Exhibit (10)(ffff)
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) dated as of December 17, 2008 is
made and entered into by and between Max O. Valdes
(“Executive”) and The First American Corporation
(“Employer”). In consideration of the mutual covenants
and agreements set forth herein, the parties agree as
follows:
1. Employment of Executive .
Subject to the terms and conditions of this Agreement, Employer
hereby employs Executive, and Executive hereby accepts employment,
as Senior Vice President and Chief Accounting Officer. Executive
shall devote Executive’s entire productive time, effort and
attention to the business of Employer during the Term (as defined
below). Executive will use his best efforts at all times to promote
and protect the good name of Employer and Employer’s
affiliates (together with Employer, each a “Related
Company” and, collectively the “Related
Companies”) as well as that of their respective officers,
directors, employees, agents, products and services. Executive
shall not directly or indirectly render any service of a business,
commercial or professional nature to any other person or
organization, whether for compensation or otherwise, without the
prior written consent of Employer.
2. Duties To Be Performed .
Executive shall perform the duties and have the responsibilities
customarily performed and held by a person in a position similar to
that set forth in Section 1. Executive shall also perform such
other duties as directed by Employer’s Board of Directors and
the Chief Executive Officer of Employer or his designee. Any
modification made by Employer’s Board of Directors to the
duties of Executive shall not constitute a breach of this
Agreement.
3. Term of Agreement . The
term of employment shall commence on the date of this Agreement
and, unless earlier terminated pursuant to the provisions of the
Agreement, shall terminate upon the close of business on
December 31, 2011 (the “Term”).
4. Compensation . In full
payment for Executive’s services, Employer shall provide to
Executive compensation and benefits determined in accordance with
this Section 4.
4.1 Salary. During the Term,
Employer shall pay Executive a base annual salary (the “Base
Salary”), before deducting all applicable withholdings, of
$300,000 per year, payable at the times and in the manner dictated
by Employer’s standard payroll policies, which Base Salary
may be increased in the sole and unfettered discretion of the
Compensation Committee of the Board of Directors of Employer (the
“Compensation Committee”). The Base Salary shall be
prorated for any partial pay period that occurs during the
Term.
4.2 Performance Bonus; Long-Term
Incentive Equity Awards . During the Term, in addition to the
Base Salary, Employer may, in the sole and unfettered discretion of
the Compensation Committee, pay to Executive an annual bonus and
long-term incentive equity award.
4.3 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 generally available to other similarly
situated executives of Employer when and as
he become eligible for them, including medical,
dental, life and disability insurance benefits. Employer 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 or recourse by Executive, so long as such action is taken
generally with respect to other similarly situated executives of
Employer and does not single out Executive.
4.4 Taxes and Withholdings .
Employer may deduct from all compensation payable under this
Agreement to Executive any taxes or withholdings Employer is
required to deduct pursuant to state and federal laws or by mutual
agreement between the parties.
5. Termination .
5.1 Termination Upon Death .
The Term (and Executive’s employment) shall automatically
terminate with immediate effect upon the death of
Executive.
5.2 Termination by Employer .
Notwithstanding anything in this Agreement to the contrary, express
or implied, the Term (and Executive’s employment) may be
terminated immediately by Employer (by delivery of written notice
specifying that termination is made pursuant to this
Section 5.2) as follows:
(a) Whenever Executive is not
physically or mentally able (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 any of the
Related Companies; (ii) Executive’s willful breach of
any fiduciary duty to Employer; (iii) Executive’s
willful failure or refusal to comply with laws or regulations
applicable to Employer and its business or the policies of Employer
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 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 directives of
Executive’s supervisor or his successor or designee and the
Board of Directors of Employer; or (viii) any gross negligence
or willful misconduct of Executive resulting in a loss to Employer
or any other Related Company, or damage to the reputation of
Employer or any other Related Company; or
(c) Upon the occurrence of any
material breach (not covered by any of clauses (i) through
(viii) of Section 5.2(b) above) of any of the provisions
of this Agreement, it being agreed that for all purposes under this
Agreement any violation of any of the provisions of Sections 1, 6,
7 and 8 shall be deemed to be a material breach of this
Agreement.
-2-
5.3 Termination by Executive
. Executive may terminate the Term (and Executive’s
employment) by giving two weeks written notice Employer.
5.4 Termination by Employer
without Cause . Employer may terminate the Term (and
Executive’s employment) by giving two weeks written notice to
Executive. A termination made pursuant to this Section 5.4 is
a “termination Without Cause.” A termination made
pursuant to Section 5.2 (and satisfying the notice requirement
set forth therein) shall under no circumstance be considered a
termination Without Cause.
5.5 Rights and Obligations Upon
Termination .
(a) In the event of Employer’s
termination of the Term (and Executive’s employment) pursuant
to Section 5.4 (which, for the avoidance of doubt, is a
termination Without Cause), Employer shall pay
Executive:
(i) his Base Salary and accrued
vacation through the date of termination, paid within 5 days
following the termination date (or earlier if required by
law);
(ii) any annual bonus earned for any
fiscal year completed before the date of termination that remains
unpaid as of the date of termination, paid within 5 days following
the termination date (or earlier if required by law);
and
(iii) an amount (the
“Severance Amount”) equal to two (2) times the sum
of (A) his Base Salary and (B) the median of the last
three (3) annual bonuses paid to Executive (whether earned
pursuant to this Agreement or otherwise and whether paid in cash,
restricted stock units, stock options or otherwise) (the
“Median Bonus”), fifty percent (50%) of which will
be paid on the first business day following the 12-month
anniversary of the date of termination and fifty percent
(50%) of which will be paid in twelve installments equal to
1/24 th of the Severance Amount, the
first payment of which will be made on the 29
th
day following
termination and the remaining eleven payments of which will be made
on the first business day of each calendar month
thereafter.
For the purpose of determining the
Median Bonus, the value of (1) the portion of any annual bonus
paid in the form of restricted stock or restricted stock units
(“RSUs”) shall be determined by multiplying the number
of restricted shares or RSUs granted by the closing price of the
restricted shares or stock underlying the RSUs on the grant date
and (2) the portion of any annual bonus paid in the form of
stock options or other equity (excluding restricted stock or RSUs)
shall be determined using the methodology utilized by Employer for
determining the cost of such stock option or other equity for
financial reporting purposes, but without giving effect to the
amortization of such stock option or other equity. For the
avoidance of doubt, the Median Bonus shall not include any
long-term incentive equity awards which would not be included in
“Covered Compensation” under the Executive Supplemental
Benefit Plan (including any amendment, modification or successor
thereto, the “SERP”). For the avoidance of doubt,
“median” means, with respect to a set of three amounts,
the middle amount and not the highest or
-3-
the lowest amount, unless two of the amounts in
the set are the same amount, in which case “median”
means the amount which occurs twice in the set.
In exchange for Employer’s
agreement to pay the Severance Amount, Executive agrees to execute
(within 21 days following the date of termination of employment),
deliver and not revoke (within the time period permitted by
applicable law) a general release of the Related Companies and
their respective officers, directors, employees and owners from any
and all claims, obligations and liabilities of any kind whatsoever,
including all such claims arising from or in connection with
Executive’s employment or termination of employment with
Employer or this Agreement (including, without limitation, civil
rights claims), in such form as is reasonably requested by
Employer. Executive’s right to receive the Severance Amount
is conditioned upon the release described in the preceding sentence
becoming irrevocable and shall immediately cease in the event that
Executive violates any of the provisions of Sections 6, 7 and 8.
Apart from the payments set forth in this Section 5.5(a) and
the benefits to which Executive may be entitled under the
Employment Arrangements (as defined below), upon such termination
Employer shall have no further liability whatsoever to
Executive.
(b) In the event of the termination
of the Term (and Executive’s employment) pursuant to Sections
5.1, 5.2 or 5.3 or, if Executive’s employment does not
continue on an at-will basis or pursuant to another agreement, upon
the expiration of the Term, Employer shall be obligated to pay
Executive (or, in the case of a termination under Section 5.1,
Executive’s heir or successor) the Base Salary and vacation
accrued hereunder through the date of termination and any annual
bonus earned for any fiscal year completed before the date of
termination, in each case, that remains unpaid as of the date of
termination. Apart from the payments set forth in this
Section 5.5(b) and the benefits to which Executive may be
entitled under the Employment Arrangements, upon such termination
or expiration, as the case may be, Employer shall have no further
liability whatsoever to Executive.
(c) If (i) Executive’s
employment is terminated Without Cause by Employer prior to the
expiration of the Term, (ii) as of the date of such
termination Executive has not yet reached his “Early
Retirement Date”, as defined in the SERP and
(iii) Executive would have reached his “Early Retirement
Date” during the Term had his employment not been earlier
terminated, Executive will be deemed to be vested in the SERP on
the date he would have reached his “Early Retirement
Date” and he will begin receiving payments under the SERP on
such date as otherwise provided in, and otherwise subject to the
provisions of, the SERP; provided , however , that in
such circumstance Executive’s “Final Average
Compensation” (or equivalent) for purposes of the SERP shall
be determined as of the date of the termination of his
employment.
(d) If Executive gives notice of
termination of employment or if it becomes known that
Executive’s employment will otherwise terminate in accordance
with its provisions, Employer may, in its sole discretion and
subject to its other obligations under this Agreement, relieve
Executive of his duties under this Agreement and assign Executive
other reasonable duties and responsibilities to be performed until
the termination becomes effective.
(e) In the event that any payment or
benefit received or to be received by Executive under this
Agreement and all other arrangements or programs, including
any
-4-
acceleration of vesting of stock options,
restricted stock, restricted stock units, deferred compensation, or
long-term incentive awards (collectively, the
“Payments”), would constitute an excess parachute
payment within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”), as
determined in good faith by Employer’s independent auditors,
then the portion of the Payments that would be treated as parachute
payments under Section 280G of the Code shall be reduced so
that the Payments, in the aggregate, are reduced to the Safe Harbor
Amount (as defined below). For purposes of this Agreement, the term
“Safe Harbor Amount” means the largest portion of
t
