EXHIBIT 10.24
SUPPLEMENTAL PENSION AGREEMENT
AGREEMENT, dated as of this 30th day of April, 1997, by and between AMBAC
INC., a Delaware corporation (the "Company"), and PHILLIP B. LASSITER (the
"Executive").
WHEREAS, the Company and the Executive have entered into an employment
agreement (the "Employment Agreement") providing for the Executive to be
employed by the Company as its Chairman and Chief Executive Officer upon the
terms and conditions set forth in such agreement; and
WHEREAS, the Company and the Executive have agreed that, as part of the
incentive for the Executive's employment with the Company and as provided in the
Employment Agreement, the Company shall provide the Executive with enhanced
pension benefits according to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Supplemental Retirement Benefits. Provided that the Executive
remains in the employ of the Company or its affiliates until at least the
age at which he becomes eligible for early retirement under the terms of
the Pension Plan of AMBAC Inc. (the "Retirement Plan") (or, if earlier,
until termination of his employment by reason of death or disability (as
defined in Section 4(c) of the Employment Agreement), the Company will pay
the Executive, commencing at the time payment of benefits under the
Retirement Plan commences (or, if earlier, commencing as of the first month
following termination of the Executive's employment by reason of death or
disability), an annual supplemental retirement benefit (the "ASRB")
determined by the formula "ASRB = X - (Y + Z)", where "X", "Y" and "Z" are
defined as follows:
"X" equals the annual amount that would be payable under the Retirement
Plan to the Executive commencing at his retirement (or earlier termination
of employment due to death or disability) determined as though (A) the
provisions of the Retirement Plan in effect on December 31, 1991 had
remained in effect through such retirement or earlier termination; (B) the
Executive's bonus compensation, including cash bonus and any restricted
stock or stock units awarded in lieu of cash (any such stock and units to
be considered to have the value attributed thereto by the Compensation and
Organization Committee (the "Committee") as provided in Section 3(b) of the
Employment Agreement), but excluding the value of any stock options, that
was taken into account
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in computing the benefit payable thereunder; and (C) such benefit was
calculated without giving effect to the limitations provided for in
Sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any successor provisions thereto.
"Y" equals the aggregate annual benefits payable to the Executive under any
qualified or nonqualified defined benefit retirement plan or arrangement
maintained by the Company or any of its subsidiaries or affiliates.
"Z" equals an annual amount that is the actuarial equivalent of the excess,
if any, of:
(A) the aggregate amount of employer contributions that would have
been contributed to the Executive's account under the AMBAC Inc.
Savings Incentive Plan or any successor plan thereto (the "SIP")
through the date of the Executive's retirement (or earlier termination
of employment due to death or disability), determined pursuant to the
terms of the SIP and any such other plans or arrangements as in effect
from time to time, over
(B) the amount of employer contributions that would have been so
contributed to the Executive's account under the SIP determined
pursuant to the terms of the SIP in effect on December 31, 1991,
in each such case calculated on the assumptions:
((alpha)) that Sections 401(a)(17), 402(g) and 415 of the Code did not
apply and that the Executive's annual contributions would not be
limited by operation of the actual deferral percentage or actual
contribution percentage tests under Sections 401(k) and (m),
respectively, of the Code, and
((beta)) that the Executive had deferred 6% of his salary under the
SIP,
all such amounts to be credited with interest from December 31 of the year
in respect of which any such contribution would have been made to the date
of the Executive's retirement or other termination of employment at a rate
equal to the applicable long-term federal rate compounded semiannually,
such rate to be adjusted annually on the first day of each calendar year to
reflect the rate then in effect. For this purpose, actuarial equivalence
shall be determined using the actuarial assumptions used in the valuation
of the required minimum contribution to the Retirement Plan under Section
412 of the Code for the plan year in which the Executive retires or
otherwise terminates employment.
The ASRB shall be determined and paid on the basis of the same payment
alternative that the Executive shall have elected under the Retirement Plan.
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2. General Provisions.
(a) Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery, telex, telecopy or
certified mail, return receipt requested, to the applicable address
set forth below:
(i) To the Company: AMBAC Inc.
One State Street Plaza
New York, NY 10004
Attention: General Counsel
(ii) To the Executive: Phillip B. Lassiter
16 Sutton Place
Apartment 12A
New York, New York 10022
or to such other person or other address as either party may specify
to the other in writing.
(b) Limited Waiver. The waiver by the Company or the Executive of
a violation of any of the provisions of this Agreement, whether
express or implied, shall not operate or be construed as a waiver of
any subsequent violation of any such provision.
(c) Assignment. No right, benefit or interest hereunder shall be
subject to assignment, encumbrance, charge, pledge, hypothecation or
set off by the Executive in respect of any claim, debt, obligation or
similar process. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets or the Company
to assume expressly and to agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place.
(d) Amendment. This Agreement may not be amended, modified or
canceled except by written agreement of the Executive and the Company.
(e) Severability. If any term or provision hereof is determined
to be invalid or unenforceable in a final court or arbitration
proceeding, (i) the remaining terms and provisions hereof shall be
unimpaired and (ii) the invalid or unenforceable term or provision
shall be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
(f) Unsecured Promise. No benefit or promise hereunder shall be
secured by any specific assets of the Company. Unless otherwise stated
herein, the Executive shall have only the rights of an unsecured
general creditor of the Company in seeking satisfaction of such
benefits or promises.
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(g) Governing Law. This Agreement has been made in and shall be
governed by and construed in accordance with the laws of the State of
Delaware.
(h) Governing Terms; Single Supplemental Retirement Benefits
Arrangement. This Agreement sets forth the understanding of the
parties according to the terms of the Employment Agreement and, in the
event that any of the terms or conditions of this Agreement are
construed in a manner that varies in any respect from the construction
of the terms or conditions of the Employment Agreement, the terms and
conditions of the Employment Agreement shall govern the relationship
of the parties. The parties understand and agree that (i) this
Agreement formalizes the provision of supplemental retirement benefits
set forth in the Employment Agreement, (ii) the supplemental
retirement benefits described herein are the same benefits
contemplated by the Employment Agreement and (iii) this Agreement is
not intended to and does not entitle the Executive to any benefits in
addition to those set forth in the Employment Agreement.
(i) Headings. The headings and captions of the Sections of this
Agreement are included solely for convenience of reference and shall
not control the meaning or interpretation of any provisions of this
Agreement.
(j) Counterparts. This Agreement may be executed by the parties
hereto in counterparts, each of which shall be deemed an original, but
all such counterparts shall together constitute one and the same
document.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the day and year first written above.
AMBAC INC.
By /s/:Janice Reals Ellig
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Name: Janice Reals Ellig
Title: Senior Vice President
THE EXECUTIVE
/s/Phillip B. Lassiter
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Phillip B. Lassiter