EXHIBIT 10(xxxii)
Form of Executive Annuity Agreement
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Executive Annuity Agreement dated as of [______________], by
and between ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. ("ML & Co.") and [_________] (the
"Executive").
WHEREAS, the Executive has worked for ML & Co. for an extended
period and is at present the [TITLE] of ML & Co.; and
WHEREAS, ML & Co. desires to establish an incentive for the
Executive, based on the Executive's compensation and total period of qualifying
service, to continue to serve in the above-referenced position with ML & Co., or
in such other high senior executive position as the Board of Directors of ML &
Co. may hereafter specify, until such time as the Executive retires from ML &
Co.;
WHEREAS, the Executive's substantial expertise and knowledge
relating to the operation of the activities of ML & Co. and its affiliates is
such that ML & Co. desires that the Executive not compete with ML & Co. and its
affiliates in certain respects following the Executive's retirement from ML &
Co.; and
WHEREAS, in view of the foregoing ML & Co. has decided that an
appropriate benefit for the Executive, conditioned on continuing executive
service until retirement and non-competition after retirement, would be to
provide the Executive, and the Executive's surviving spouse, if any, with a
retirement annuity which supplements retirement benefits otherwise payable to
the Executive and the Executive's surviving spouse; and
WHEREAS, the Executive is willing to enter into this
Agreement;
NOW THEREFORE, in consideration of the foregoing and the
Executive's further service with ML & Co., ML & Co. and the Executive agree as
follows:
SECTION 1
Definitions
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In addition to the defined terms indicated above, unless
otherwise required by the context for purposes of this Agreement, each of the
following terms shall have the meaning indicated for that term:
"Affiliate" means any subsidiary or other entity that is owned
at least 50% by ML & Co. or by another such subsidiary or
entity, or that is designated by ML & Co. as an Affiliate for
purposes of this Agreement.
"Agreement" means this Executive Annuity Agreement, as it may
be amended from time to time.
"Beneficiary" means the Executive's surviving spouse, if any.
"Board" means that Board of Directors of ML & Co.
"Committee" means the Management Development and Compensation
Committee of the Board, as constituted from time to time.
"Compensation" means the highest consecutive five calendar
year average of the Executive's Eligible Compensation, as
defined in the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. Retirement
Accumulation Plan, as amended from time to time, included in
the Retirement Program, but without regard to the limit
prescribed under Internal Revenue Code Section 401(a)(17) and
excluding for all years any non-recurring cash compensation
awards such as awards under the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. ▇▇▇
Incentive Compensation Plan.
"Disability" means a physical or mental impairment as a result
of which the Executive is eligible to receive, or is in
receipt of, long term disability benefits under the ▇▇▇▇▇▇▇
▇▇▇▇▇ & Co., Inc. Basic Long Term Disability Plan, as amended
from time to time.
"Executive Annuity" means the annual amount determined under
Section 3.
"401(k) Savings Plan" means the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
401(k) Savings & Investment Plan, as amended from time to time
and any successor plans thereto.
"Index Value" means the "Personal Consumption Expenditures"
index amount published by the Economics and Statistics
Administration of the U.S. Department of Commerce for the
period ending on the December 31 or June 30 immediately prior
to the relevant date or, if such index amount is no longer
published on a regular basis, such successor index published
by an agency or instrumentality of the United States
government as the Committee determines in its sole and
absolute discretion to most closely replace that index.
"Initial Index Value" means the Index Value as of [_______].
"▇▇▇▇▇▇▇ ▇▇▇▇▇" means ML & Co. and each Affiliate.
"Metropolitan Contract" means Group Annuity Contract No. 10438
issued as of December 29, 1988 by Metropolitan Life Insurance
Company to the Trustees of the Pension Plan for Employees of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and Affiliates (terminated as of
December 13, 1988) to provide for the payment of Pension Plan
Annuities as provided therein.
"Qualified Retirement Annuity" means an annual amount
calculated as the sum of the following, payable monthly for
the life of the Executive commencing as of the Retirement Date
provided in Section 4:
(a) the single life annuity, if any, of the Executive under
the provisions of the Metropolitan Contract,
(b) the annuitized value of the aggregate of the Executive's
account balances under the Retirement Program and the
401(k) Savings Plan as adjusted to reflect only the
balance in the SIP account thereunder allocable to
employer contributions and investment experience thereon
(not including any amount allocable to elective 401(k)
deferrals or investment experience thereon), such value to
be calculated by dividing such aggregate by the applicable
conversion factor for immediate annuities payable at or
after age 55 as set forth in the table attached hereto as
Appendix "A". Arithmetic interpolation (in increments of
one-twelfth for each month or any part thereof, rounded up
to the third decimal place) between the conversion factors
for two consecutive ages shall be used to determine the
conversion factor for Retirement Dates that are not
coincident with or next following the Executive's
birthday, and
(c) 50% of the Executive's Social Security Primary Insurance
amount computed as of the Executive's Retirement Date.
Annuitized values shall be determined based upon the quarterly
(in the case of the Retirement Program) or monthly (in the
case of the 401(k) Savings Plan) valuation occurring
coincident with or immediately preceding the Executive's
Retirement Date or death while in ▇▇▇▇▇▇▇ ▇▇▇▇▇ employment, as
applicable.
"Retirement" means termination of the Executive's employment
with ▇▇▇▇▇▇▇ ▇▇▇▇▇ after attaining age [_], except that
Retirement shall not include such termination by (a)
affirmative vote of a majority of the whole Board, either for
or without cause, unless the Board specifically directs that
such termination shall be treated as Retirement, or (b)
resignation of the Executive without the approval of the
Board, which shall not be unreasonably withheld.
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"Retirement Date" means the first day of any month coincident
with or next following the Executive's Retirement as of which
payment of the Executive Annuity to or in respect of the
Executive is to commence as provided in Section 4.
"Retirement Program" means the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
Retirement Accumulation Plan, as amended from time to time,
and the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. Employee Stock Ownership
Plan, as amended from time to time, and any successor plans
thereto.
"Service", shall have the same meaning as under the Retirement
Program for purposes of determining the Executive's "Basic
Credits" thereunder, but excluding any periods after the
Executive's 65th birthday, Retirement, or the date of
termination of this Agreement. Service includes all periods of
Disability.
SECTION 2
Eligibility
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An Executive Annuity shall be payable to or in respect of the
Executive only in the event of the Retirement or death of the Executive while in
▇▇▇▇▇▇▇ ▇▇▇▇▇ employment.
SECTION 3
Amount
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Except as otherwise provided in Section 6, the amount of the
Executive Annuity to or in respect of the Executive shall be an annual sum equal
to 1.25% of the Executive's Compensation multiplied by the Executive's Service,
reduced by the Executive's Qualified Retirement Annuity. Notwithstanding the
foregoing, however, the sum of the amount payable annually to or in respect of
the Executive under this Agreement shall not exceed (i) $1,750,000, if the
Executive's Executive Annuity is payable as a Life Annuity, or a 10-year Certain
and Life Annuity as referred to in Section 4, or (ii) $1,480,000, if the
Executive's Executive Annuity is payable as a 50% or 100% Joint and Survivor
Life Annuity as referred to in Section 4, in either case less the amount of the
Executive's Qualified Retirement Annuity.
The $1,750,000 and $1,480,000 limits established under the
preceding paragraph shall be adjusted as of each December 31 and June 30 prior
to the earlier of the Executive's Retirement or death by multiplying the
respective amount by a fraction, the numerator of which is the Index Value as of
the relevant date and the denominator of which is the Initial Index Value;
provided that no adjustment shall be made as of any December 31 or June 30 if
such adjustment would result in a decrease in the limit then in effect.
Following the Executive's Retirement or death, the amount of
an Executive Annuity as determined under this Section 3 will neither be
increased by any cost of living adjustments nor reduced by any such adjustments
made to the Pension Plan Annuity under the Metropolitan Contract.
SECTION 4
Time and Forms of Payment
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One-twelfth of the Executive Annuity shall be payable monthly
commencing as of the Executive's Retirement Date, which shall be at the same
time and in the same form (namely, as a Life Annuity, a 50% Joint and Survivor
Life Annuity, a 100% Joint and Survivor Life Annuity, or a 10-Year Certain and
Life Annuity) as the Pension Plan Annuity under the Metropolitan Contract that
is actually so payable to or in respect of the Executive. For purposes of
computing an amount payable under this Agreement, the computation shall be made
in all cases by applying the relevant reduction factors provided for in the
Metropolitan Contract with reference to the Beneficiary, whether or not the
Beneficiary is also the Executive's beneficiary, if any, under the Metropolitan
Contract.
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Notwithstanding the foregoing, in the event of the death of
the Executive while in ▇▇▇▇▇▇▇ ▇▇▇▇▇ employment and before Retirement, payments
to the Beneficiary, if any, shall be made as if the Executive's Retirement was
on the day before the Executive's death with the Executive having elected a 100%
Joint and Survivor Life Annuity, computed as stated in the foregoing paragraph.
SECTION 5
Administration
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The Committee is authorized in its sole and absolute
discretion, without limitation, to make all determinations which it deems
necessary or advisable for the operation of this Agreement, to construe and
interpret the Agreement, to establish such rules and to delegate such of its
authority as it deems appropriate, and to perform all other acts believed
reasonable and proper in connection with this Agreement.
SECTION 6
Amendment and Termination
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ML & Co. reserves the right to amend, modify, restate, or
terminate this Agreement in whole or in part, at any time for any reason;
provided, however, that no such action shall reduce the amount of the Executive
Annuity determined under Section 3, based on the Executive's Compensation and
Service as of the effective date of such action, but with the Qualified
Retirement Annuity for purposes of the offset under Section 3 to be determined
as of the Executive's Retirement Date, or otherwise deprive the Executive or
Beneficiary of any entitlement to such Executive Annuity determined as of the
effective date of such action.
SECTION 7
Miscellaneous
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7.1 Source of Payments
The obligation of ML & Co. to pay the Executive Annuity shall
be unfunded and is solely an unsecured Promise by ML & Co. All monthly payments
shall be made, as and when due, from the general assets of ML & Co. ML & Co. is
not obligated to, but may, in its sole and absolute discretion, make
arrangements with banks or insurance companies, and establish special reserve,
accounts or funds, including a "grantor trust", and may make such investments as
deemed desirable, to assist in meeting its obligations under this Agreement. Any
such arrangements with their underlying assets, reserves, accounts, or funds
shall at all times remain general assets of ML & Co., subject to the claims of
its general creditors, and neither the Executive nor the Beneficiary shall have
any right, title, or interest whatsoever therein.
7.2 Non-Alienation
No payment or right under this Agreement is subject to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any such action, shall be void and of no effect; nor are any such
payments subject to seizure, attachment, execution, garnishment, or other legal
or equitable process, or for the payment of any debts, judgments, alimony, or
separate maintenance; nor are such payments transferable by operation of law in
the event of bankruptcy, insolvency, or similar occurrence of the Executive or
Beneficiary. In the event a person who is receiving or is entitled to receive
payments under this Agreement attempts to assign, transfer, or dispose of such
payment or right, or if an attempt is made to subject said payment or right to
such process, such assignment, transfer, or disposition shall be null and void.
7.3 Forfeiture
The Executive and the Beneficiary, in the sole discretion of
the Committee, shall forfeit any right to payments under this Agreement not yet
made in the event that the Executive, following Retirement, enters into any
employment, consulting, or other relationship with any person or entity which
the Committee determines, in its sole
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discretion, to be in competition with ▇▇▇▇▇▇▇ ▇▇▇▇▇. Competition, for purposes
of this section, means any involvement in any business in the financial services
industry, including, but not limited to, investment banking, securities
brokerage, securities trading, asset management, insurance, and banking.
7.4 Merger, Consolidation, Sale, or Transfer of Assets
In the event ML & Co. is merged or consolidated with another
entity, or all or substantially all of the assets of ML & Co. are sold or
otherwise transferred to another entity, this Agreement shall be binding upon
and inure to the benefit of the successor or transferee resulting from or of
such merger, consolidation, sale or transfer.
7.5 Agreement Not a Condition of Employment
Nothing in this Agreement or any action taken hereunder shall
be deemed or construed as giving the Executive any right to continued employment
or as affecting the right of ▇▇▇▇▇▇▇ ▇▇▇▇▇ to discipline (including, without
limitation, the right to discharge) the Executive at any time.
7.6 No Trust or Fiduciary Relationship Created
Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust of any kind or a fiduciary relationship between ▇▇▇▇▇▇▇ ▇▇▇▇▇,
the Executive, or any Beneficiary.
7.7 Application for Payments
An application for payments under this Agreement shall be in a
form acceptable to the Committee. The Committee may require any applicant to
furnish the Committee with such documented evidence or information as the
Committee may consider reasonably necessary or desirable.
7.8 Claims Procedure
(a) If an application for payments under this Agreement is denied, in
whole or in part, the Committee shall promptly give the applicant
written notice of the denial, setting forth the specific reasons
therefor. The notice shall include the following:
(i) The basis for the denial;
(ii) A reference to each Agreement provision on which the denial
is based;
(iii) A description of any additional information required of the
applicant; and
(iv) An explanation of the procedure for having a denied
application reviewed under this Agreement.
(b) The applicant may, upon receipt of a notice of a denied
application, request a review of the application by the Committee.
Such request shall be delivered in writing to any member of the
Committee. After the Committee has reviewed the application, the
final decision of the Committee shall be communicated in writing to
the applicant. Such communication shall set forth the specific
reasons for the decision with reference to each appropriate
Agreement provision.
7.9 Payments to Incompetents
If the Committee receives evidence satisfactory to it that the
Executive or Beneficiary entitled to receive any payment under this Agreement
is, at the time when such payment becomes payable, physically or mentally
incompetent to receive such payment and to give a valid release therefor and
that another person or institution is then maintaining or has custody of the
Executive or Beneficiary, and that no guardian, committee, or other
representative of the estate of the Executive or Beneficiary shall have been
duly appointed, the Committee may
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direct payment of such payment otherwise payable to the Executive or Beneficiary
to such other person or institution, and the release of such other person or
institution shall be a valid and complete discharge for the payments.
7.10 Governing Law and Exclusive Venue
This Agreement shall be construed, performed and enforced
under the laws of the State of New York, without giving effect to its conflict
of laws rules, except to the extent such laws are pre-empted by Federal law. The
venue with respect to any litigation involving the Agreement and a claimant
shall lie exclusively in either (a) the Supreme Court of the State of New York,
New York County, or (b) the United States District Court for the Southern
District of New York. By continuing in employment with ▇▇▇▇▇▇▇ ▇▇▇▇▇ after
executing this Agreement, the Executive, on behalf of the Executive and the
Executive's Beneficiary, hereby waives any right to a trial by jury in
connection with any dispute relating to this Agreement.
IN WITNESS WHEREOF, the Executive and ML & Co. have duly
executed this Agreement.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
By:
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Name:
Title: Senior Vice President,
Head of Human Resources
Executive
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APPENDIX "A"
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(See "Qualified Retirement Annuity" under Section 1)
CONVERSION FACTORS FOR IMMEDIATE ANNUITIES
UP 1984 Mortality - 8% p.a. Discount Rate
Age at birthday coincident with or
immediately preceding Retirement Date Conversion Factor
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55 9.955
56 9.801
57 9.642
58 9.477
59 9.308
60 9.133
61 8.954
62 8.770
63 8.582
64 8.390
65 8.196
66 7.999
67 7.801
68 7.601
69 7.399
70 7.192
71 6.983
72 6.771
73 6.556
74 6.339
75 6.122
76 5.905
77 5.690
78 5.476
79 5.264
80 5.053
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