Exhibit 10(viii)
Executive Annuity Agreement
Executive Annuity Agreement dated July 24, 1991, 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 President at 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 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. in a qualifying capacity, ML & Co. and the
Executive agree as follows:
SECTION 1
Definitions
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 the 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 $200,000 (as indexed) limit prescribed under Internal
Revenue Code Section 401(a)(17).
"Disability" means a physical or mental impairment as a result of
which the Executive is entitled 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, effective October 1, 1987, as amended
from time to time.
"▇▇▇▇▇▇▇ ▇▇▇▇▇" means ML & Co. and each Affiliate.
"Metropolitan Contract" means Group Annuity Contract No. 10438
issued as of December 29, 1988
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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.
"PAYSOP" means the Payroll-Based Stock Ownership Plan for Employees
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and Affiliates, as at January 1, 1983,
as amended from time to time.
"Qualifying position" means an elected office of ▇▇▇▇▇▇▇ ▇▇▇▇▇ with
seniority level equal to or greater than that of an Executive Vice
President of ML & Co.
"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 Pension Plan Annuity, if any, of the Executive under the
provisions of the Metropolitan Contract, and
(b) the annuitized value of the aggregate of the Executive's
account balances under the Retirement Program, the 401(k)
Savings Plan as adjusted to reflect only the balance
thereunder allocable to employer contributions and investment
experience thereon (not including any amount allocable to
elective 401(k) deferrals or investment experience thereon),
and the PAYSOP, 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.
Annuitized values shall be determined based
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upon the quarterly (in the case at the Retirement Program and
PAYSOP) 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
▇▇▇▇▇▇▇ ▇▇▇▇▇ while holding a Qualifying Position, 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.
"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, effective January 1, 1969, as amended from time
to time, and the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. Employee Stock Ownership
Plan, effective July 1, 1969, as amended from time to time.
"Service" means the aggregate number of years and months (any
fractional part of a month being treated as a full month) of the
Executive's employment, whether or not consecutive, up to the
earliest of the Executive's 65th birthday, Retirement, or the date
or termination of this Agreement, as determined for purposes of
computing the amount of Company Retirement Contributions on behalf
of the Executive under Article III of the ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc.
Retirement Accumulation Plan, as amended from time to time, included
in the Retirement Program. Service includes all periods of
Disability.
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SECTION 2
Eligibility
An Executive Annuity shall be payable to or in respect of the
Executive only in the event of either the Retirement or death of the Executive,
in either case, while holding a Qualifying Position or, if applicable, while on
Disability, provided the Executive held a Qualifying Position immediately
preceding such Disability.
SECTION 3
Amount
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, and further reduced by
(a) 10% multiplied by the number of years and months (any fractional part of a
month being treated as a full month) less than 10 years that the Executive did
not hold a Qualifying Position, up to a maximum reduction of 50%, and, (b) if
the Executive's Retirement Date or date of death is prior to the Executive's
60th birthday, 4% multiplied by the number of years and months (any fractional
part of a month being treated as a full month) between such Retirement Date or
date of death and such 60th birthday.
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
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
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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.
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
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
ML & Co. reserves the right to amend, modify, restate, or terminate
this Agreement in whole or in part, at any tine 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.
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SECTION 7
Miscellaneous
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 a Co. is
not obligated to, but may, in its sole and absolute discretion, make
arrangements with banks or insurance companies, and establish special reserves,
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 discretion, to be in competition with
▇▇▇▇▇▇▇ ▇▇▇▇▇.
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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:
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(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 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
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Court of the State at 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: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President,
Director of Human Resources
Executive
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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APPENDIX "A"
(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
----------------------------- -----------------
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 8.39O
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