bonuses and/or Commissions only, such Participant's
death benefit during the first twelve months of Plan Participation shall be
$0. At the end of the initial twelve month period (which may or may not
span more than one Plan Year) the amount of the Participant's deferral of
Bonuses and/or Commissions shall be aggregated and multiplied by fifteen,
which amount shall constitute the Participant's death benefit for the
remainder of his or her participation in this Plan.
(iii) If a Participant elects during his first twelve months
of Plan Participation (whether or not such election occurs during more than
one Plan Year) to defer Base Salary and Bonuses and/or Commissions, then
the Participant's death benefit during his first twelve months of Plan
Participation shall equal his Base Salary deferrals annualized over twelve
months multiplied by fifteen. At the end of the initial twelve month period
(which may or may not span more than one Plan Year) the Participant's death
benefit shall equal the amount of Base Salary deferrals annualized during
the first twelve months multiplied by fifteen plus the aggregate amount of
all deferrals of Bonuses and/or Commissions which occurred during the first
twelve months multiplied by fifteen. This amount shall constitute the
Participant's death benefit for the remainder of his participation in the
Plan.
Any such Policy shall be subject to certain conditions set forth in a
"split-dollar life insurance agreement" between the Participant, Trustee and the
Company, pursuant to which the Participant may designate a beneficiary with
respect to the portion of the Policy proceeds described in this Section
6.1(c)(1) in the event the Participant dies prior to terminating employment with
the Company. The Participant shall have the right to designate and change such
beneficiary (which need not be his or her Beneficiary) at any time on a form
provided by and filed with the insurance company. If no such form is on file
with the insurance company, the insurance proceeds designated in this paragraph
(1) shall be paid to the Beneficiary. The benefit payable pursuant to this
paragraph (1) shall only be paid if the insurance company agrees that the
Participant is insurable and shall be subject to all conditions and exceptions
set forth in the applicable insurance policy. Notwithstanding the provision of
this Plan or any other
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document to the contrary, the Company shall not have any obligation to pay the
Participant or his or her beneficiary any amounts described in Section
6.1(c)(1); all such amounts due pursuant to Section 6.1(c)(1) shall be payable
solely from the proceeds of the Policy, if any. Furthermore, the Company is not
obligated to maintain the Policy; no death benefit shall be payable hereunder if
the Company has discontinued the Policy for the Participant. In addition, no
Policy shall be allocated to any Account.
(2) The Account Balance in a lump sum or installments as
previously elected by the Participant.
(d) Death After Benefit Commencement. In the event a Participant dies
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after he has retired from the employ of the Company and still has a balance in
his or her Account, the balance shall continue to be paid in quarterly
installments for the remainder of the period as elected by the Participant.
(e) Death Benefit Reduction. In the event a Participant elects an
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Early Distribution from his or her Deferral Account, the Participant's death
benefit as computed in accordance with Section 6.1(c)(1) of the Plan shall be
reduced by multiplying said death benefit by a fraction the numerator of which
shall be the sum of the Participant's Early Distributions and the denominator of
which shall be the Participant's Deferral Account plus Early Distributions. For
purposes of calculating the denominator of the fraction set forth above, a
Participant's Early Distributions shall be credited with earnings in accordance
with Section 4.1 of the Plan.
In the event a Participant suspends contributions of Base Salary
during the first twelve (12) months of Plan participation, then the
Participant's death benefit calculated in accordance with Sections 6.1(c)(1)(i)
and (iii) shall be determined by multiplying the actual amount of Base Salary
deferred during the initial twelve (12) month period multiplied by fifteen (15).
6.2 Early Distributions.
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A Participant shall be permitted to elect an Early Distribution from
his or her Deferral Account prior to the Payment Date, subject to the following
restrictions:
(a) The election to take an Early Distribution shall be made by
filing a form provided by and filed with the Committee prior to the end of any
calendar month.
(b) The amount of the Early Distribution shall in all cases be an
amount not less than the greater of 50% of the Deferral Account as of the end of
the calendar month as of which the distribution is to be made, or $25,000.
(c) The amount described in subsection (b) above shall be paid in a
single cash lump sum as soon as practicable after the end of the calendar month
in which the Early Distribution election is made.
(d) If a Participant receives an Early Distribution of his entire
Deferral Account, the remaining balance of his or her Deferral Account (10% of
the Deferral Account) shall be permanently forfeited and the Company shall have
no obligation to the Participant or his Beneficiary with respect to such
forfeited amount. If a Participant receives an Early Distribution of 50% or more
of his Deferral
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Account, such Participant shall forfeit 10% of the gross amount to be
distributed from the Participant's Deferral Account.
(e) If a Participant receives an Early Distribution of either all or
a part of his Deferral Account, the following rules will apply for the balance
of the Plan Year and for the following Plan Year: (i) the Participant will be
ineligible to participate in the Plan, and (ii) neither the Participant (nor his
Beneficiary or beneficiaries) shall be entitled to death benefits under Section
6.1(c)(1) or (2).
6.3 Inability to Locate Participant.
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In the event that the Committee is unable to locate a Participant or
Beneficiary within two years following the required Payment Date, the amount
allocated to the Participant's Deferral Account, shall be forfeited. If, after
such forfeiture, the Participant or Beneficiary later claims such benefit, such
benefit shall be reinstated without interest or earnings.
6.4 Payment of Policy Premiums.
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So long as the Company maintains a Policy for a Participant, the
Company shall pay to the Trustee amounts necessary to pay premiums on the Policy
insuring the Participant's life from as soon as practical after the end of each
Plan Year, or such earlier time as the Company shall determine (but no later
than the tax return due date for the Company for such year), in amounts equal to
the amount deferred by the Participant for the Plan Year.
ARTICLE VII
ADMINISTRATION
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7.1 Committee.
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A committee shall be appointed by, and serve at the pleasure of, the
Board of Directors. The number of members comprising the Committee shall be
determined by the Board which may from time to time vary the number of members.
A member of the Committee may resign by delivering a written notice of
resignation to the Board. The Board may remove any member by delivering a
certified copy of its resolution of removal to such member. Vacancies in the
membership of the Committee shall be filled promptly by the Board.
7.2 Committee Action.
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The Committee shall act at meetings by affirmative vote of a majority
of the members of the Committee. Any action permitted to be taken at a meeting
may be taken without a meeting if, prior to such action, a written consent to
the action is signed by all members of the Committee and such written consent is
filed with the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely to himself
or herself as a Participant. The Chairman or any other member or members of the
Committee designated by the Chairman may execute any certificate or other
written direction on behalf of the Committee.
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7.3 Powers and Duties of the Committee.
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(a) The Committee, on behalf of the Participants and their
Beneficiaries, shall enforce the Plan in accordance with its terms, shall be
charged with the general administration of the Plan, and shall have all powers
necessary to accomplish its purposes, including, but not by way of limitation,
the following:
(1) To select the Funds in accordance with Section 3.2(b)
hereof;
(2) To construe and interpret the terms and provisions of this
Plan;
(3) To compute and certify to the amount and kind of benefits
payable to Participants and their Beneficiaries;
(4) To maintain all records that may be necessary for the
administration of the Plan;
(5) To provide for the disclosure of all information and the
filing or provision of all reports and statements to Participants, Beneficiaries
or governmental agencies as shall be required by law;
(6) To make and publish such rules for the regulation of the
Plan and procedures for the administration of the Plan as are not inconsistent
with the terms hereof;
(7) To appoint a plan administrator or any other agent, and to
delegate to them such powers and duties in connection with the administration of
the Plan as the Committee may from time to time prescribe;
(8) To take all actions necessary for the administration of the
Plan, including determining whether to hold or discontinue the Policies; and
(9) If a Policy is discontinued or a Participant has terminated
employment with the Company for a reason other than death, (A) to notify the
insurance company that no death benefits are payable to the beneficiaries of the
applicable Participant under the Policy (and that neither the Participant nor
his or her beneficiary has any rights under the Policy or to any benefits under
the Policy) and (B) to file a new beneficiary designation with the insurance
company naming the Company as beneficiary or to cash in the Policy.
7.4 Construction and Interpretation.
-------------------------------
The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretations or construction shall
be final and binding on all parties, including but not limited to the Company
and any Participant or Beneficiary. The Committee shall administer such terms
and provisions in a uniform and nondiscriminatory manner and in full accordance
with any and all laws applicable to the Plan.
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7.5 Information.
-----------
To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death or other events which cause
termination of their participation in this Plan, and such other pertinent facts
as the Committee may require.
7.6 Compensation, Expenses and Indemnity.
------------------------------------
(a) The members of the Committee shall serve without compensation for
their services hereunder.
(b) The Committee is authorized at the expense of the Company
to employ such legal counsel as it may deem advisable to assist in the
performance of its duties hereunder. Expenses and fees in connection with the
administration of the Plan shall be paid by the Company.
(c) To the extent permitted by applicable state law, the Company
shall indemnify and save harmless the Committee and each member thereof, the
Board of Directors and any delegate of the Committee who is an employee of the
Company against any and all expenses, liabilities and claims, including legal
fees to defend against such liabilities and claims arising out of their
discharge in good faith of responsibilities under or incident to the Plan, other
than expenses and liabilities arising out of willful misconduct. This indemnity
shall not preclude such further indemnities as may be available under insurance
purchased by the Company or provided by the Company under any bylaw, agreement
or otherwise, as such indemnities are permitted under state law.
7.7 Quarterly Statements.
--------------------
Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Accounts on a quarterly
basis as of each March 31, June 30, September 30 and December 31.
7.8 Disputes.
--------
(a) Claim.
-----
A person who believes that he or she is being denied a benefit to
which he or she is entitled under this Agreement (hereinafter referred to as
"Claimant") must file a written request for such benefit with the Company,
setting forth his or her claim. The request must be addressed to the President
of the Company at its then principal place of business.
(b) Claim Decision.
--------------
Upon receipt of a claim, the Company shall advise the Claimant
that a reply will be forthcoming within ninety (90) days and shall, in fact,
deliver such reply within such period. The Company may, however, extend the
reply period for an additional ninety (90) days for special circumstances.
If the claim is denied in whole or in part, the Company shall
inform the Claimant in writing, using language calculated to be understood by
the Claimant, setting forth: (A) the specified
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reason or reasons for such denial; (B) the specific reference to pertinent
provisions of this Agreement on which such denial is based; (C) a description of
any additional material or information necessary for the Claimant to perfect his
or her claim and an explanation of why such material or such information is
necessary; (D) appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review; and (E) the time limits for
requesting a review under subsection (c).
(c) Request For Review.
------------------
Within sixty (60) days after the receipt by the Claimant of the
written opinion described above, the Claimant may request in writing that the
Committee review the determination of the Company. Such request must be
addressed to the Secretary of the Company, at its then principal place of
business. The Claimant or his or her duly authorized representative may, but
need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Committee. If the Claimant does not request a
review within such sixty (60) day period, he or she shall be barred and estopped
from challenging the Company's determination.
(d) Review of Decision.
------------------
Within sixty (60) days after the Committee's receipt of a request
for review, after considering all materials presented by the Claimant, the
Committee will inform the Participant in writing, in a manner calculated to be
understood by the Claimant, the decision setting forth the specific reasons for
the decision containing specific references to the pertinent provisions of this
Agreement on which the decision is based. If special circumstances require that
the sixty (60) day time period be extended, the Committee will so notify the
Claimant and will render the decision as soon as possible, but no later than one
hundred twenty (120) days after receipt of the request for review.
ARTICLE VIII
MISCELLANEOUS
8.1 Unsecured General Creditor.
--------------------------
Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of the Company. No assets of the Company shall be held in any
way as collateral security for the fulfilling of the obligations of the Company
under this Plan. Any and all of the Company's assets shall be, and remain, the
general unpledged, unrestricted assets of the Company. The Company's obligation
under the Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money in the future, and the rights of the Participants and
Beneficiaries shall be no greater than those of unsecured general creditors. It
is the intention of the Company that this Plan be unfunded for purposes of the
Code and for purposes of Title 1 of ERISA.
8.2 Restriction Against Assignment.
------------------------------
The Company shall pay all amounts payable hereunder only to the person
or persons designated by the Plan and not to any other person or corporation. No
part of a Participant's Accounts shall be liable for the debts, contracts, or
engagements of any Participant, his or her Beneficiary, or successors in
interest, nor shall a Participant's Accounts be subject to execution by levy,
attachment, or
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garnishment or by any other legal or equitable proceeding, nor shall any such
person have any right to alienate, anticipate, sell, transfer, commute, pledge,
encumber, or assign any benefits or payments hereunder in any manner whatsoever.
If any Participant, Beneficiary or successor in interest is adjudicated bankrupt
or purports to anticipate, alienate, sell, transfer, commute, assign, pledge,
encumber or charge any distribution or payment from the Plan, voluntarily or
involuntarily, the Committee, in its discretion, may cancel such distribution or
payment (or any part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the Committee shall
direct.
8.3 Withholding.
-----------
There shall be deducted from each payment made under the Plan or any
other Compensation payable to the Participant (or Beneficiary) all taxes which
are required to be withheld by the Company in respect to such payment or this
Plan. The Company shall have the right to reduce any payment (or compensation)
by the amount of cash sufficient to provide the amount of said taxes.
8.4 Amendment, Modification, Suspension or Termination.
--------------------------------------------------
The Committee may amend, modify, suspend or terminate the Plan in
whole or in part, except that no amendment, modification, suspension or
termination shall have any retroactive effect to reduce any amounts allocated to
a Participant's Accounts (neither the Policies themselves, nor the death benefit
described in Section 6.1(c)(1) shall be treated as allocated to Accounts). In
addition, the Committee has the right to amend or terminate Section 6.1(c)(1).
In the event that this Plan is terminated, the amounts allocated to a
Participant's Accounts shall be distributed to the Participant or, in the event
of his or her death, his or her Beneficiary in a lump sum within thirty (30)
days following the date of termination.
8.5 Governing Law.
-------------
This Plan shall be construed, governed and administered in accordance
with the laws of the State of California.
8.6 Receipt or Release.
------------------
Any payment to a Participant or the Participant's Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full satisfaction of all claims against the Committee and the Company. The
Committee may require such Participant or Beneficiary, as a condition precedent
to such payment, to execute a receipt and release to such effect.
8.7 Payments on Behalf of Persons Under Incapacity.
----------------------------------------------
In the event that any amount becomes payable under the Plan to a
person who, in the sole judgment of the Committee, is considered by reason of
physical or mental condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any
payment made pursuant to such determination shall constitute a full release and
discharge of the Committee and the Company.
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8.8 Limitation of Rights and Employment Relationship
------------------------------------------------
Neither the establishment of the Plan and Trust nor any modification
thereof, nor the creating of any fund or account, nor the payment of any
benefits shall be construed as giving to any Participant or other person any
legal or equitable right against the Company or the trustee of the Trust except
as provided in the Plan and Trust; and in no event shall the terms of employment
of any Employee or Participant be modified or in any way be affected by the
provisions of the Plan and Trust.
8.9 Headings.
--------
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
IN WITNESS WHEREOF, the Company has caused this document to be
executed by its duly authorized officer on this 1st day of October, 1997.
THE FIRST AMERICAN FINANCIAL CORPORATION
By /s/ Parker S. Kennedy
--------------------------------
Its: President
---------------------------
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