Exhibit 10(b)
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) is made and entered into on this 12th day
of September 2008 by and between Curt Johnson
(“Executive”) and First American Title Insurance
Company (the “Company”) and is intended by the parties
hereto to memorialize any and all terms relating to
Executive’s employment with the Company.
The parties hereto agree as
follows:
1. Employment of Executive;
Position; Exclusivity . Subject to the terms and conditions of
this Agreement, the Company hereby employs Executive, and Executive
hereby accepts employment, as a Vice Chairman of the Company. In
this capacity, Executive will work with the executives of the
Company responsible for managing the Company’s National
Commercial Services Division, including, but not limited to, the
commercial operations of Republic Title of Texas and the
Company’s 1031 exchange operations (“NCS”) and
the New York Commercial Operations (the “NY Commercial
Operations”, the NY Commercial Operations, together with NCS,
the “Business Units”) to develop key customer
relationships and strategic markets. In addition, Executive also
will undertake such other reasonable duties as requested by the
Company. Executive shall devote Executive’s entire productive
time, effort and attention to the business of the Company during
the Term (as defined below). Executive shall not directly or
indirectly render any service of a business, commercial or
professional nature to any other person or organization without the
prior written consent of the Company.
2. Term of Agreement .
Executive’s employment under this Agreement shall be the
period from the date hereof through December 31, 2010 (the
“Term”) unless terminated earlier in accordance with
Section 5 of this Agreement. Unless this Agreement is formally
extended in a writing executed by the parties hereto, or a new
written agreement is entered into, Executive’s continued
employment after December 31, 2010 will be for an unspecified
term on an at-will basis under the same terms and conditions
applicable to similarly situated at-will employees of the
Company.
3. Compensation .
3.1 Salary . During the Term,
the Company shall pay Executive an annual base salary, before
deducting all applicable withholdings, of $600,000.00 (the
“Salary”). The Salary shall be payable at the times and
in the manner dictated by the Company’s standard payroll
policies and it shall be prorated for any partial pay period that
occurs during the Term. The Company may deduct from the Salary any
taxes or withholdings the Company is required to deduct pursuant to
state and federal laws or by mutual agreement between the
parties.
3.2 Annual Bonus .
(a) For the calendar year 2008,
Executive shall receive an annual bonus of one and one-half percent
(1.5%) of PTNI (as defined below) of the Business Units.
Executive acknowledges and agrees that this amount will be his
entire annual bonus for calendar year 2008 and he will not be
entitled to any additional annual bonus for any period prior to
calendar year 2008. For the calendar years 2009 and 2010, Executive
shall receive 1.5% of the PTNI of the Business Units (the annual
bonuses for calendar
years 2008, 2009 and 2010 are
referred to herein as the “Annual Bonus”). The Annual
Bonus for any calendar year shall (i) not be less than
$250,000 (the “Minimum Bonus”) nor greater than
$2,500,000, (ii) be paid in cash and restricted stock units
(“RSU”) of the Company’s ultimate publicly traded
parent company (including any ultimate successor to the stock or
assets of the Company, the “Parent”) in accordance with
the Company’s then effective RSU program applicable to
similarly situated executives of the Company (the “RSU
Program”), provided , however , that if the
Minimum Bonus is paid, then the entire amount shall be paid in
cash. The cash portion of the Annual Bonus shall be paid on
March 10 of the year following the calendar year in which the
Annual Bonus was earned (or if such day is not a business day, the
first business day preceding such day) and the RSU portion of the
Annual Bonus will be paid in accordance with the Plan (as defined
below) and the policies of the Parent. All such payments which are
required to be made pursuant to this Agreement shall be made by the
Company without regard to whether Executive is employed by the
Company at the time any such payment is payable.
(b) For purposes of this Agreement,
“PTNI” means the income before income taxes as
determined in accordance with generally accepted accounting
principles by the Company; provided , however , that
PTNI shall be reduced by corporate allocations, overhead,
general/administrative costs and similar costs provided that such
costs are of a nature consistent with those charged to other
business units of the Company. The Company makes no representations
or warranties with respect to current or future PTNI and Executive
acknowledges and agrees that he is not relying on any express or
implied representations or warranties with respect
thereto.
(c) The portion of the Annual Bonus
payable in RSUs may include both long term incentive RSUs (which
Executive acknowledges are not included for purposes of determining
benefits under the SERP) and short-term RSUs (which may also be
referred to as “Bonus RSUs”), as provided in the RSU
Program. Any RSUs granted pursuant to this Agreement or otherwise
shall be granted at such times as is consistent with, and shall
otherwise be subject to, Parent’s standard policies and
procedures for RSUs and shall be evidenced by a notice and
agreement as approved by the Compensation Committee of the Parent
and which is required to be signed by similarly situated employees
of the Company (the “RSU Agreement”). Without limiting
the generality of the foregoing, any RSUs granted pursuant to this
Agreement or otherwise shall be granted in accordance with, and
subject to the provisions of, The First American Corporation 2006
Incentive Compensation Plan (as the same may be amended or modified
at any time, including any replacement plan adopted by any
successor to the Parent, the “Plan”). Subject to
Section 3.2(d), in the event there are insufficient RSUs
available under the Plan, the Plan has been terminated, the
registration statement on which the Plan is registered has been
suspended or is otherwise not in effect or the issuance of any of
the RSUs would violate the Plan, then that portion of the Annual
Bonus payable in RSUs which as a result cannot be granted in RSUs
shall be paid in cash. The Company at its option may pay any amount
in cash that would otherwise be payable in RSUs.
(d) Nothing in this Agreement
prohibits or restricts the Company from realigning, combining,
divesting or in any other manner affecting the structure or
operation of the Business Units. If the Company acquires or
integrates new business units into the Business Units or realigns,
combines or divests the Business Units, the Company and Executive
agree to negotiate in good
-2-
faith an adjustment to the formula
for determining the Annual Bonus; provided , however
, that any such adjustment may be subject to the approval the
Compensation Committee of the Parent, which approval its may grant
or deny in its sole and unfettered discretion. The parties
acknowledge and agree that the intent of this Section 3.2(d)
is to put the parties in substantially the same economic position
after any such event as they were before any such event.
(e) The Company may deduct from the
Annual Bonus any taxes or withholdings the Company is required to
deduct pursuant to state and federal laws or by mutual agreement
between the parties.
4. Benefits . Executive
shall, subject to the terms and conditions of any applicable
benefits plan documents and applicable law, be entitled to receive
all benefits of employment he currently receives (subject to the
last sentence of this Section 4) and as are generally
available to other similar employees of the Company, including
medical, dental, life and disability insurance benefits. Executive
will also continue to participate in the Executive Supplemental
Benefit Plan (the “SERP”), subject to the terms and
conditions set forth in the plan document, as such document may be
amended or modified from time to time. The Company reserves the
right to modify, suspend or discontinue any and all of the above
benefit plans, policies, and practices at any time without notice
to Executive, so long as such action is taken generally with
respect to other similarly situated employees of the Company and
does not single out Executive and so long as such modification,
suspension or discontinuation is permitted by applicable
law.
5. Termination .
5.1 Termination Upon Death .
Executive’s employment shall automatically terminate with
immediate effect upon the death of Executive.
5.2 Termination by the
Company . Notwithstanding anything in this Agreement to the
contrary, express or implied, Executive’s employment may be
terminated prior to the expiration of the Term immediately by the
Company as follows:
(a) Whenever Executive is not
physically or mentally able or qualified (with reasonable
accommodation) to perform the essential functions of
Executive’s job;
(b) For “Cause,” which
shall be defined as: (i) embezzlement, theft or
misappropriation by the Executive of any property of the Company or
any of its affiliates (each of the Company and its affiliates a
“Related Company” and, collectively, the “Related
Companies”); (ii) Executive’s willful breach of
any fiduciary duty to Company or any other Related Company;
(iii) Executive’s willful refusal to comply with
governmental laws or regulations applicable to Company and any
other Related Company and their businesses or the reasonable
policies of Company or Parent governing the conduct of its
employees; (iv) Executive’s gross incompetence in the
performance of Executive’s job duties; (v) commission by
Executive of a felony or of any crime involving moral turpitude,
fraud or gross misrepresentation; (vi) the failure of
Executive to perform duties consistent with a commercially
reasonable standard of care; (vii) Executive’s refusal
to perform Executive’s job duties or to perform reasonable
specific
-3-
