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EX-10.17
EMPLOYMENT AGREEMENT
BETWEEN
MELLON BANK, N.A.
AND
XXXXX X. XXXXXXX
EFFECTIVE AS OF JULY 25, 1993
(AS AMENDED AND RESTATED
EFFECTIVE OCTOBER 17, 1995)
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THIS AGREEMENT, made effective as of July 25, 1993 by and between Mellon Bank,
N.A. (the "Company"), a national banking association, and Xxxxx X. Xxxxxxx (the
"Executive"),
WITNESSETH THAT:
WHEREAS, the Executive, who has served as Chairman and Chief Executive Officer
of the Company and Mellon Bank Corporation (the "Holding Company"), effective
as of June 19, 1987, is willing to continue to serve in such capacity, and the
Company desires to retain the Executive in such capacity on the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. The Company agrees to continue to employ the Executive, and
the Executive agrees to continue to be employed by the Company, for the Term
provided in Paragraph 3(a) below and upon the other terms and conditions
hereinafter provided. The Executive hereby represents and warrants that he has
the legal capacity to execute and perform this Agreement, that it is a valid
and binding agreement, enforceable against him according to its terms, and that
its execution and performance by him does not violate the terms of any existing
agreement or understanding to which the Executive is a party. In addition, the
Executive represents and warrants that he knows of no reason why he is not
physically capable of performing his obligations under this Agreement in
accordance with its terms.
2. POSITION AND RESPONSIBILITIES. During the Term, the Executive (a) agrees
to serve as the Chairman and Chief Executive Officer of the Company and the
Holding Company, and to be responsible for the general management of the
affairs of the Company and the Holding Company, reporting directly to the
respective Boards of Directors of the Company (the "Board") and the Holding
Company, and as a member of such boards for
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the period for which he is and shall from time to time be elected, (b) shall be
given such authority as is appropriate to carry out the duties described above,
and (c) agrees to serve, if elected, as an officer and director of any other
subsidiary or affiliate of the Company or the Holding Company.
3. TERM AND DUTIES.
(a) TERM OF EMPLOYMENT. The term of the Executive's employment under
this Agreement shall be deemed to have commenced on July 25, 1993 and
shall continue thereafter through December 31, 1998 (the "Term").
(b) DUTIES. During the Term, and except for illness or incapacity and
reasonable vacation periods of no more than 4 weeks in any calendar year
(or such other period as shall be consistent with the Company's policies
for other key executives), the Executive shall devote all of his
business time, attention, skill and efforts exclusively to the business
and affairs of the Company and the Holding Company and their
subsidiaries and affiliates, shall not be engaged in any other business
activity, and shall perform and discharge well and faithfully the duties
which may be assigned to him from time to time by the board of directors
of the Company or the Holding Company; provided, however, that nothing
in this Agreement shall preclude the Executive from devoting time during
reasonable periods required for:
(i) serving, in accordance with the Company's policies and with the
prior approval of the Board, as a director or member of a committee
of any company or organization involving no actual or potential
conflict of interest with the Company or the Holding Company or any
of their subsidiaries or affiliates;
(ii) delivering lectures and fulfilling speaking engagements;
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(iii) engaging in charitable and community activities; and
(iv) investing his personal assets in businesses in which his
participation is solely that of an investor in such form or manner
as will not violate Section 7 below or require any services on the
part of the Executive in the operation or the affairs of such
business, provided, however, that such activities do not materially
affect or interfere with the performance of the Executive's duties
and obligations to the Company or the Holding Company.
4. COMPENSATION. For all services rendered by the Executive in any capacity
required hereunder during the Term, including, without limitation, services as
an executive, officer, director, or member of any committee of the Company, the
Holding Company or any subsidiary, affiliate or division thereof, the Executive
shall be compensated as follows:
(a) BASE SALARY. The Company shall pay the Executive a fixed salary
("Base Salary") of $760,000 per annum, subject to such periodic review
(which shall occur at least annually) and such periodic increases as the
Board shall deem appropriate in accordance with the Company's customary
procedures and practices regarding the salaries of senior officers;
provided, however, in determining such increases, the Board shall take
into consideration the base salaries of the chief executive officers of
the 10 largest bank holding companies in the United States, ranked by
total assets, the performance of which is substantially similar to that
of the Holding Company. Base Salary shall be payable in accordance with
the customary payroll practices of the Company, but in no event less
frequently than monthly.
(b) BONUS. The Company shall pay the Executive such amounts, if any,
as may be due under the terms of the Mellon Bank Corporation Profit
Bonus Plan (or any successor plan), with such payments of bonus to be
made in accordance with the terms of such bonus plan. For the Profit
Bonus Plan award for 1994 (payable in
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1995) and for future years, it is understood that the Executive may
receive some portion of his Profit Bonus Plan award in the form of
restricted stock or phantom stock units, such awards are to be made on
the same terms as apply to other members of the Office of the Chairman.
(c) STOCK OPTIONS. The Holding Company shall from time to time after
the date of this Agreement consider the grant to the Executive of
options to purchase shares of the Holding Company's Common Stock (the
"Common Stock"). Such options shall be granted under and subject in all
respects to the terms of the Holding Company's Long-Term Profit
Incentive Plan (1981) (or any successor plan) and, in the event of
retirement, shall be exercisable through their stated expiration date.
(d) ADDITIONAL BENEFITS. Except as modified by this Agreement, the
Executive shall be entitled to participate in all compensation or
employee benefit plans or programs, and to receive all benefits,
perquisites and emoluments for which any salaried employees are eligible
under any plan or program, now or hereafter established and maintained
by the Company or the Holding Company for senior officers, to the extent
permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof, including group
hospitalization, health, dental care, senior executive life or other
life insurance, travel or accident insurance, disability plans,
tax-qualified or non-qualified pension, savings, thrift and
profit-sharing plans, deferred compensation plans, termination pay
programs, sick-leave plans, auto allowance or auto lease plans, and
executive contingent compensation plans, including, without limitation,
capital accumulation programs and stock purchase, restricted stock or
stock option plans.
Specifically, but not by way of limitation, the Company shall furnish
the Executive, without cost to him, with life insurance for the benefit
of the Executive's designated beneficiary in an amount at least equal to
twice his Base Salary (without regard to any deferrals of Base Salary
made by the Executive).
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Notwithstanding the foregoing, nothing in this Agreement shall preclude
the amendment or termination of any such plan or program, on the
condition that such amendment or termination is applicable generally to
all of the senior officers of the Company or any subsidiary or affiliate
and that no such amendment may result in a reduction of the amount of
benefits provided to the Executive under any such plan or program or the
life insurance provided for the benefit of the Executive's designated
beneficiary.
(e) PERQUISITES. The Company will also furnish the Executive, without
cost to him, with (i) a Company-owned or leased automobile and driver,
(ii) membership in one country club located within the Pittsburgh
metropolitan area and one business club located in Pittsburgh, (iii) an
annual physical examination of the Executive by a physician selected by
the Executive, (iv) participation in the Company's matching gifts
program, and (v) personal financial, investment or tax advice, not to
exceed a reasonable sum per annum, to the extent costs or expenses of
the Executive to be reimbursed are properly documented for Federal
income taxation purposes to preserve any deduction for such
reimbursements to which the Company may be entitled.
5. BUSINESS EXPENSES. The Company shall pay or reimburse the Executive for
all reasonable travel or other expenses incurred by the Executive (and his
spouse where there is a legitimate business reason for his spouse to accompany
him) in connection with the performance of his duties and obligations under
this Agreement, subject to the Executive's presentation of appropriate vouchers
in accordance with such procedures as the Company may from time to time
establish for senior officers and to preserve any deductions for Federal income
taxation purposes to which the Company may be entitled.
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6. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) In the event the Executive's employment hereunder terminates due to
either Permanent Disability, a Without Cause Termination, or a
Constructive Discharge, the Company shall, as liquidated damages or
severance pay, or both, continue, subject to the provisions of Section 7
below, to pay the Executive's Base Salary as in effect at the time of
such termination from the date of termination until the end of the Term,
provided, however, that in the case of Permanent Disability, such
payments shall be offset by any amounts otherwise paid to the Executive
under the Company's disability program generally available to other
employees. In addition, earned but unpaid Base Salary as of the date of
termination of employment shall be payable in full and the target bonus
award (or, if higher, the bonus award the Executive would have received
had he been employed throughout the bonus year), including any
restricted stock or phantom stock units payable in lieu of any portion
of the Profit Bonus Plan award, shall be payable on a pro-rated basis
for the year in which such termination of employment occurs only. The
Executive shall continue to participate through the end of the Term, or
such longer period as shall be prescribed in any plan or program, in all
compensation or employee benefit plans or programs maintained by the
Company or the Holding Company in which he was participating on the date
of termination, including group hospitalization, health, dental care,
senior executive life or other life insurance, travel or accident
insurance, disability plans, tax qualified savings plans, thrift and
profit-sharing plans and deferred compensation plans, all in accordance
with the terms and conditions of the applicable employee benefit plans
in effect from time to time as applied to employees. The Executive
shall continue to receive years of service credit under all
tax-qualified or non-qualified retirement plans and related excess
benefit plans maintained by the Company for the Executive through the
end of the Term and shall be 100% vested in such plans as of the date of
the termination of his employment. The Perquisites set forth in
Paragraphs 4(e)(i), (ii) and (v) shall continue through the first
anniversary of the Executive's termination of employment (except for the
driver
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which shall continue only for the 90-day period following the
Executive's termination of employment). Any options to purchase shares
of the Holding Company's Common Stock or shares of restricted stock
which are unvested as of the date of the Executive's termination of
employment shall continue to vest and be exercisable through the end of
the Term and thereafter, as permitted by the applicable plan. The
Executive shall have no duty or obligation to seek other employment
through the end of the Term or thereafter.
(b) In the event the Executive's employment hereunder terminates due to
a Termination for Cause or the Executive terminates employment with the
Company for reasons other than a Constructive Discharge, Permanent
Disability or retirement pursuant to Section 8 below, earned but unpaid
Base Salary as of the date of termination of employment shall be payable
in full. However, no other payments shall be made, or benefits
provided, by the Company under this Agreement except for stock options
to the extent already vested and exercisable, and except for benefits,
which have already become vested, under the Supplemental Pension
provided in Section 8 of this Agreement and under the terms of employee
benefit programs maintained by the Company or its affiliates for its
employees generally.
(c) For purposes of this Agreement, the following terms have the
following meanings:
(i) The term, "Termination for Cause", means, to the maximum extent
permitted by applicable law, a termination of the Executive's
employment by the Company by a vote of a majority of the Board
members then in office, because the Executive has (a) been convicted
of a criminal offense covered by Section 19 of the Federal Deposit
Insurance Act, 12 U.S.C. #1829, or (b) has entered a plea of nolo
contendere thereto, or (c) has breached or failed to perform his
duties hereunder, and such breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness, (within the
meaning of
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Section 1713(a) of the Pennsylvania Business Corporation Law, as
amended), or a final determination has been reached that the
Executive has violated the representations made in Section 1 above,
or the provisions of Section 7, below; provided, however, that the
Board has given the Executive advance notice of such Termination for
Cause including the reasons therefor, together with a reasonable
opportunity for the Executive to appear with counsel before the
Board and to reply to such notice.
(ii) The term, "Constructive Discharge", means a termination of the
Executive's employment by the Executive due to a failure of the
Company or its successors to fulfill the obligations under this
Agreement in any material respect, including (a) any failure to
elect or reelect or to appoint or reappoint the Executive to the
offices of Chairman and Chief Executive Officer of the Company and
the Holding Company or as a member of each of their boards of
directors or (b) any other material change by the Company and the
Holding Company in the functions, duties or responsibilities of the
Executive's position with the Company and the Holding Company which
would reduce the ranking or level, dignity, responsibility,
importance or scope of such position, (c) any imposition on the
Executive of a requirement to be permanently based at a location
more than fifty miles from the principal office of the Company
without the consent of the Executive, or (d) any reduction without
the consent of the Executive in the Executive's salary below the
amount then provided for under Paragraph 4(a) hereof.
(iii) The term "Without Cause Termination" means a termination of
the Executive's employment by the Company, upon 30 days notice to
the Executive, other than due to Permanent Disability or expiration
of the Term and other than a Termination for Cause.
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(iv) The term "Permanent Disability" means the inability of the
Executive to work for a period of six full calendar months during
any eight consecutive calendar months due to illness or injury of a
physical or mental nature, supported by the completion by the
Executive's attending physician of a medical certification form
outlining the disability and treatment.
7. OTHER DUTIES OF EXECUTIVE DURING AND AFTER TERM.
(a) CONFIDENTIAL INFORMATION. The Executive recognizes and
acknowledges that certain information pertaining to the affairs,
business, clients, or customers of the Holding Company or any of its
subsidiaries or affiliates (any or all of such entities hereinafter
referred to as the "Business"), as such information may exist from time
to time, is confidential information and is a unique and valuable asset
of the Business, access to and knowledge of which are essential to the
performance of his duties under this Agreement. The Executive shall
not, through the end of the Term or thereafter, except to the extent
reasonably necessary in the performance of his duties under this
Agreement, divulge to any person, firm, association, corporation or
governmental agency, any information concerning the affairs, business
clients, or customers of the Business (except such information as is
required by law to be divulged to a government agency or pursuant to
lawful process or such information which is or shall become part of the
public realm through no fault of the Executive), or make use of any such
information for his own purposes or for the benefit of any person, firm,
association or corporation (except the Business) and shall use his
reasonable best efforts to prevent the disclosure of any such
information by others. All records, memoranda, letters, books, papers,
reports, accountings or other data, and other records and documents
relating to the Business, whether made by the Executive or otherwise
coming into his possession are, shall be, and shall remain the property
of the Business. No copies thereof shall be made which are not retained
by the Business, and the Executive agrees, on termination of his
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employment, or on demand of the Holding Company, to deliver the same to
the Holding Company.
(b) NON-COMPETE. Through the end of the Term, the Executive shall not
without express prior written approval by order of the Board, directly
or indirectly own or hold any proprietary interest in, or be employed by
or receive remuneration from, any corporation, partnership, sole
proprietorship or other entity engaged in competition with the Company,
the Holding Company or any of their affiliates (a "Competitor"), other
than for severance type benefits from entities constituting prior
employers of the Executive. The Executive also agrees that he will not
solicit for the account of any Competitor, any customer or client of the
Company, the Holding Company or their affiliates, or, in the event of
the Executive's termination of employment, any entity or individual that
was such a customer or client during the 12 month period immediately
preceding the Executive's termination of employment. The Executive also
agrees not to act on behalf of any Competitor to interfere with the
relationship between the Company, the Holding Company or their
affiliates and their employees.
For purposes of the preceding sentence, (i) the term, "Proprietary
interest", means direct or indirect legal or equitable ownership,
whether through stockholdings or otherwise, of an equity interest in a
business, firm or entity other than ownership through mutual funds or
other similar diversified vehicles; provided, however, that the
Executive shall not be required to divest any previously acquired equity
interest and (ii) an entity shall be considered to be "engaged in
competition" if such entity is a commercial bank located in Pittsburgh,
Pennsylvania or any other major money center commercial bank or major
regional commercial bank, in either case, with principal offices in any
state east of the Mississippi River. Notwithstanding the foregoing, it
is understood that the Executive is subject to all policies and
procedures of the Company and the Holding Company regarding investment
in securities of competitors.
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(c) REMEDIES. The Company's obligation to make payments or provide for
or increase any benefits under this Agreement (except to the extent
vested) shall cease upon any violation of the preceding provisions of
this Section; provided, however, that the Executive shall first have the
right to appear before the Board with counsel and that such cessation of
payments or benefits shall require a vote of a majority of the Board
members then in office, and provided, further, that in the event of a
violation of the preceding provisions of this Section following a
"change in control" (as defined for purposes of the severance
arrangements for employees of the Company adopted by the Board in a
resolution dated June 15, 1987) the Company's obligations to make
payments or provide for any benefits under this Agreement shall cease
only to the extent of the Executive's remuneration from subsequent
employers, or income from self employment which is subject to FICA
taxation, during the period liquidated damages or severance compensation
is to be paid by the Company. The Executive's agreement as set forth in
this Section 7 shall survive the Executive's termination of employment
with the Company.
8. RETIREMENT.
(a) The Executive may elect, upon not less than 12 months' advance
written notice, to retire under this Agreement, if then in effect, on
the first day of any month coincident with or after his attainment of
age 62. In the event of such retirement, the Term and the Company's
obligation to make payments under Section 4 above shall cease as of the
retirement date, except for (i) earned but unpaid Base Salary which
shall be payable in full and the target bonus award (or, if higher, the
bonus award the Executive would have received had he been employed
throughout the bonus year), including any restricted stock or phantom
stock units payable in lieu of any portion of the Profit Bonus Plan
award, which shall be payable on a pro-rated basis for the year of
retirement, (ii) vested benefits under Company plans or programs
maintained for employees generally and (iii) the delivery of shares or
cash
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upon the exercise of stock options held by the Executive pursuant to the
terms of the Holding Company's stock option plan. In addition, the
Company shall pay a monthly supplemental retirement benefit to the
Executive, commencing immediately and continuing for the remainder of
his life, which benefit shall be payable in the form of a 50% joint and
survivor annuity which shall be unreduced for the actuarial value of the
survivor's benefit. If the Executive's spouse at the time of his death
is not more than three years younger than the Executive, the survivor
benefit shall be equal to 50% of the Executive's benefit and shall be
payable for the remainder of the spouse's life. If the Executive's
spouse at the time of his death is more than three years younger than
the Executive, the benefit payable to the survivor shall be reduced to a
benefit having the same actuarial value as the benefit that would have
been payable had the spouse been three years younger than the Executive.
The Executive shall also have the right to elect a 100% joint and
survivor annuity, on an actuarially-reduced basis or a lump-sum payment,
on an actuarially-reduced basis (if the Executive makes a timely
lump-sum election which avoids constructive receipt), or any other form
of payment available or provided under the "Supplemental Plans" defined
in this Paragraph. Actuarial reductions shall be based on the actual
ages of the Executive and his spouse at the time of retirement. In the
event that the Executive elects a form of payment other than the
automatic 50% joint and survivor annuity or other than a lump sum
payment, and remarries subsequent to retirement, the benefits payable
under this Section shall be actuarially adjusted at the time of the
Executive's death to reflect the age of the subsequent spouse. If the
Executive elects a lump sum payment at retirement, no further benefits
will be payable under this Section. The amount of the monthly
retirement benefit as an unreduced 50% joint and survivor annuity shall
be equal to the product of (A) the "Compensation Percentage" multiplied
by (B) the Executive's "Final Average Compensation" multiplied by (C)
the Executive's "Vesting Percentage", with such product reduced by (D)
the total monthly amount of benefit (measured for purposes of this
offset as if the Executive elected a 50% joint and survivor annuity upon
retirement) provided to or in respect of the Executive under
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all tax-qualified retirement plans and related excess benefit and other
benefit restoration plans maintained by the Company or the Holding
Company for the Executive, including the Mellon Bank Benefit Restoration
Plan and the Mellon Bank IRC Section 401(a)(17) Plan (the "Supplemental
Plans") and benefits paid pursuant to Section 4.7 of the Mellon Bank
Corporation Elective Deferred Compensation Plan for Senior Officers, but
not including payments of any compensation previously deferred under any
deferred compensation plan of the Company or the Holding Company, or
interest thereon, or payments from the Mellon Bank Corporation
Retirement Savings Plan, a 401(k) plan.
The Executive owns interest in life insurance policies (the "Policies")
as a participant in the Mellon Bank Senior Executive Life Insurance
Plan. The supplemental retirement benefit payable to the Executive
hereunder shall be further reduced by the Executive's interest in the
cash value of the Policies. This reduction shall be calculated in the
same manner as under the Supplemental Plans.
If Executive retires after he attains age 65, Executive shall be
entitled for the period after he attains age 65 until his actual
retirement date to receive both (A) an actuarial increase in the gross
supplemental retirement benefit which would have been payable to him if
he had retired when he attained age 65 and (B) an additional incremental
gross supplemental retirement benefit, without actuarial increase, based
on his additional service and increase, if any, in his Final Average
Compensation subsequent to attaining age 65. The increases described in
the preceding sentence shall be calculated in the manner illustrated in
Appendix A hereto, using for purposes of clause (A) the actuarial
factors set forth in the Mellon Bank Retirement Plan. For purposes of
determining the benefit described in clause (A) above, Final Average
Compensation may be determined based on Base Salary for the 36
consecutive months from June 1, 1994 to May 31, 1997 and Bonus Awards
paid to the Executive for work performed in the 36-month period from
January 1, 1995 to December 31, 1997, if such Base Salary and Bonus
Awards result in a higher Final
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Average Compensation than Final Average Compensation as described in
Paragraph 8(e). This adjusted gross supplemental retirement benefit
shall then be reduced by other benefits which are payable to Executive
and Executive's interest in the cash value of Policies as of his actual
retirement date in the manner described above in this Paragraph 8(a).
The Executive shall elect the form of payment of his supplemental
retirement benefit at the same time and subject to the same provisions
(including timing requirements and all reductions and/or penalties for
late elections) as provided under the Supplemental Plans. After
retirement, the Executive (or beneficiary who is receiving payments) may
elect to receive his remaining supplemental retirement benefits which
are payable hereunder in a lump sum payment, calculated in the same
manner and subject to the same reductions as under the Supplemental
Plans. In the event that the Executive elects a form of payment of his
supplemental retirement benefits which provides for payments to continue
after his death and the Executive dies without having received all
payments of supplemental retirement benefits that may be payable
hereunder, then the unpaid balance of such benefits shall be paid in
accordance with the form of payment elected by the Executive. Any such
remaining payments shall be made to the Executive's beneficiary provided
under the Supplemental Plans, subject to any contrary written
instructions from the Executive designating a different beneficiary for
such payments.
(b) The Executive may also elect, upon not less than 12 months' advance
written notice, to retire under this Agreement on the first day of any
month coincident with or after his attainment of age 60. Benefits will
be computed on the basis of the years of service, "Final Average
Compensation", "Compensation Percentage" and "Vesting Percentage"
determined at the date of such retirement prior to age 62 and shall be
actuarially reduced from the unreduced full payment required under this
Agreement at age 62 to reflect such early retirement. In the event of
such
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retirement, the Term and the Company's obligations to make payments
under Section 4 above shall cease as of the retirement date.
(c) Notwithstanding the foregoing, in no event shall the Executive
receive any payments under this Section 8 or be deemed to be retired
from the Company while the Executive is entitled to payments under
Paragraph 6(a).
(d) As used in this Agreement, "Compensation Percentage" means 50% plus
2.5% for each full year of employment which the Executive has completed
under this Agreement as of the date his active employment with the
Company terminates, plus 2.5% for each full year the Executive receives
payments under Paragraph 6(a) hereof (with such percentage pro-rated for
the partial contract year in which such final termination of the
Executive's employment occurs or in which such final payments under
Paragraph 6(a) hereof are made, whichever shall be applicable).
(e) As used in this Agreement, "Final Average Compensation" means the
average monthly amount of the Executive's Base Salary and any bonus
award for the 36 consecutive months of the Executive's employment by the
Company, under this Agreement or prior agreements, which produces the
highest average amount. The cash value of any portion of bonus payable
as either restricted stock or phantom stock units (in lieu of any
portion of the Profit Bonus Plan award) shall be determined on the date
such restricted stock or phantom stock units are granted for purposes of
determining Final Average Compensation. Any portion of the Executive's
Base Salary and bonus award which is deferred by the Executive under
prior agreements with the Company or under any Company or Holding
Company employee benefit plan shall be included for purposes of
determining Final Average Compensation.
(f) As used in this Agreement, the term "Vesting Percentage" shall be
determined from the following vesting schedule on the basis of the
number of full months of
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employment with the Company which the Executive has completed under this
Agreement as of the date his active employment with the Company
terminates plus the number of months during which the Executive receives
payments under Paragraph 6(a).
VESTING SCHEDULE
VESTING INTERVAL VESTING PERCENTAGE
Less than 11 85%
11 or more 100%
In the event the Executive's employment is terminated during the first
11 months of the Term, the Executive's vesting percentage shall be 85%
increased by a pro rata portion of the remaining 15% determined by
dividing the number of whole months worked during such 11-month period
by 11.
In the event the Executive's termination of employment is due to death,
prior to the commencement of the payment of pension benefits under this
Section, and he shall be survived by a spouse, such spouse shall be
entitled to receive a pre-retirement death benefit, payable in the form
of a lifetime annuity, equal in value to the benefit which would have
been payable to the Executive hereunder had he retired immediately prior
to the date of his death and elected the unreduced 50% joint and
survivor annuity provided under Paragraph (a) of this Section 8. If the
Executive's spouse at the time of his death is more than three years
younger than the Executive, the benefit payable to the survivor shall be
reduced to a benefit having the same actuarial value as the benefit that
would have been payable had the spouse been three years younger than the
Executive.
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9. LIMITATION AS TO AMOUNTS PAYABLE.
(a) SECTION 280G LIMITATION. In the event that any payment, coverage
or benefit provided under this Agreement would, in the opinion of
counsel for the Company, not be deemed to be deductible in whole or in
part in the calculation of the Federal income tax of the Company, or any
other person making such payment or providing such coverage or benefit,
by reason of Section 280G of the Code, the aggregate payments, coverages
or benefits provided hereunder shall be reduced to the "safe harbor"
level under Section 280G of the Code so that no portion of such amount
which is paid to the Executive is not deductible by reason of Section
280G of the Code. Executive may determine which payments, coverages or
benefits will be reduced in order to satisfy the "safe harbor" level
under Section 280G. Furthermore, the Company shall hold such portions
not paid to the Executive in escrow pending a final determination of
whether such amounts would be deductible if paid to the Executive, and
the Company shall use its best efforts to seek a ruling from the
Internal Revenue Service that any portion of such payments, coverages or
benefits not paid to the Executive pursuant to this Paragraph 9(a) would
continue to be deductible if paid to the Executive and the Company shall
pay to the Executive any portion of such amounts for which such a ruling
is received. In the event the IRS will not rule on such matter, the
Company shall pay to the Executive such amounts maintained in escrow
pursuant to this Paragraph 9(a) as shall be determined at some point in
time by a counsel, selected by the Company and the Executive, is likely
to be deductible if paid to the Executive or shall be forfeited by the
Executive in the event of a final determination by the IRS that such
amounts are not deductible. For purposes of this Paragraph, the value
of any non-cash benefit or coverage or any deferred or contingent
payment or benefit shall be determined by the independent auditors of
the Company in accordance with the principles of Section 280G of the
Code.
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(b) OFFSET. Within 90 days following any termination of his employment
which constitutes a Without Cause Termination or Constructive Discharge
(as such terms are defined in Paragraph 6(c)), Executive may elect, by
written notice to Employer, to have the provisions of this Paragraph
9(b) apply to reduce the aggregate payments, coverages and benefits
provided under this Agreement during the remainder of the Term of this
Agreement following his termination of employment (hereafter the
"Applicable Period"). If Executive does not make such election, this
Paragraph 9(b) shall have no application or effect under this Agreement.
If Executive elects to have this Paragraph 9(b) apply, the aggregate
payments, coverages and benefits provided to Executive under this
Agreement during the Applicable Period following his termination of
employment shall be reduced by "mitigation" (as defined below) to comply
with Regulations under Section 280G of the Code, including, in
particular, Question and Answer 42(b). "Mitigation" shall mean that
payments which are made and benefits which are provided by the Employer
during the Applicable Period after termination of Executive's employment
and which are attributable to the Applicable Period and not to any other
period will be reduced by all earned income (within the meaning of
Section 911(d)(2)(A) of the Code) received by Executive from persons or
entities other than the Employer or from self employment during the
Applicable Period.
Not less frequently than annually (by December 31 of each year) during
the Applicable Period, Executive shall account to the Employer with
respect to all payments and benefits received by Executive from other
employment or self employment during the Applicable Period which are
required by reason of his duty of "mitigation" hereunder to be offset
against payments or benefits received by Executive from the Employer
during the Applicable Period. During the Applicable Period, if the
Employer has paid amounts in excess of those to which Executive was
entitled (after giving effect to the offsets provided above), Executive
shall reimburse the Employer for such excess by December 31 of such
year.
20
If Executive receives earned income from other employment or self
employment during only a portion, but not all, of the Applicable Period,
only payments which are made and benefits which are provided by the
Employer that are attributable to the portion of the Applicable Period
during which Executive receives earned income from other employment or
self employment shall be subject to reduction and offset as provided
above.
If Executive elects to have this Paragraph 9(b) apply, Executive may
elect, at any time, to be subject to a greater (but no lesser) duty of
"mitigation" than otherwise provided above in this Paragraph 9(b), if
counsel selected by Executive determines that such greater duty of
"mitigation" is advisable in order to comply with Regulations under
Section 280G.
10. LEGAL FEES, RELATED EXPENSES. The Company agrees to promptly reimburse
the Executive for his reasonable legal and consulting fees incurred in the
preparation and negotiation of this Agreement. In addition, in the event of
any litigation or other proceeding between the Company and the Executive with
respect to the subject matter of this Agreement and the enforcement of rights
hereunder, the Company shall reimburse the Executive for his reasonable costs
and expenses relating to such litigation or other proceeding, including
attorneys' fees and expenses, provided that such litigation or proceeding
results in any: (i) settlement requiring the Company to make a payment to the
Executive; or (ii) judgment, order or award in favor of the Executive, unless
such judgment, order or award is subsequently reversed on appeal or in a
collateral proceeding.
11. WITHHOLDING TAXES. The Company may directly or indirectly withhold from
any payments made under this Agreement all Federal, state, city or other taxes
as shall be required pursuant to any law or governmental regulation or ruling.
21
12. CONSOLIDATION, MERGER, OR SALE OF ASSETS. Nothing in this Agreement shall
preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement and all obligations and undertakings of the
Company hereunder. Upon such a consolidation, merger or transfer of assets and
assumption, the term, "Company", as used herein shall mean such other
corporation and this Agreement shall continue in full force and effect.
13. NOTICES. All notices, requests, demands and other communications required
or permitted hereunder shall be given in writing and shall be deemed to have
been duly given if delivered or mailed, postage prepaid, by same day or
overnight mail as follows:
(a) To the Company:
Director-Human Resources Department
Mellon Bank, N.A.
0 Xxxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
(b) To the Executive:
000 Xxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
with copies to:
Xxxxx Xxxxxx
Management Compensation Group
000 X. Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Xxxxxx X. Xxxxxx
00000 Xxxxxxx Xxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
or to such other address as either party shall have previously specified in
writing to the other.
22
14. NO ATTACHMENT. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to
execution, attachment, levy, or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect, provided, however, that nothing in this Section
14 shall preclude the assumption of such rights by executors, administrators,
or other legal representatives of the Executive or his estate and their
assigning any rights hereunder to the person or persons entitled thereto.
15. SOURCE OF PAYMENTS. All payments provided for under this Agreement shall
be paid in cash from the general funds of the Company. The Company shall not
be required to establish a special or separate fund or other segregation of
assets to assure such payments, and, if the Company shall make any investments
to aid it in meeting its obligations hereunder, the Executive shall have no
right, title, or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument relating to
such investments. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship, between the Company and the Executive or
any other person. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.
16. BINDING AGREEMENT. This Agreement shall be binding upon, and shall inure
to the benefit of, the Executive and the Company and, as permitted by this
Agreement, their respective successors, assigns, heirs, beneficiaries and
representatives.
17. GOVERNING LAW. The validity, interpretation, performance, and enforcement
of this Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania.
23
18. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which, when executed, shall be deemed to be an original and both of which
together shall be deemed to one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and
its seal to be affixed hereunto by its officers thereunto duly authorized, and
the Executive has signed this Agreement, all as of the first date above
written.
ATTEST: Mellon Bank, N.A.
XXXXXX XXXX ORESTI By: D. XXXXXXX XXXXX
---------------------- ---------------------------
Xxxxxx Xxxx Xxxxxx X. Xxxxxxx Xxxxx
Secretary Head of the Human Resources
Department
XXXXX X. XXXXXXX
---------------------------
Xxxxx X. Xxxxxxx
24
APPENDIX A
Xxxxx Xxxxxxx
Employment Agreement Dated as of July 25, 1993 Amended through October 17, 1995
Supplemental Retirement Benefit
Basis of Sample Calculation
Birth Date: May 25, 1932
Spouse Birth Date: March 2, 1931
Assumed Retirement Date: January 1, 1999
Compensation Assumption: Salary or Bonus in Any Given Year is Greater Than or Equal to Prior Year Salary or Bonus
Service at Age 65: Elapsed Time from 7/25/93 to 5/31/97 Rounded up to Complete Month = SVC65
Service at Retirement: Elapsed Time from 7/25/93 to 12/31/98 Rounded up to Complete Month = SVCRET
Actuarial Equivalence: 1979 Buck (80% Male, 20% Female) Mortality, 7% Interest
N(12)65 = N(12)65
N(12)66 7/12 = N(12)RET
Life Annuity to 50% Joint & Contingent Annuity Conversion Factor = JS65:66
(Executive Age Nearest 65, Spouse Age Nearest 66)
Life Annuity to 50% Joint & Contingent Annuity Conversion Factor = JS67:68
(Executive Age Nearest 67, Spouse Age Nearest 68)
Determination of Final Average Compensation at Age 65
/-----------------------------------------------------------------------------------------------------------/
Salary Bonus Total
Date Salary Date Bonus Compensation
/----------------------------------------------------------------------------------------------------------/
6/1/94 - 5/31/95 Salary 1 1/1/95 - 12/31/95 Bonus 1 Salary 1 + Bonus 1
6/1/95 - 5/31/96 Salary 2 1/1/96 - 12/31/96 Bonus 2 Salary 2 + Bonus 2
6/1/96 - 5/31/97 Salary 3 1/1/97 - 12/31/97 Bonus 3 Salary 3 + Bonus 3
Average of Total Compensation = FAC65
Determination of Final Average Compensation at Retirement
/-----------------------------------------------------------------------------------------------------------/
Bonus Total
Date Salary Date Bonus Compensation
/----------------------------------------------------------------------------------------------------------/
1/1/96 - 12/31/96 Salary 4 1/1/96 - 12/31/96 Bonus 2 Salary 4 + Bonus 2
1/1/97 - 12/31/97 Salary 5 1/1/97 - 12/31/97 Bonus 3 Salary 5 + Bonus 3
1/1/98 - 12/31/98 Salary 6 1/1/98 - 12/31/98 Bonus 4 Salary 6 + Bonus 4
Average of Total Compensation = FACRET
Calculation of Age 65 Benefit
FAC65 x [50% + (2.5% x SVC65)] = BEN65
Calculation of Age 65 Benefit Actuarially Increased to reflect Delayed
Commencement at 1/1/99
[BEN65 / JS65:66] x [N(12)65 / N(12)RET] x JS67:68 = BEN65A1
Calculation of Annual Benefit Payable Upon Retirement at 1/1/99
BEN65AI + [FACRET x [50% + (2.5% x SVCRET)] - BEN65] = BENRET
