EXHIBIT 10
MARSH & MCLENNAN COMPANIES
STOCK INVESTMENT SUPPLEMENTAL PLAN
(Effective July 1, 1992)
As amended and restated to conform to the Stock Investment Plan (amended to
conform to IRS determination letter dated January 25, 1995)
INDEX TO ARTICLES
ARTICLE Page
- ------- ----
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . 2
3 Employee Deferrals . . . . . . . . . . . . . . . . . . . . . 3
4 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6 Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . 9
7 Administration . . . . . . . . . . . . . . . . . . . . . . . 9
8 Amendment and Termination. . . . . . . . . . . . . . . . . . 11
9 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 12
10 Effective Date . . . . . . . . . . . . . . . . . . . . . . . 13
PREAMBLE
Effective July 1, 1992, Marsh & McLennan Companies, Inc. (the
"Company") adopted this Marsh & McLennan Companies Stock Investment Supplemental
Plan (the "Plan"). The Plan provides benefits to certain employees of the
Company and its subsidiaries who would have their benefits and contributions
under the Marsh & McLennan Companies Stock Investment Plan limited by certain
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and
other applicable laws. It is intended that, to the maximum extent possible,
benefits paid under the Plan shall be paid under an arrangement that is an
unfunded "excess benefit plan" within the meaning of section 3(36) of ERISA and,
to the extent not so paid, such benefits shall be paid under an arrangement that
is, for purposes of ERISA, unfunded and maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees. This document describes the benefits provided under the
Plan and is intended to represent a binding obligation of Marsh & McLennan
Companies, Inc. and participating subsidiaries to provide those benefits,
subject to the terms and conditions of the Plan as from time to time in effect.
The Plan reads as follows:
ARTICLE 1
DEFINITIONS
The following terms when used in this Plan have the designated
meanings unless a different meaning is clearly required by the context.
1.1 AFTER-TAX CONTRIBUTIONS, CODE, COMPANY, COMPENSATION, EMPLOYEE,
MMC STOCK, MONTHLY EARNINGS, PARTICIPANT, PARTICIPATING COMPANY MATCHING
CONTRIBUTIONS, PLAN YEAR, PRE-TAX CONTRIBUTIONS and TERMINATION OF EMPLOYMENT
have the meanings given them in the Basic Plan.
1.2 BASIC PLAN means the Marsh & McLennan Companies Stock Investment
Plan.
1.3 BENEFICIARY means the person or persons designated pursuant to
Article 6 to receive a benefit in the event of a SISP Participant's death before
his SISP Benefit has been paid in full.
1.4 CHANGE IN CONTROL has the meaning set forth in Section 5.6.
1.5 COMMITTEE means the committee appointed by the Company pursuant
to Section 11.1 of the Basic Plan.
1.6 COMPENSATION LIMIT means, with respect to any Plan
Year, the limit established for such Year pursuant to section 401(a)(17) of the
Code.
1.7 DEFERRAL LIMIT means, with respect to any calendar year, the
limit on elective deferrals for such year established pursuant to section 402(g)
of the Code.
1.8 FAIR MARKET VALUE of a share of MMC Stock on any date means the
closing price per share reported on the New York Stock Exchange for such date
or, if no trading occurs on such date, for the last preceding day on which
trading occurred.
1.9 PARTICIPATING COMPANY means the Company and any subsidiary
thereof whose Employees are eligible to participate in the Basic Plan.
1.10 PAYMENT DATE means a date determined pursuant to Section 5.3 or
5.4 for commencement of the payment of some portion or all of a SISP Benefit.
1.11 PLAN means this Marsh & McLennan Companies Stock Investment
Supplemental Plan as in effect from time to time.
1.12 PLAN ADMINISTRATOR means an individual appointed from time to
time by the Company to administer the Plan.
1.13 SECTION 415 LIMIT means, with respect to any limitation year
within the meaning of Treas. Reg. section 1.415-2(b), the limit established for
such year pursuant to section 415(c)(1)(A) of the Code.
1.14 SISP ACCOUNT means an account established by the Company pursuant
to Section 4.1.
1.15 SISP BENEFIT means the benefit described in Section 5.1.
1.16 SISP PARTICIPANT means an individual who has a SISP Account that
has not been terminated pursuant to Section 4.1.
1.17 STOCK UNIT means a bookkeeping entry made to a SISP Participant's
SISP Account pursuant to Article 4.
ARTICLE 2
ELIGIBILITY
2.1 ELIGIBILITY. An Employee who is a Participant in the Basic Plan,
whose Contribution Authorization under the Basic Plan is not suspended pursuant
to Section 3.7 of the Basic Plan and whose opportunity to cause contributions to
be made pursuant to Section 3.1 thereof could reasonably be expected to be
limited in any Plan Year by the operation of the Compensation Limit or the
Section 415 Limit may (a) defer Compensation during such Plan Year pursuant to
Section 3.1 of this Plan and (b) have matching amounts
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credited to his SISP Account pursuant to Section 4.3 of this Plan. The Plan
Administrator in his sole discretion may establish specific terms and conditions
for the participation of any Employee.
ARTICLE 3
EMPLOYEE DEFERRALS
3.1 DEFERRAL ELECTION. Subject to Section 3.3, an Employee who is
eligible pursuant to Section 2.1 for a Plan Year may direct the Participating
Company that employs him to reduce his Compensation for such Plan Year by an
amount equal to any whole percentage thereof, provided that such percentage
shall be not less than two percent (2%) and not more than twelve percent (12%),
and to pay such amount to such Employee in the future as deferred compensation.
Any direction pursuant to this Section 3.1 shall be given in writing, at such
time and in such manner as the Plan Administrator shall prescribe, and shall
apply only to Compensation that is remuneration for services rendered after the
date such direction is given. No direction given pursuant to this Section 3.1
shall be changed with retroactive effect.
3.2 EFFECTIVE DATE. An Employee who elects a Compensation reduction
pursuant to Section 3.1 may, at the time such election is made, direct that it
shall be effective for any Plan Year on the earliest date in such Plan Year as
of which the Employee's opportunity to cause Pre-Tax Contributions to be made
under the Basic Plan is limited by the Deferral Limit. If the Employee does not
give such a direction, then, except as may be otherwise permitted by the Plan
Administrator, no Compensation reduction elected pursuant to Section 3.1 shall
be effective in any Plan Year prior to the earliest date in such Plan Year as of
which the Employee's opportunity to cause contributions to be made under the
Basic Plan is limited by the Compensation Limit or the Section 415 Limit. Any
Compensation reduction elected pursuant to Section 3.1 shall be effected by
payroll deductions from each payment of Monthly Earnings that is made to the
Employee subsequent both to the date he directs a Participating Company to make
such reduction and to the effective date determined under this Section 3.2.
3.3 LIMITATIONS. (a) The sum for any Plan Year of an Employee's
Compensation reduction pursuant to Section 3.1 of this Plan and his Pre-Tax and
After-Tax Contributions pursuant to Section 3.1 of the Basic Plan shall not
exceed an amount equal to twelve percent (12%) of the Compensation paid to such
Employee during such Plan Year. The reduction in an Employee's Compensation
under this Plan shall be adjusted to the extent necessary to comply with the
limitation set forth in the preceding sentence.
(b) The sum for any Plan Year of the amount credited to an
Employee's SISP Account pursuant to Section 4.3 of this Plan and the
Participating Company Matching Contributions credited
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to him pursuant to Section 4.1 of the Basic Plan shall not exceed an amount
equal to four percent (4%) of the Compensation paid to such Employee during such
Plan Year. The amount credited pursuant to Section 4.3 of this Plan shall be
adjusted to the extent necessary to comply with the limitation set forth in the
preceding sentence.
3.4 COMPENSATION. For purposes of this Article 3, an Employee's
Compensation shall include any amount deferred pursuant to an election under
this Plan.
ARTICLE 4
ACCOUNTS
4.1 SISP ACCOUNTS. The Company shall establish a SISP Account for
each SISP Participant which shall be credited with Stock Units based upon such
SISP Participant's Compensation reductions and the matching amounts attributable
thereto, and upon reinvestment of dividends, and which shall be debited for SISP
Benefits paid to or in respect of such SISP Participant. A SISP Account shall
be terminated when no more Stock Units stand credited to it.
4.2 CREDITS FOR COMPENSATION REDUCTIONS. The reduction in a SISP
Participant's Compensation for any month shall be converted to Stock Units as of
the last day of such month by dividing the amount of such reduction by the Fair
Market Value of a share of MMC Stock on such day. The number of Stock Units
thus determined, including any fractional unit, shall be credited to such SISP
Participant's SISP Account as of the last day of the month.
4.3 CREDITS FOR EMPLOYER MATCHING. Each SISP Account to which Stock
Units are credited for any month pursuant to this Section 4.3 shall be credited
as of the last day of such month with an additional number of Stock Units
(including any fractional Unit) equal to the quotient of (a) two-thirds (2/3) of
the first six percent (6%) of reduction in the SISP Participant's Monthly
Earnings under this Plan for such month divided by (b) the Fair Market Value of
a share of MMC Stock as of such last day.
4.4 CREDITS FOR DIVIDEND REINVESTMENT. Whenever a cash dividend is
paid on MMC Stock, each SISP Account shall be credited as of the payment date
with a number of Stock Units (including any fractional Unit) equal to the
quotient of (a) an amount equal to the cash dividend payable on shares of MMC
Stock equal in number to the number of Stock Units (excluding any fractional
Unit) standing credited to such SISP Account at the record date divided by (b)
the Fair Market Value of a share of MMC Stock on such payment date. In the
event of a stock dividend or distribution, stock split, recapitalization or the
like, each SISP Account shall be credited as of the payment date with a number
of Stock Units (including any fractional Unit) equal to the number of shares
(including any
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fractional share) of MMC Stock payable in respect of shares of MMC Stock equal
in number to the number of Stock Units (excluding any fractional Unit) standing
credited to such SISP Account at the record date.
4.5 ACCOUNTS CONFER NO INTEREST IN ASSETS. The crediting of Stock
Units to the SISP Account of a SISP Participant is merely a bookkeeping record
and shall not confer on such SISP Participant any right, title or interest in or
to any specific assets of Participating Companies.
4.6 ACCOUNT STATEMENTS. The Plan Administrator shall furnish written
statements to each SISP Participant setting forth, at least as of the end of
each calendar year, the number of Stock Units (including any fractional Unit)
credited to his SISP Account.
ARTICLE 5
BENEFITS
5.1 SISP BENEFIT. A SISP Participant's SISP Benefit payable as of
any Payment Date shall be a number of shares of MMC Stock equal to the number of
Stock Units that stand credited to his SISP Account as of the end of the month
preceding such Payment Date and to which such Payment Date applies pursuant to
Section 5.3 or 5.4. Except as provided in Section 5.6 hereof, SISP Benefits
shall be paid only in shares of MMC Stock. If actual payment of a SISP Benefit
(or portion thereof) cannot commence on the applicable Payment Date, it shall
commence as soon as practicable thereafter.
5.2 NONFORFEITABILITY. A SISP Participant's right to receive his
SISP Benefit shall be fully vested and nonforfeitable at all times.
5.3 TIME AND METHOD OF PAYMENT. (a) Except to the extent that a SISP
Participant shall have designated the time and/or form of payment of his SISP
Benefit pursuant to Section 5.4, the Payment Date for a SISP Benefit shall be
the date of the SISP Participant's Termination of Employment for any reason and
such Benefit shall be paid in a single distribution. All payments of SISP
Benefits shall be subject to the provisions of Section 5.8.
(b) In the event that a SISP Participant dies before payment of
his SISP Benefit has commenced, his SISP Benefit shall be paid to his
Beneficiary as soon as practicable in a single distribution.
(c) Notwithstanding any other provision of this Article 5, the
Plan Administrator may delay the payment of a SISP Benefit to a date no more
than one year following the Payment Date otherwise selected if the Plan
Admnistrator determines that such delay is necessary or advisable to preserve in
full the right of a
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Participating Company to a tax deduction pursuant to section 162 of the Code in
respect of such payment.
5.4 DESIGNATIONS BY PARTICIPANTS. (a) Subject to the provisions of
paragraph (b) of this Section 5.4, the Plan Administrator may in his discretion
permit SISP Participants, under uniformly applicable rules, to designate the
time and/or form of payment of their SISP Benefits. Any such designation (i)
shall apply only to such portion of a SISP Benefit as is based on Stock Units
credited to a SISP Account in respect of Compensation reductions effected after
the date of such designation and matching amounts attributable thereto, and (ii)
shall remain in effect until such time as a new designation shall be made. No
such designation shall be changed with retroactive effect.
(b) The Plan Administrator may permit a SISP Participant to
designate as a Payment Date (i) the first day of any month that is at least 24
months after the date of such designation or (ii) the date of his Termination of
Employment, whenever that shall occur. A SISP Participant who thus designates a
Payment Date may at the same time elect to receive the portion of his SISP
Benefit payable on such Payment Date in substantially equal installments paid at
such intervals as the Plan Administrator shall determine over a period certain
not to exceed the lesser of 15 years or his life expectancy at the Payment Date.
(c) In the event that a SISP Participant who is receiving
payment in installments dies before his entire SISP Benefit has been paid, his
Beneficiary shall receive the undistributed SISP Benefit in a single
distribution which shall be made as soon as practicable following the date of
death.
(d) The SISP Account in respect of which a SISP Benefit is paid
in installments shall be debited for the number of Stock Units in each
installment payment when made. The amount of each installment shall be
appropriately increased to reflect Stock Units credited to such Account as a
result of dividend reinvestment pursuant to Section 4.4.
5.5 SOURCE OF PAYMENT. The SISP Benefit of each SISP Participant
shall be the obligation of the Participating Company or Companies by which such
SISP Participant was employed at the time Compensation reductions in respect of
him were made pursuant to Section 3.1, and shall be the general liability of
such Participating Company or Companies. The claim of a SISP Participant or
Beneficiary to a SISP Benefit shall at all times be merely the claim of an
unsecured creditor of the Participating Company or Companies responsible
therefor. No trust, security, escrow, or similar account need be established
for the purpose of paying SISP Benefits. However, the Company may in its
discretion establish a custodial account or "rabbi trust" (or other arrangement
having equivalent taxation characteristics under the Code and applicable
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regulations or rulings) to hold assets of the Participating Companies, subject
to the claims of such Companies' creditors in the event of insolvency, for the
purpose of paying SISP Benefits. If the Company establishes such an account or
trust, amounts paid therefrom shall discharge the obligations hereunder to the
extent of the payments so made.
5.6 CHANGE IN CONTROL. (a) For purposes of this Section 5.6, a
"Change in Control" shall have occurred if:
(i) any "person", as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
securities;
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of
the Company, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect
a transaction described in clause (i), (iii) or (iv) of this Section
5.5) whose election by the Board of Directors or nomination for
election by the Company stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other Company, other than (A) a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) 50% or more of the combined
voting power of voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or
(B) a merger or consolidation effected to implement a recapitalization
of the Company (or similar transaction) in which no "person" (as
defined above) acquires 50% or more
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of the combined voting power of the Company's then outstanding
securities);
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets (or
any transaction having a similar effect).
(b) Notwithstanding any contrary provision of the Plan,
immediately upon the occurrence of a Change in Control, the Company shall pay to
each SISP Participant his SISP Benefit (i) in a single distribution of shares of
MMC Stock or (ii) to the extent all of the shares of MMC Stock have been
changed, exchanged or converted into cash, property or other securities of the
Company in connection with such Change in Control, in such cash, property or
other securities to which such SISP Participant would have been entitled if his
SISP Benefit had been paid to him in the manner as set forth in clause (i)
hereof immediately prior to the Change in Control; PROVIDED, HOWEVER, that if it
is determined that the payment provided for in clauses (i) or (ii) above, as
applicable, would cause the SISP to fail to comply with the requirements set
forth in Rule 16b-3(d) under the Exchange Act, the Company instead shall
establish an irrevocable trust for the benefit of SISP Participants and shall
contribute to such trust such cash, property or shares of MMC Stock or other
securities of the Company which would have been paid to each SISP Participant
pursuant to such clause (i) or (ii) with distribution to be made from such trust
as soon as practicable in compliance with Rule 16b-3(d).
5.7 WITHHOLDING. All deferrals and payments under the Plan shall be
subject to any applicable withholding requirements imposed by any tax or other
law. The Participating Company or Companies responsible for payment of a SISP
Benefit shall have the right to require as a condition of deferral and payment
that the payee remit to such Company or Companies an amount sufficient in its or
their opinion to satisfy all applicable withholding requirements. To the extent
permitted by applicable law, the Plan Administrator may from time to time
establish procedures to facilitate the discharge of payees' obligations under
this Section 5.7, which procedures may include the withholding of shares of MMC
Stock otherwise payable under the Plan.
5.8 RESTRICTIONS (a) If the Plan Administrator shall at any time
determine that any Consent (as hereinafter defined) is necessary or desirable as
a condition of, or in connection with, the crediting of stock units under the
Plan, or the issuance of shares thereunder, or the taking of any other action
thereunder (each such action being hereinafter referred to as a "Plan Action"),
then such Plan Action shall not be taken, in whole or in part, unless and until
such Consent shall have been effected or obtained to the full satisfaction of
the Plan Administrator.
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(b) The term "Consent" as used herein with respect to any Plan
Action means (i) any and all listings, registrations or qualifications in
respect thereof upon any securities exchange or under any federal, state or
local law, rule or regulation, (ii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Plan Administrator shall deem
necessary or desirable to comply with the terms of any such listing,
registration or qualification or to obtain an exemption from the requirement
that any such listing, qualification or registration be made and (iii) any and
all consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies.
ARTICLE 6
BENEFICIARIES
6.1 BENEFICIARY DESIGNATION. (a) A SISP Participant shall be deemed
to have designated the same Beneficiary or Beneficiaries for his SISP Benefit as
those he has at the time of reference properly designated pursuant to Section
10.1 of the Basic Plan. Any proper change in designation under the Basic Plan
shall be deemed a like change under this Plan.
(b) In the event that there is no properly designated
Beneficiary or contingent Beneficiary living at the time of a SISP Participant's
death, any unpaid amount of his SISP Benefit shall be paid in accordance with
Section 10.2 of the Basic Plan. The person or persons to whom such amount is
paid shall be deemed to be the deceased SISP Participant's Beneficiary for
purposes of Article 5 of this Plan.
6.2 PAYMENT TO INCOMPETENT. If any person entitled to benefits under
this Plan shall be a minor or shall be physically or mentally incompetent in the
judgment of the Plan Administrator, such benefits may be paid to the person to
whom the corresponding benefits under the Basic Plan are paid pursuant to
Section 10.3 thereof.
ARTICLE 7
ADMINISTRATION
7.1 APPOINTMENT OF PLAN ADMINISTRATOR. The Plan shall be
administered by the Committee except as to such duties as have been specifically
delegated to the Plan Administrator in other provisions of this Plan. Without
limiting the generality of the foregoing, the Committee shall have the power and
discretion to:
(a) make and enforce rules and regulations and prescribe the use
of forms he deems appropriate for the administration of the
Plan;
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(b) construe all terms, provisions, conditions and limitations
of the Plan and resolve ambiguities, inconsistencies and
omissions;
(c) determine all questions arising out of or in connection with
the provisions of the Plan or its administration in any and
all cases in which it deems such a determination advisable,
such determinations to be final and conclusive on all
persons;
(d) delegate authority to agents and other persons to act on its
behalf in carrying out the provisions and administration of
the Plan, and to take or direct any action required or
advisable with respect to the administration of the Plan.
7.2 CLAIMS PROCEDURE. If the Plan Administrator denies any SISP
Participant's or Beneficiary's claim for benefits under the Plan:
(a) the Plan Administrator shall notify such SISP Participant or
Beneficiary of such denial by written notice which shall set
forth the specific reasons for such denial; and
(b) the SISP Participant or Beneficiary shall be afforded a
reasonable opportunity for a full and fair review by the
Committee of the decision to deny his claim for Plan
benefits.
Notwithstanding the foregoing provisions of this Section 7.2, in the event that
the denied claim is for benefits that are deemed not provided under an "excess
benefit plan" within the meaning of section 3(36) of ERISA, the claims procedure
shall be the same as the one provided for under the Basic Plan.
7.3 SERVICE OF PROCESS. The Company or such other person as may from
time to time be designated by the Company shall be the agent for service of
process under the Plan.
7.4 NO BOND REQUIRED. No bond or other security shall be required of
the Plan Administrator or any member of the Committee or any person to whom the
Plan Administrator or the Committee delegates authority except as may be
required by law.
7.5 LIMITATION OF LIABILITY; INDEMNITY. Except to the extent
otherwise provided by law, if any duty or responsibility of the Plan
Administrator or the Committee has been allocated or delegated to any other
person in accordance with any provision of this Plan, then neither the Plan
Administrator nor the Committee (as the case may be) shall be liable for any act
or omission of
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such person in carrying out such duty or responsibility. The Company shall
indemnify and save the Plan Administrator and each person who is a member of the
Committee, and each employee or director of a Participating Company harmless
against any and all loss, liability, claim, damage, cost and expense which may
arise by reason of, or be based upon, any matter connected with or related to
the Plan or the administration of the Plan (including, but not limited to, any
and all expenses reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or in settlement of any such
claim) to the fullest extent permitted under applicable law, except when the
same is judicially determined to be due to the gross negligence or willful
misconduct of the Plan Administrator or such Committee member, employee or
director.
7.6 PAYMENT OF EXPENSES. The Plan Administrator and members of the
Committee shall serve without special compensation. Their expenses, and all
other expenses of Plan administration, shall be paid by the Company.
ARTICLE 8
AMENDMENT AND TERMINATION
8.1 RIGHT RESERVED. (a) Subject to Section 8.2, the Company may at
any time amend the Plan, retroactively or otherwise, in any respect or terminate
the Plan. However, no such amendment or termination shall reduce any SISP
Participant's SISP Benefit determined as though the date of such amendment or
termination were the date of his Termination of Employment. No amendment shall
increase Plan benefits, or broaden Plan eligibility, without action by the Board
of Directors of the Company.
(b) Notwithstanding a termination of the Plan, additional Stock
Units shall continue to be credited to each SISP Account as dividend
reinvestments pursuant to Section 4.4 until such time as such Account is
terminated.
(c) In its discretion, the Company may upon Plan
termination or at any time thereafter pay to every SISP Participant (or
Beneficiary) in a single distribution a number of shares of MMC Stock equal to
the number of Stock Units then standing credited to his SISP Account, whereupon
all SISP Accounts shall be terminated.
8.2 ACTION TO BIND COMPANY. Upon the execution of the Plan by the
Company, each Participating Company designates the Company as its agent to
administer the Plan. Any amendment or termination of the Plan by the Company
shall be binding upon each Participating Company.
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ARTICLE 9
MISCELLANEOUS
9.1 DOUBT AS TO RIGHT TO PAYMENT. If any doubt exists as to the
right of any person to any benefits under this Plan or the amount or time of
payment of such benefits (including, without limitation, any case of doubt as to
identity, or any case in which any notice has been received from any other
person claiming any interest in amounts payable hereunder, or any case in which
a claim from other persons may exist by reason of community property or similar
laws), the Plan Administrator may, in his discretion, direct that payment of
such benefits be deferred until such right or amount or time is determined, or
until a court of competent jurisdiction orders that such benefits be paid into
court in accordance with appropriate rules of law, or the Plan Administrator may
direct that payment be made only upon receipt of a bond or similar
indemnification (in such amount and in such form as is satisfactory to him).
9.2 SPENDTHRIFT CLAUSE. No benefit, distribution or payment under
the Plan may be anticipated, assigned (either at law or in equity), alienated or
subject to attachment, garnishment, levy, execution or other legal or equitable
process whether pursuant to a "qualified domestic relations order" as defined in
section 414(p) of the Code or otherwise.
9.3 USAGE. Whenever applicable, the masculine gender, when used in
the Plan, includes the feminine gender, and the singular includes the plural.
9.4 DATA. Any SISP Participant or Beneficiary claiming a SISP
Benefit under the Plan shall furnish to the Plan Administrator such documents,
evidence or information as the Plan Administrator shall consider necessary or
desirable for the purpose of administering the Plan, or to protect the Plan
Administrator. It is a condition of the Plan that each such SISP Participant or
Beneficiary shall furnish promptly true and complete data, evidence or
information and sign such documents as the Plan Administrator may require before
any benefits become payable under the Plan.
9.5 SEPARABILITY. If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any other
provisions of the Plan, and the Plan shall be construed and enforced as if such
provision had not been included therein. Without limiting the application of
the preceding sentence, a provision shall be considered invalid if its operation
would cause the Basic Plan to fail to qualify under section 401(k) of the Code.
9.6 CAPTIONS. The captions in this document and in the table of
contents prefixed hereto are inserted only as a matter of
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convenience and for reference and in no way define, limit, enlarge or describe
the scope or intent of the Plan and shall in no way affect the Plan or the
construction of any provision thereof.
9.7 RIGHT OF DISCHARGE RESERVED. The establishment of the Plan shall
not be construed to confer upon any Employee any legal right to be retained in
the employ of a Participating Company or give any Employee or any other person
any right to benefits, except to the extent expressly provided for hereunder.
All employees shall remain subject to discharge to the same extent as if the
Plan had never been adopted, and may be treated without regard to the effect
such treatment may have upon them under the Plan.
9.8 LIMITATIONS ON LIABILITY. Notwithstanding any other provision of
the Plan, no Participating Company nor any employee or agent of a Participating
Company shall be liable to any SISP Participant, Beneficiary or other person for
any claim, loss, liability or expense incurred in connection with the Plan.
9.9 GOVERNING LAW AND LIMITATIONS ON ACTIONS. The Plan is intended
to constitute in part an arrangement that is an unfunded "excess benefit plan"
and in part an arrangement that is unfunded and maintained primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees, all within the meaning of the Employee Retirement
Income Security Act of 1974, as amended. All rights under this Plan shall be
governed by and construed in accordance with rules of Federal law applicable to
such plans. No action (whether at law, in equity or otherwise) shall be brought
by or on behalf of any Participant or Beneficiary for or with respect to
benefits due under this Plan unless the person bringing such action has timely
exhausted the Plan's claim review procedure. Any action (whether at law, in
equity or otherwise) must be commenced within three years. This three year
period shall be computed from the earlier of (a) the date a final determination
denying such benefit, in whole or in part, is issued under the Plan's claim
review procedure and (b) the date such individual's cause of action first
accrued (as determined under the laws of the State of New York without regard to
principles of choice of laws).
ARTICLE 10
EFFECTIVE DATE
10.1 EFFECTIVE DATE. This Plan shall be effective as of July 1, 1992,
provided that it shall have been approved by a vote of the Company's
shareholders prior to that date. No benefits shall be payable under the Plan in
respect of employees who terminated employment for any reason prior to such date
or to their beneficiaries.
- 13 -
IN WITNESS WHEREOF, MARSH & MCLENNAN COMPANIES, INC. has caused this
instrument to be executed by its duly authorized officers, and its corporate
seal to be hereunto affixed, this 17th day of February, 1995.
MARSH & MCLENNAN COMPANIES, INC.
By:/S/Francis N. Bonsignore
-----------------------------------
Title: Senior Vice President
- 14 -
EXHIBIT 10
PUTNAM INVESTMENTS, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective as of January 1, 1994
TABLE OF CONTENTS
PAGE
----
ARTICLE I Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III Participation . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV Executive Salary Deferral Account. . . . . . . . . . . . . . . . 5
ARTICLE V Excess Contribution Accounts. . . . . . . . . . . . . . . . . . . 6
ARTICLE VI Investment of Executive Salary Deferrals and
Excess Contributions . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VII Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VIII Payment of Benefits. . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IX Administration . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE X Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE XI Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE XII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE XIII Amendment, Termination and Effective Date. . . . . . . . . . . 13
PUTNAM INVESTMENTS, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE
The Putnam Investments, Inc. Executive Deferred Compensation Plan has been
established to provide certain executives with deferred compensation equal to
the amounts of (a) employer contributions in excess of amounts permitted to be
contributed to the Putnam Investments, Inc. Profit Sharing Retirement Plan, (the
"Profit Sharing Plan") because of the limitations of section 415 of the Code,
(b) employer contributions with respect to a Participant's Compensation in
excess of the limitations imposed by sections 401(a)(17) of the Code, and (c)
elective deferrals (as described in section 402(e)(3) of the Code) which exceed
the amount that could otherwise be deferred under the Profit Sharing Plan.
The Plan is intended to be "a plan which is unfunded and is maintained by
an employer primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees" within the meaning
of Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"), and shall be interpreted and administered to the extent
possible in a manner consistent with that intent.
ARTICLE II
DEFINITIONS
Wherever used herein, the following terms have the meanings set forth
below, unless a different meaning is clearly required by the context:
1. "Accounts" means the Executive Salary Deferral Account and the Excess
Contribution Account established for the Participant's benefit under Articles IV
and V.
2. "Appendix A" is the appendix attached to the Plan which lists those
individuals who have been designated as Eligible Executives for purposes of
making Executive Salary Deferrals under Article IV.
3. "Appendix B" is the appendix attached to the Plan which lists those
individuals for whom Excess Contributions will be made for a Plan Year under
Article V.
4. "Beneficiary" means the person or persons designated by the Participant
under the Profit Sharing Plan to receive benefits payable at the Participant's
death.
5. "Board of Directors" means the board of directors of the Company.
6. "Change of Control" means the occurrence of any of the following
events:
(a) any "person" as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than MMC, the Employer, any trustee or other
fiduciary holding securities under an employee benefit plan of
MMC or the Employer or any company owned, directly or indirectly,
by the stockholders of MMC or the Employer in substantially the
same proportions as their ownership of stock of MMC or the
Employer), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of MMC or the Employer representing 50% or more of the
combined voting power of MMC's or the Employer's then outstanding
securities;
(b) the stockholders of MMC or the Employer approve a merger or
consolidation of MMC or the Employer with any other company,
other than (i) a merger or consolidation which would result in
the voting securities of MMC or the Employer, outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) 50% or more of the combined
voting power of voting securities of MMC or the Employer or such
surviving entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of MMC or the Employer (or similar
transaction) in which no "person" (as defined above) acquires 50%
or more of the combined voting power of MMC's or the Employer's
then outstanding securities;
(c) the stockholders of MMC or the Employer approve a plan of
complete liquidation of MMC or the Employer or an agreement for
the sale or disposition by MMC or the Employer of all or
substantially all of MMC's or the Employer's assets (or any
transaction having a similar effect); or
(d) MMC ceases to hold securities of the Company representing 50% or
more of the combined voting power of the Company's outstanding
securities.
- 2 -
7. "Code" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to any section or subsection of the Code includes reference to
any comparable or succeeding provisions of any legislation which amends,
supplements or replaces such section or subsection.
8. "Committee" means the persons appointed by the Board with the written
approval of the Chief Executive Officer of MMC, to review decisions of the Plan
Administrator with respect to denied claims in accordance with the claims
procedure described in Article XI.
9. "Company" means Putnam Investments, Inc., a Delaware corporation.
10. "Compensation" means base salary and the cost of employee benefits
elected by the Eligible Executive in lieu of cash compensation, including
elective deferrals under the Profit Sharing Plan.
11. "Compensation Limit" means the amount distributed in section
401(a)(17) of the Code for any Plan Year.
12. "Contribution Limit" means the applicable limitation on contributions
described in section 415 of the Code for any Plan Year.
13. "Eligible Executive" means each employee of the Employer who is
designated on either Appendix A or Appendix B as eligible to participate in the
Plan.
14. "Employer" means the Company, and any corporation affiliated with the
Company which the Board of Directors permits to adopt the Plan for its Eligible
Executives.
15. "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to any section or subsection of ERISA
includes reference to any comparable or succeeding provisions of any legislation
which amends, supplements or replaces such section or subsection.
16. "Excess Contribution" means an amount credited to a Participant's
Excess Contribution Account by the Employer in accordance with Article V.
17. "Executive Salary Deferral" means the portion of a Participant's
Compensation which is deferred under Article IV and credited to the
Participant's Executive Salary Deferral Account.
18. "MMC" means Marsh & McLennan Companies, Inc., a Delaware corporation.
- 3 -
19. "MMC Stock" means the common stock of MMC.
20. "Participant" means any individual who participates in the Plan in
accordance with Article III.
21. "Plan Administrator" means the individual or individuals currently
serving as Plan Administrator under the Profit Sharing Plan.
22. "Plan" means the Putnam Investments, Inc. Executive Deferred
Compensation Plan as set forth herein and all subsequent amendments hereto.
23. "Plan Year" means the calendar year.
24. "Profit Sharing Plan" means the Putnam Investments, Inc. Profit
Sharing Retirement Plan, as amended from time to time.
25. "Unforeseen Emergency" means an immediate and heavy financial need
resulting from
(a) expenses which are not covered by insurance and which the
Participant, the Beneficiary or the spouse or dependent of such
Participant or Beneficiary has incurred as a result of, or is
required to incur in order to receive, medical care; or
(b) any other unanticipated emergency that is determined by the Plan
Administrator to be caused by an event beyond the control of the
Participant or Beneficiary and that would result in severe
financial hardship to the individual if early withdrawal were not
permitted.
26. "Valuation Date" means each business day.
ARTICLE III
PARTICIPATION
Section 1. The Plan Administrator shall determine prior to each Plan Year
which employees shall be Eligible Executives for purposes of Section IV for such
Plan Year, and shall list such Eligible Executives on Appendix A. At the end of
the Plan Year, the Plan Administrator shall determine which employees will be
Eligible Executives for purposes of Article V only for such Plan Year, and shall
list such Eligible Executives on Appendix B.
Section 2. An Eligible Executive shall become eligible to make Executive
Salary Deferrals under Article IV for the first
- 4 -
Plan Year after the December 31st on which his or her annual rate of
Compensation exceeds the Compensation Limit. To become a participant for
purposes of Article V for a Plan Year, an Eligible Employee must be eligible for
an allocation of the Employer's profit sharing contributions under the Profit
Sharing Plan for such Plan Year and (a) must receive Compensation for the Plan
Year in excess of the Compensation Limit or (b) be entitled to an allocation
amount calculated under Section 6.2(d) (without reference to Section 6.3) of the
Profit Sharing Plan which exceeds the amount that may be contributed to the
Profit Sharing Plan on his or her behalf because of the Contribution Limit.
Section 3. Any Eligible Executive who elects to make Executive Salary
Deferrals or for whom Excess Contributions are made shall become a Participant
in the Plan and shall continue to be a Participant as long as any amount remains
credited to his or her Accounts.
Section 4. By participating in the Plan, each Participant acknowledges the
Plan is not subject to certain provisions of ERISA, including the participation,
vesting, funding, spousal benefits and fiduciary responsibility provisions.
ARTICLE IV
EXECUTIVE SALARY DEFERRAL ACCOUNT
Section 1. A Participant may for any Plan Year elect to defer a designated
whole percentage of any Compensation payable to such Participant for services to
be performed subsequent to the election, and have his or her Employer credit an
equivalent amount to an Executive Salary Deferral Account under the Plan. Such
election shall be made on a form delivered to the Plan Administrator prior to
the beginning of the Plan Year. The Plan Administrator may limit the amount of
Executive Salary Deferrals under the Plan by establishing a percentage limit for
any Plan Year.
Section 2. Any amount to be credited to an Executive Salary Deferral
Account under the Plan shall be deemed to be credited to such Account as of the
same date that the Compensation would have been paid to the Participant but for
the election made under Section 1 of this Article IV (or as soon as
administratively practicable thereafter). The value of the Participant's
Executive Salary Deferral Account shall be determined at any time in accordance
with Article VI.
Section 3. A Participant may change his or her deferral election at any
time, but such new deferral election shall become effective no earlier than the
first day of the Plan Year following the making of such election. Any deferral
election
- 5 -
made under this Article IV shall continue to be effective until revoked or
changed pursuant to this Article.
Section 4. Except as provided herein, a Participant may revoke his or her
deferral election as of the first day of any Plan Year which follows such
revocation by giving written notice to the Plan Administrator before that day
(or any such earlier date as the Plan Administrator may prescribe). If the
Participant incurs an Unforeseen Emergency, the Plan Administrator may permit
the Participant to revoke a deferral election effective immediately.
Section 5. A Participant shall have no right to receive any portion of his
or her Executive Salary Deferral Account until it becomes distributable under
Article VIII.
ARTICLE V
EXCESS CONTRIBUTION ACCOUNTS
Section 1. For any Plan Year in which the Participant's Compensation
exceeds the Compensation Limit, the Employer shall credit his or her Excess
Contribution Account with an amount equal to the amount of the Participant's
Compensation in excess of the Compensation Limit multiplied by the rate of
contributions the Employer makes to the Profit Sharing Plan for that Plan Year.
For any Plan Year in which the amount called for by Section 6.2(d) (without
reference to Section 6.3) of the Profit Sharing Plan together with contributions
to any other qualified plan of the Employer with respect to any Participant
exceeds the Contribution Limit, such excess amount shall be credited to the
Participant's Excess Contribution Account under the Plan.
Section 2. Any amount to be credited to an Excess Contribution Account
shall be deemed to be credited to such Account as of the same date that the
Employer would have contributed such amount to the Profit Sharing Plan except
for the Contribution Limit or the Compensation Limit. The value of the
Participant's Excess Contribution Account shall be determined at any time in
accordance with Article VI.
Section 3. A Participant shall have no right to receive any portion of the
account balance of his or her Excess Contribution Account until it becomes
distributable under Article VIII.
ARTICLE VI
INVESTMENT OF EXECUTIVE SALARY DEFERRALS AND
EXCESS CONTRIBUTIONS
Section 1. ACCOUNTS. The Plan Administrator shall establish two Accounts
for each Participant reflecting Executive
- 6 -
Salary Deferrals (if any) and Excess Contributions made for the Participant's
benefit together with any adjustments hereunder. As of the end of each calendar
quarter or such other interval as the Plan Administrator may from time to time
determine, the Plan Administrator shall provide the Participant with a statement
of his or her Accounts reflecting the income, gains and losses (realized and
unrealized), amounts of deferrals, and distributions of such Accounts since the
prior statement.
Section 2. INVESTMENTS. Each Participant's Accounts shall be credited
with income, gain and loss as if it were invested in shares of one or more
investment companies for which Putnam Investment Management, Inc. serves as
investment advisor or for which Putnam Mutual Funds Corp. is the principal
underwriter, or in MMC Stock. The Plan Administrator may determine from time to
time whether MMC Stock will be an available investment option under the Plan,
and may limit the choice of investment companies in which Accounts may be deemed
to be invested and the percentage of each Account that may be allocated to any
one fund or to MMC Stock. The Plan Administrator may provide Participants and
Beneficiaries the opportunity to determine how their Accounts will be deemed to
be invested from among the available investment options, and may permit changes
in those investment directions at whatever frequency it deems appropriate and
within whatever limitations are applicable to any investment option. If any
Participant or Beneficiary makes an investment selection, the Employer (or in
the event of the establishment of a trust hereunder, the trustee of such trust)
may follow such investment selection but neither shall be legally bound to do
so.
Section 3. PAYMENTS. Each Participant's Accounts shall be reduced by the
amount of any payment made to or on behalf of the Participant under Article VIII
as of the date such payment is made.
ARTICLE VII
VESTING
All Excess Contribution Accounts, Executive Salary Deferral Accounts,
Excess Contributions and Executive Salary Deferrals shall at all times be fully
vested.
ARTICLE VIII
PAYMENT OF BENEFITS
Section 1. RETIREMENT. When a Participant elects to have Executive Salary
Deferrals made on his or her behalf for any Plan Year, the Participant shall
also elect the time at which the Executive Salary Deferrals and any Excess
Contributions for such
- 7 -
Plan Year (including earnings attributable thereto) will be paid to the
Participant. Payment shall be made within 60 days following:
(a) the Participant's retirement on or after age 50 from the Company
or applicable Employer; or
(b) the fifth anniversary of such retirement date,
whichever the Participant elects.
The Participant shall also at such time select the form of payment of his
or her Accounts, under one of the following options:
(i) a single sum cash payment; or
(ii) annual installments over a period of 10 years, the amount of each
installment to equal the balance of his or her Account
immediately prior to the installment divided by the number of
installments remaining to be paid.
The foregoing elections shall be made on such form and in such manner as
approved or prescribed by the Plan Administrator. Each such election may be
changed prior to the beginning of the Plan Year to which it applies, but not
thereafter. If no new election is made hereunder with respect to any Executive
Salary Deferrals, the existing election as to form and time of payment of such
amounts shall remain effective for all amounts deferred thereafter until a new
election is made hereunder with respect to future deferrals. Except as provided
in Sections 2, 3, or 4 below, payment of a Participant's Accounts shall be made
in accordance with the Participant's elections under this Section 1. If a
Participant has elected no Executive Salary Deferrals under the Plan, his or her
Excess Contribution Account shall be paid to him in a lump sum within 60 days
following the date the Participant ceases to be an employee of the Employer.
Section 2. TERMINATION OF EMPLOYMENT BEFORE AGE 50. If a Participant dies
or his or her employment terminates for any reason before attaining age 50, the
Participant's Accounts shall be paid to the Participant (or in the case of
death, to the Beneficiary) in a single sum cash payment within 60 days after
such termination of employment or death.
Section 3. DEATH AFTER ATTAINING AGE 50. If a Participant dies while
employed and after attaining age 50, the value of his or her Accounts shall be
paid within 60 days after the Participant's death to the Participant's
designated Beneficiary, in the form previously elected by the Participant under
one of the following options:
- 8 -
(a) a single sum cash payment; or
(b) annual installments over a period of 10 years, the amount of each
installment to equal the balance of his or her Accounts
immediately prior to the installment divided by the number of
installments remaining to be paid.
If a Participant dies after attaining age 50 and after his or her retirement
date, but prior to the complete distribution of his or her Accounts, the balance
of the Accounts shall be paid to the Participant's designated Beneficiary, in
the same manner as it would have been paid to the Participant if the Participant
had lived.
Section 4. ACCELERATION OF PAYMENTS DUE TO UNFORESEEN EMERGENCY. If a
retired Participant or a Beneficiary incurs an Unforeseen Emergency, the Plan
Administrator may, in its sole discretion, accelerate installment payments or
any delayed distribution date to satisfy the individual's emergency need,
including any amounts necessary to pay federal, state or local income taxes
reasonably anticipated to result from the distribution. A Participant or
Beneficiary requesting an emergency payment shall apply for the payment in
writing in a form approved or prescribed by the Plan Administrator and shall
provide such additional information as the Plan Administrator may require.
Section 5. All benefits payable under the Plan shall be subject to any
applicable federal, state or local income tax or employment tax withholding
requirements and any payment made hereunder shall be reduced to reflect such
withheld taxes.
ARTICLE IX
ADMINISTRATION
Section 1. The Plan Administrator shall have the power
(a) to make and enforce rules and regulations and to prescribe the use of
forms necessary or advisable for efficient administration;
(b) to interpret the Plan, to resolve ambiguities, inconsistencies and
omissions and to decide questions concerning the eligibility of any
person to become a Participant, such interpretations, resolutions and
decisions to be final and conclusive on all persons;
(c) to direct payment of amounts due Participants, Beneficiaries and other
persons under the Plan; and
- 9 -
(d) to delegate authority to agents and other persons to act on its behalf
in carrying out the provisions and administration of the Plan.
Section 2. The Plan Administrator may employ such accountants, counsel,
and other persons as he deems necessary or desirable in connection with the
administration of the Plan and any trust created hereunder. In administrating
the Plan, the Plan Administrator may use the facilities of any corporation or
unincorporated business affiliated with the Company. The Plan Administrator may
delegate any of his responsibilities to such persons as the Plan Administrator
deems appropriate. The Plan Administrator may adopt such rules and procedures
with respect to the administration of the Plan in such manner and to such extent
as he deems necessary and expedient to carry out the Plan. The rules and
decisions of the Plan Administrator made in good faith within the scope of his
authority shall be final and binding upon all parties.
Section 3. The Plan Administrator shall prepare or cause to be prepared
and distributed to each Participant and Beneficiary periodic reports of the
value of the individual's Account under the Plan.
ARTICLE X
FUNDING
Section 1. The Plan constitutes a mere promise by the Employer to make
benefit payments to Participants and Beneficiaries in the future in accordance
with the terms hereof, and such Participants and Beneficiaries shall have only
the status of general unsecured creditors of the Employer. Any amounts payable
under the Plan shall be paid out of the general assets of the Employer and the
Participants shall be deemed to be general unsecured creditors of the Employer.
Section 2. Nothing in the Plan will be construed to create a trust or to
obligate the Employer or any other person to segregate a fund, purchase an
insurance contract, or in any other way currently to fund the future payment of
any benefits hereunder, nor will anything herein be construed to give any
employee or any other person rights to any specific assets of the Employer or of
any other person.
Section 3. Except as provided in Section 4, the Employer may, in its sole
discretion, create a grantor trust to pay its obligations hereunder, but shall
have no obligation to do so. If the Employer decides to establish a separate
account or trust fund for the payment of benefits hereunder, such account or
trust shall be applicable only with respect to the Participants of such Employer
and such account or trust shall be treated for all
- 10 -
purposes as the assets of such Employer. If such a trust is established by the
Employer, the terms of any such trust will conform to the terms of the model
trust described in Revenue Procedure 92-64. In all events, it is the intent of
the Employer that the Plan be treated as unfunded for tax purposes and for
purposes of Title I of ERISA.
Section 4. In the case of a Change in Control prior to the establishment
of a trust under Section 3 above, the Employer shall pay to each Participant and
Beneficiary the balance of his or her Account in cash in a lump sum.
ARTICLE XI
CLAIMS PROCEDURE
Section 1. A Participant or Beneficiary who asserts a right to any benefit
under the Plan that he or she has not received must file a written claim with
the Plan Administrator. If the Plan Administrator wholly or partially denies
the claim, he shall within 90 days of his receipt of the claim provide a written
notice of denial to the claimant, setting forth:
(a) specific reasons for the denial of the claim;
(b) specific reference to pertinent provisions of the Plan on which
the denial is based;
(c) a description of any additional material or information necessary
to perfect the claim, and an explanation of why such material or
information is necessary; and
(d) an explanation of the Plan's claims review procedure.
Section 2. A claimant whose application for benefits is denied by the Plan
Administrator, or who has received neither an affirmative reply nor a notice of
denial within 90 days after filing his or her claim with the Plan Administrator,
may request a full and fair review of the decision denying the claim. The
request must be made in writing to the Committee within 60 days after receipt of
the notice of denial or, if no notice of denial is issued, within 60 days after
the expiration of 90 days from the filing of the claim. In connection with the
review, the claimant may:
(a) request a hearing by the Committee upon written application to
the Committee,
(b) review pertinent documents in the possession of the Committee, or
- 11 -
(c) submit issues and comments in writing to the Committee for
review.
Section 3. A decision on review by the Committee shall be made promptly,
and not later than 60 days after the receipt by the Committee of a request for
review, unless special circumstances (such as the need to hold a hearing)
require an extension of time for processing, in which case the claimant will be
so notified of the extension, and a decision shall be rendered as soon as
possible, and not later than 120 days after the receipt of the request for
review. The decision shall be in writing and shall include specific reasons for
the decision, written in a manner calculated to be understood by the claimant,
and specific reference to the pertinent provisions of the Plan on which the
decision is based. The Committee shall have discretionary authority to
interpret and apply the provisions of the Plan with respect to any benefit
claim, and the decision of the Committee shall be final and binding upon all
parties.
ARTICLE XII
MISCELLANEOUS
Section 1. The establishment of the Plan shall not be construed to confer
upon any Participant any legal right to be continued as an Employee and the
Company and the applicable Employer expressly reserve the right to discharge
from employment any Participant or to increase or decrease his or her
compensation whenever the interest of the Employer, in its sole judgment, may so
require.
Section 2. Except as otherwise provided by applicable law, amounts payable
under the Plan may not be assigned or hypothecated and no such amounts shall be
subject to legal process or attachment for the payment of any claim of any
person entitled to receive the same.
Section 3. Except as otherwise provided by applicable law, if any
Participant or Beneficiary becomes a debtor under the bankruptcy code or
attempts to assign, encumber or otherwise transfer any amounts payable under the
Plan, or if any attempt is made to subject any amounts payable under the Plan to
the debts, liabilities or obligations of the Participant or his or her
Beneficiary entitled to such amounts, then the Plan Administrator may, in its
discretion, terminate the obligation of the Employer to pay such amounts and
cause such amounts or any part thereof to be held or applied for the benefit of
such Participant or Beneficiary, in such manner and in such proportion as the
Plan Administrator shall determine.
Section 4. To the extent not preempted by any laws of the United States
now or hereafter enacted, including the Employee
- 12 -
Retirement Income Security Act of 1974, as may from time to time be amended, the
Plan shall be construed and all provisions hereof shall be enforced and
administered according to the laws of the Commonwealth of Massachusetts.
Section 5. Any provisions of the Plan deemed to be in violation of any law
or regulation shall be void and of no effect, and shall not affect the continued
validity of any other provision hereof which shall remain in full force and
effect.
ARTICLE XIII
AMENDMENT, TERMINATION AND EFFECTIVE DATE
Section 1. The Company reserves the right at any time and from time to
time to modify, amend or terminate the Plan or any of its provisions as to all
Employers, by an officer executing an instrument in writing by authorization of
the Board of Directors, with the written approval of the Chief Executive Officer
of MMC. Notwithstanding the preceding sentence, in no event shall the
modification, amendment or termination of the Plan reduce the value of any
Participant's account balance in his or her Accounts.
Section 2. This document, which sets forth the terms and conditions of the
Plan, shall be effective as of January 1, 1994.
IN WITNESS WHEREOF, Putnam Investments, Inc. has caused the Putnam
Investments, Inc. Executive Deferred Compensation Plan to be executed by its
duly authorized officer the 15th day of December, 1994.
PUTNAM INVESTMENTS, INC.
By:/s/Lawrence J. Lasser
--------------------------------
Title: President
- 13 -
APPENDIX A
- 14 -
APPENDIX B
- 15 -
EXHIBIT 10
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
by and between
MARSH & McLENNAN RISK CAPITAL CORP.
and
ROBERT CLEMENTS
Effective as of December 31, 1993
TABLE OF CONTENTS
PAGE
----
Section 1. Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Employment Period. . . . . . . . . . . . . . . . . . . . . . . 1
Section 3. Position and Duties. . . . . . . . . . . . . . . . . . . . . . 1
Section 4. Place of Performance . . . . . . . . . . . . . . . . . . . . . 2
Section 5. Compensation and Related Matters . . . . . . . . . . . . . . . 2
(a) Base Salary and Stipend . . . . . . . . . . . . . . . . 2
(b) Bonus . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Performance Payment . . . . . . . . . . . . . . . . . . 3
(d) Expenses. . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Vacation. . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Services Furnished. . . . . . . . . . . . . . . . . . . 9
(g) Other Benefits. . . . . . . . . . . . . . . . . . . . . 10
(h) Consulting Arrangement. . . . . . . . . . . . . . . . . 11
(i) Physician Certification Notice. . . . . . . . . . . . . 12
(j) Investment Advisor Relationship . . . . . . . . . . 13
(k) Other Company Activities. . . . . . . . . . . . . . . . 17
Section 6. Personal Investments . . . . . . . . . . . . . . . . . . . . . 17
Section 7. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Death . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Disability. . . . . . . . . . . . . . . . . . . . . . . 18
(c) Cause . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Good Reason . . . . . . . . . . . . . . . . . . . . . . 19
(e) Other Terminations. . . . . . . . . . . . . . . . . . . 22
(f) Notice of Termination . . . . . . . . . . . . . . . . . 22
i
PAGE
----
Section 8. Compensation Upon Termination or
During Disability . . . . . . . . . . . . . . . . . . . . . . 23
(a) Disability Period . . . . . . . . . . . . . . . . . . . 23
(b) Death or Disability . . . . . . . . . . . . . . . . . . 23
(c) Cause or By Executive (Other
than for Good Reason or
Pursuant to a Physician
Certification Notice) . . . . . . . . . . . . . . . . . 24
(d) Termination By Company (without
Cause or Disability) or By
Executive for Good Reason . . . . . . . . . . . . . . . 25
(e) Failure to Extend Consulting
Period. . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9. Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10. Confidential Information, Removal
of Documents, Non-Competition . . . . . . . . . . . . . . . . 27
(a) Confidential Information. . . . . . . . . . . . . . . . 27
(b) Removal of Documents. . . . . . . . . . . . . . . . . . 27
(c) Non-Competition . . . . . . . . . . . . . . . . . . . . 28
(d) Injunctive Relief . . . . . . . . . . . . . . . . . . . 29
(e) Continuing Operation. . . . . . . . . . . . . . . . . . 30
Section 11. Successors; Binding Agreement . . . . . . . . . . . . . . . . 30
(a) Company's Successors. . . . . . . . . . . . . . . . . . 30
(b) Executive's Successors. . . . . . . . . . . . . . . . . 30
Section 12. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 14. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 15. Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 16. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 32
ii
PAGE
----
Section 17. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 32
Exhibit A -- Definition of Certain Terms Used in Section 5(c) and in this
Exhibit A
Exhibit B -- Terms of Trust Referred to in Section 5(c)(4)
Schedules -- Examples of Executive's Performance Payment under Various
Assumptions
iii
INDEX OF DEFINED TERMS
Term Where Defined
- ---- -------------
Advisor's Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
Agreed Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(c)
Base Performance Payment . . . . . . . . . . . . . . . . . . . . . Section 5(c)
Base Salary. . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(a)
Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3
Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7(c)
Change in Control of the Company . . . . . . . . . . . . . . . . . Section 7(d)
Change in Control of the Parent. . . . . . . . . . . . . . . . . . Section 7(d)
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Company's Capital Raising Fee. . . . . . . . . . . . . . . . . . . Exhibit A
Consulting Fee . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(j)
Consulting Period. . . . . . . . . . . . . . . . . . . . . . . . . Section 5(j)
Date of Termination. . . . . . . . . . . . . . . . . . . . . . . . Section 7
Designated Entities. . . . . . . . . . . . . . . . . . . . . . . . Section 10(c)
Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7(b)
Disability Period. . . . . . . . . . . . . . . . . . . . . . . . . Section 8(a)
Early Termination Election . . . . . . . . . . . . . . . . . . . . Section 7(e)
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2
Employment Period. . . . . . . . . . . . . . . . . . . . . . . . . Section 2
Enhanced Performance Payment . . . . . . . . . . . . . . . . . . . Section 5(c)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7(d)
Executive. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Good Reason. . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7(d)
Investment Advisor . . . . . . . . . . . . . . . . . . . . . . . . Section 5(j)
Investment Advisor Fee . . . . . . . . . . . . . . . . . . . . . . Section 5(j)
Investment Advisory Services . . . . . . . . . . . . . . . . . . . Section 5(j)
Investment Fees. . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
Litigation Liabilities . . . . . . . . . . . . . . . . . . . . . . Exhibit A
Marsh & McLennan Entities. . . . . . . . . . . . . . . . . . . . . Section 5(c)
Marsh & McLennan Trident Compensation. . . . . . . . . . . . . . . Exhibit A
Non-Capital Distributions to Partners. . . . . . . . . . . . . . . Exhibit A
Notice of Termination. . . . . . . . . . . . . . . . . . . . . . . Section 7(f)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 1
Performance Payment. . . . . . . . . . . . . . . . . . . . . . . . Section 5(c)
Physician Certification Notice . . . . . . . . . . . . . . . . . . Section 5(i)
SERP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(g)
Stipend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(a)
Trident. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(c)
Trident Annual Return. . . . . . . . . . . . . . . . . . . . . . . Exhibit A
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(c)
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5(c)
20% Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . Exhibit A
iv
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT, effective as of December 31, 1993, by and between Robert
Clements (the "Executive") and Marsh & McLennan Risk Capital Corp., a Delaware
corporation (the "Company").
WHEREAS, the Executive and Marsh & McLennan Risk Capital Corp., a New
York corporation ("MMRCC"), entered into an Employment Agreement, effective as
of December 31, 1993 (the "Prior Agreement"), setting forth the terms and
conditions of the employment relationship of the Executive with MMRCC; and
WHEREAS, MMRCC has been merged into the Company, which is an indirect
wholly-owned subsidiary of the Parent (as hereinafter defined), and the Company
has succeeded to the rights and obligations of MMRCC under the Prior Agreement;
and
WHEREAS, the parties wish to amend and restate the Prior Agreement in
its entirety;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree, intending to be legally
bound hereby, as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive,
and the Executive hereby accepts such employment, on the terms and conditions
hereinafter set forth. The Executive hereby resigns from his positions as
President and a member of the Executive Committee of the Board of Directors of
Marsh & McLennan Companies, Inc. (the "Parent") effective as of December 31,
1993.
2. EMPLOYMENT PERIOD. The period of employment of the Executive by
the Company hereunder (the "Employment Period") shall commence on January 1,
1994 (the "Effective Date") and shall end on September 30, 1997, unless sooner
terminated by a termination of Executive's employment as set forth herein.
3. POSITION AND DUTIES. During the Employment Period, the Executive
shall serve as Chief Executive Officer and Chairman of the Company. Subject to
the supervisory powers of the Board of Directors of the Company (the "Board")
(which is expected to have regular quarterly meetings), the Executive shall have
those powers and duties consistent with his position as Chief Executive Officer
as may be prescribed by the Board, and the Executive as Chief Executive Officer
shall cause the
Company to comply with all general policies and procedures as shall be in effect
from time to time applicable to the Parent's operating subsidiaries and that
have been communicated to the Executive in writing, including the approval by
the Parent of annual budgets and business plans including any material changes
thereto. During the Employment Period, the Executive shall also provide, from
time to time, consulting services to the Parent and its subsidiaries as
requested by the Chief Executive Officer of the Parent with respect to their
businesses, including services relating to the performance and activities of the
Parent's insurance investments, assessing events in the insurance industry and
their implications for the Parent's businesses, and such other projects as the
Executive may be assigned by the Chief Executive Officer of the Parent. It is
expected that the Executive and the Chief Executive Officer of the Parent will
meet at least quarterly or as requested by the Chief Executive Officer of the
Parent. The Executive agrees to devote substantially all his full working time,
attention and energies during normal business hours to the performance of his
duties for the Company and such consulting services, and shall comply with all
general policies of the Parent and the Company relating to conduct by officers
and employees that have been communicated to the Executive in writing. Anything
herein to the contrary notwithstanding, subject to Section 10(c) hereof, nothing
shall preclude the Executive from (i) serving on the boards of directors of a
reasonable number of other corporations (subject to prior approval by the Chief
Executive Officer of the Parent) or the boards of a reasonable number of trade
associations and/or charitable organizations, (ii) engaging in charitable
activities and community affairs, and (iii) managing his personal investments
and affairs, provided that such activities do not interfere with the proper
performance of his duties and responsibilities as the Company's Chairman and
Chief Executive Officer.
4. PLACE OF PERFORMANCE. The principal place of employment of the
Executive shall be at the Company's principal executive offices in New York
State or such other location as may be agreed to by the Board and the Executive.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY AND STIPEND. As compensation for the
performance by the Executive of his obligations hereunder, during the Employment
Period the Company shall pay the Executive a base salary at the rate of Eight
Hundred Thousand Dollars ($800,000) per year
2
("Base Salary"), payable pursuant to the Company's normal payroll practices.
The Executive shall also receive a stipend at the rate of Four Hundred Fifty
Thousand Dollars ($450,000) per year, payable semi-monthly and subject to
regular payroll withholding, in connection with the consulting services he
provides pursuant to Section 3 hereof during the Employment Period (the
"Stipend").
(b) BONUS. Subject to the provisions of Section 8 hereof, the
Executive shall receive an annual cash bonus during the Employment Period,
payable on or before March 1 following each such year, with a minimum bonus of
Eight Hundred Thousand Dollars ($800,000) to be paid with respect to each of
1994, 1995 and 1996, and Six Hundred Thousand Dollars ($600,000) to be paid with
respect to 1997. The Compensation Committee of the Board of Directors of the
Parent shall, in its sole discretion, after considering the recommendation of
the Chief Executive Officer of the Parent, who shall take into account pertinent
aspects of the Executive's performance, determine the amount of such bonus. In
arriving at such recommendation, the Chief Executive Officer of the Parent shall
consider in particular the performance of the Company against business plans and
budgets for the year, absolute and relative profit performance, the contribution
to the Company of investments and initiatives undertaken by the Executive from
January 1, 1994 forward, and the Executive's contributions to the business of
other Marsh & McLennan Entities (as defined in Section 5(c)(2) hereof).
(c) PERFORMANCE PAYMENT.
(1) As used in this Section 5(c), the terms Advisor's Fees,
Company's Capital Raising Fee, Litigation Liabilities, Marsh & McLennan Trident
Compensation and Trident Annual Return shall have the respective meanings set
forth in Exhibit A annexed hereto, which refers to the offering memorandum dated
July 1993 relating to the private placement of interests in The Trident
Partnership, L.P., a limited partnership registered under the laws of the Cayman
Islands ("Trident").
(2) Subject to the provisions of Sections 5(i) and 8 hereof and
clause (5) below, if Trident has accepted subscriptions from limited partners
while the Executive is an employee of the Company pursuant hereto,
3
the Executive will be eligible to receive a cash payment (the "Performance
Payment") within forty-five (45) days following the receipt by the Company of
the final liquidating distribution from Trident, and in accordance with the
provisions of clauses (3) and (6) below, may receive advance payments of the
Performance Payment. As promptly as practicable following receipt of such final
liquidating distribution and within 45 days of such receipt, the Company shall
furnish the Executive with a statement setting forth in reasonable detail the
calculation of the Performance Payment. The Performance Payment will be based
upon the Trident Annual Return and certain payments received by the Parent and
any corporation or partnership in which the Parent directly or indirectly
maintains a majority equity interest (the "Marsh & McLennan Entities") from
Trident as described below. In the event the Trident Annual Return is at least
15%, the Executive will be paid a Performance Payment (the "Base Performance
Payment") equal to not less than 5% nor more than 25% of the Company's Capital
Raising Fee, such percentage to depend upon the percentage of the Trident Annual
Return, as follows:
Capital Raising Fee
Trident Annual Return Percentage
- --------------------- -------------------
At least Up to but not including
- -------- -----------------------
15% 16% 5%
16% 17% 10%
17% 18% 15%
18% 19% 20%
19% -- 25%
The Executive will also receive an additional amount as a Performance Payment
(the "Enhanced Performance Payment"), based upon percentages of portions of the
Marsh & McLennan Trident Compensation attributable to increments of the Trident
Annual Return. Such additional payment shall be equal to the sum of: (A) 5% of
the Marsh & McLennan Trident Compensation; (B) 2.5% of that portion, if any, of
the Marsh & McLennan Trident Compensation attributable to the Trident Annual
Return being more than 25%; (C) 2.5% of that portion, if any, of the Marsh &
McLennan Trident Compensation attributable to the Trident Annual Return being
more than 30%; (D) 2.5% of that portion, if any, of the Marsh & McLennan Trident
Compensation attributable to the Trident Annual Return being more than 40%;
4
and (E) 2.5% of that portion, if any, of the Marsh & McLennan Trident
Compensation attributable to the Trident Annual Return being more than 50%. For
purposes of this Section 5(c), all amounts due under this clause (2) shall
reflect any applicable reductions or exclusions under clause (5) below or
otherwise under this Section 5(c). (Schedules annexed hereto set forth examples
of the computation of the Executive's Performance Payment under various
assumptions, such computation being illustrative only and not intended to be
binding upon the parties hereto.)
(3) Subject to the provisions of clause (5) below, the Company
shall, within 10 days after receipt of any payment constituting the Company's
Capital Raising Fee, make an advance payment to the Executive of the Base
Performance Payment equal to 25% of the amount received by the Company. Should
it be determined, at the time payment of the Performance Payment would be due
pursuant to clause (2) above, that, whether due to computation of the Trident
Annual Return, the existence of Litigation Liabilities or otherwise, the
Executive has received, by way of advance payments, an amount in excess of the
Base Performance Payment to which he is entitled pursuant to clause (2) above,
the Executive shall, within 10 days of receiving a demand of payment from the
Company (which demand shall include a statement setting forth the basis of such
demand in reasonable detail), pay the Company the amount of such excess,
together with interest thereon at a rate per annum equal to the publicly
announced prime commercial lending rate of Morgan Guaranty Trust Company of New
York, or successor thereto, in effect from time to time (the "Agreed Rate"), on
a compound basis, from the date or dates such excess was paid to the Executive
until the date of payment to the Company. If the Executive fails to make such
payment, the Company, in addition to other available remedies, may offset such
amount due the Company against any other amounts due to the Executive pursuant
to the terms hereof.
(4) As soon as practicable following the execution of this
Agreement, the Company shall establish a grantor trust (the "Trust"), of which
Morgan Guaranty Trust Company of New York or, subject to the consent of the
Executive, another bank of nationally recognized standing with consolidated
shareholders' equity of not less than $500 million shall be trustee (the
"Trustee") and the Executive shall be the beneficiary. The Company
5
shall be responsible for the fees of the Trustee and all other expenses related
to the establishment and administration of the Trust and all tax liability in
connection therewith other than taxes payable by the Executive on amounts
received by him from the Trust. The trust agreement shall include, or the Trust
shall otherwise be subject to, the terms set forth in Exhibit B annexed hereto,
the relevant terms of this clause (4) and such other terms as the Company and
the Executive shall, reasonably and in good faith, agree to. The corpus of the
Trust shall be funded by the Company contributing $100 upon the Trust's
establishment and thereafter, during its existence, contributing, within 10 days
of receipt by any Marsh & McLennan Entity of a payment constituting Marsh &
McLennan Trident Compensation (subject to the provisions of clauses (5) and (6)
below), 5% of such payment, and the Company shall promptly notify the Executive
of the amount of such payment and of such contribution.
In addition:
(A) Should the Company determine, prior to the time payment of the Enhanced
Performance Payment would be due pursuant to clause (2) above, that the
Marsh & McLennan Trident Compensation is of an amount less than
previously determined, the Company shall give notice thereof to the
Executive and the Trustee (which notice shall include a statement
setting forth the basis of the determination in reasonable detail) and,
unless the Executive, within 30 days of receipt of such notice, notifies
the Trustee and the Company in writing of his disagreement with the
Company's determination, the Trustee shall pay over to the Company from
the corpus of the Trust an amount equal to 5% of such deficiency in the
Marsh & McLennan Trident Compensation; if the Executive does so notify
the Trustee and the Company of his disagreement, and the parties
thereafter are unable to agree, the disagreement shall be submitted to
arbitration pursuant to the provisions of Section 14 hereof.
(B) If it shall be determined, at the time payment of the Performance
Payment becomes due pursuant to clause (2) above, that the Trust assets
are less
6
than the amount of the Enhanced Performance Payment due the Executive
(after subtracting from such amounts due any payments made pursuant to
clause (6) below), the Company shall also pay to the Executive the
additional income that the Executive would have been paid from the Trust
(based on the income actually paid from the Trust) had the Company
(after giving effect to any payments made pursuant to clause (6) below)
contributed to the corpus of the Trust, on the 10th day following the
time the Company received each payment of Marsh & McLennan Trident
Compensation, the actual portion of the Marsh & McLennan Trident
Compensation ultimately determined to be due to the Executive, together
with interest thereon at the Agreed Rate, on a compound basis, from the
date or dates such additional income would have been payable to the
Executive until the date of payment by the Company.
(C) If it shall be determined, at the time payment of the Performance
Payment would be due pursuant to clause (2) above, that, due to
computation of the Trident Annual Return, a repayment by "clawback" or
otherwise to Trident of all or a portion of the Marsh & McLennan Trident
Compensation, the existence of Litigation Liabilities or otherwise, a
greater amount has been contributed to the Trust by the Company than
would have been the case had the payments purporting to be Marsh &
McLennan Trident Compensation not been characterized as Marsh & McLennan
Trident Compensation, the Executive shall, within 10 days of receiving a
demand of payment from the Company, pay to the Company an amount equal
to the income received by him from the Trust earned upon such excess
amount, together with interest on such income at the Agreed Rate, on a
compound basis, from the date or dates of such payments of income to the
Executive until the date of payment to the Company; PROVIDED, HOWEVER,
that if such subsequent determination results from, or is caused by
facts or circumstances that also result in, the Marsh & McLennan
Entities making a repayment to Trident that does not include the payment
of interest, the Executive shall not be required to pay to the Company
any amount (including interest thereon)
7
which so relates to such repayment to Trident. Notwithstanding the
foregoing, if as a result of the resolution of Litigation Liabilities or
otherwise it is subsequently determined that some or all of the payments
characterized as not being Marsh & McLennan Trident Compensation (as
described above) were in fact Marsh & McLennan Trident Compensation,
then the Company shall promptly repay to the Executive the amount of
income and interest paid by him to the Company pursuant to this
subparagraph (C) that would not have been paid if such subsequent
determination had been made at the time of the payment of such income
and interest by the Executive, together with interest on such amount at
the Agreed Rate, on a compound basis, from the date of payment by the
Executive until the date of repayment by the Company.
Upon the payment to the Executive of all payments due him pursuant to the
provisions of clause (2) above and this clause (4), the Trust shall terminate
and all assets of the Trust shall be paid over to the Company. Without limiting
the foregoing, at the time payment of the Performance Payment becomes due
pursuant to clause (2) above, the Executive shall be entitled to receive from
the corpus of the Trust the lesser of (i) the amount then due pursuant to clause
(2) above (reduced by (A) any amounts previously paid to the Executive pursuant
to clause (6) below and (B) the application of the provisions of clause (5)
below if relevant) or (ii) the amount in the Trust, PROVIDED, HOWEVER, that the
Company may choose to make payments from its own funds rather than from the
Trust, in which case all assets in the Trust shall be distributed to the Company
promptly following such payment. Any such amount paid from the Trust (but not
income paid from the Trust) shall reduce the amount otherwise then payable by
the Company.
(5) If, at the time of the final liquidating distribution from
Trident or at the time that an advance payment is due pursuant to the provisions
of clause (3) above or at the time that a payment of 5% of the Marsh & McLennan
Trident Compensation is made to the Trust as provided in clause (4) above, there
are any pending or threatened claims, penalties, damages or liabilities
involving the Marsh & McLennan Entities that
8
are potentially Litigation Liabilities, an amount equal to the maximum potential
exposure of the Company relating thereto that may reasonably be anticipated in
the opinion of the Company's outside counsel, shall be excluded from the
Company's Capital Raising Fee or from the Marsh & McLennan Trident Compensation,
as the case may be. Upon the resolution of such claims, penalties, damages or
liabilities, the Company's Capital Raising Fee or the Marsh & McLennan Trident
Compensation, as applicable, shall be recomputed and any further payment thereby
due the Executive pursuant to clauses (2) or (3) above or payable to the Trust
pursuant to clause (4) above as a result of such recomputation shall be promptly
paid, PROVIDED, HOWEVER, that in the event such recomputation results in a
further exclusion from the Company's Capital Raising Fee or the Marsh & McLennan
Trident Compensation, the Executive shall promptly pay to the Company any amount
thereby due to the Company.
(6) Prior to the receipt by the Company of the final liquidating
distribution from Trident, the Company and the Executive may agree, each in his
or its complete discretion, to the payment to the Executive of a portion of the
Enhanced Performance Payment. In the event it shall ultimately be determined
that, for whatever reason, the Executive is not entitled to at least the amount
of the Enhanced Performance Payment he has received, then, upon receipt of
written notice from the Company setting forth in reasonable detail the basis of
its claim and the appropriate calculation, the Executive shall promptly pay to
the Company an amount equal to the excess payment made to the Executive.
(d) EXPENSES. During the Employment Period, the Company shall
reimburse the Executive for all reasonable business expenses upon the
presentation of itemized statements of such expenses, subject to the Company's
policies and procedures then in force and upon approval of the Chief Executive
Officer of the Parent.
(e) VACATION. The Executive shall be entitled to vacation
during the Employment Period in accordance with the policies of the Parent
applicable generally to senior executives.
(f) SERVICES FURNISHED. During the Employment Period, the
Company shall furnish the Executive,
9
at the Company's principal executive offices, with appropriate office space and
such other facilities and services as shall be suitable to the Executive's
position and adequate for the performance of his duties as set forth in Section
3 hereof.
(g) OTHER BENEFITS. During the Employment Period, the Executive
shall be eligible to participate in all tax-qualified defined contribution and
defined benefit retirement plans, and supplemental plans relating thereto, and
welfare plans and programs (including group life insurance, medical and dental
insurance, and accident and disability insurance) in which employees of the
Parent and its United States subsidiaries are generally eligible to participate;
PROVIDED, HOWEVER, that, without limitation, such plans and programs shall not
include annual bonuses (other than as contemplated in this Agreement and other
than a bonus with respect to 1993) or stock option, restricted stock or other
Parent stock-related awards or grants after December 31, 1993, and the
Executive's covered compensation for the purposes of any such plans during the
Employment Period shall include only the Base Salary under Section 5(a) hereof
and not the Stipend or any other amounts payable under this Agreement.
Notwithstanding anything to the contrary contained in the Marsh & McLennan
Supplemental Employee Retirement Plan (the "SERP"), in the event of the
Executive's death while in the employ of the Company under this Agreement, the
Executive's spouse shall be entitled to a survivor benefit hereunder equal to
the excess of (i) the benefit to which she would have been entitled under the
SERP assuming the Executive had retired on the date immediately preceding the
date of death and had been receiving retirement payments pursuant to the SERP in
the form of a 100% joint and survivor annuity at the time of his death, over
(ii) the benefit to which she is entitled under the SERP. The stock option,
restricted stock and other Parent stock-related awards and grants held by the
Executive on the date of this Agreement shall continue to be governed by the
terms of their respective plans and award agreements. The Company will provide
the Executive during the Employment Period with an automobile similar to that
currently provided by the Parent. It is also expected that the Company will
maintain a car and driver for use in connection with the Company's business,
including business related local travel by the Executive. The Company will
continue to reimburse the Executive for
10
dues and expenses for The Links Club, Stamford Yacht Club and Toronto Lawn and
Tennis Club on the same basis as he is presently reimbursed by the Parent.
Additional or substitute clubs will be subject to approval by the Chief
Executive Officer of the Parent in the normal manner.
(h) CONSULTING ARRANGEMENT. If the Employment Period has not
been terminated prior to September 30, 1997, the Company shall retain the
Executive, and the Executive agrees to serve, as a consultant with respect to
the Company's business to render advice and services in connection with the
Company's business activities and to work on such special projects utilizing the
Executive's professional skills as may be assigned to the Executive, subject to
the Executive's reasonable convenience, with such services not to require more
than 25% of the Executive's time during normal working hours, and with such
other responsibilities as the Company and the Executive may hereafter agree.
The period during which the Executive shall be retained by the Company as a
consultant pursuant to this Section 5(h) (the "Consulting Period") shall
commence on October 1, 1997 and end on September 30, 1999. By mutual agreement
between the Company and the Executive, the Consulting Period may be extended
annually for successive one-year terms as of each October 1 thereafter. In all
events, the Consulting Period (including if so extended) may be sooner
terminated by a termination of the Executive's consultancy as set forth herein.
During the Consulting Period, the Executive shall receive a consulting fee at
the rate of $300,000 per year (the "Consulting Fee"), payable semi-monthly, and
the Company will reimburse the Executive for any reasonable travel and
entertainment expenses incurred in connection with such consulting services.
While serving as a consultant, the Executive shall be an independent contractor,
not an employee, and all benefits and emoluments he may have received as an
employee shall cease, and the Company will not exercise any control or direction
of the Executive's performance of such consulting services but will require that
the result to be accomplished has been acceptably achieved. In addition,
notwithstanding anything to the contrary in this Section 5(h) or in Section 5(i)
hereof, the Executive may at any time prior to the commencement of the
Consulting Period elect to have the advice and services described in this
Section 5(h) provided to the Company by a corporation all of the stock of which
is owned by the Executive, members
11
of his immediate family or trusts for the benefit of the Executive and members
of his immediate family, provided that such corporation shall make the Executive
available to render such advice and services. If the Executive so elects, such
corporation shall be retained as the consultant under this Section 5(h) and the
Consulting Fee and expense reimbursements shall be paid to such corporation. In
such event, Sections 7 and 8 hereof shall be deemed modified to provide for the
termination of such corporation's consultancy upon the occurrence of the various
events specified in such sections with respect to the Executive, and both the
Executive and such corporation shall be subject to all of the obligations of the
Executive hereunder as pertain to his consultancy hereunder, including but not
limited to Section 10 hereof.
(i) PHYSICIAN CERTIFICATION NOTICE. Notwithstanding anything to the
contrary in Section 5(h) hereof, if subsequent to December 31, 1995 and prior to
September 30, 1997, a physician mutually agreed to by the Executive and the
Company certifies that the Executive's continuing to serve as Chief Executive
Officer and Chairman of the Company carries a significant risk of having a
material adverse impact on the Executive's health, the Executive may, upon 30
days prior written notice to the Company (a "Physician Certification Notice"),
terminate his employment hereunder and commence his service as a consultant as
provided in Section 5(h) hereof with such consultancy to continue until
September 30, 1999, unless sooner terminated by a termination of the Executive's
consultancy as set forth herein. In the event that the Executive's consultancy
commences prior to October 1, 1997 as provided in the immediately preceding
sentence, the Executive shall receive a bonus under Section 5(b) hereof for the
year in which the Date of Termination (as defined in Section 7(e) hereof) occurs
on the basis of $1,000,000 (or $750,000 in the event the Date of Termination
occurs during the nine-month period ending on September 30, 1997) prorated based
upon the number of days during such year or period the Executive was employed by
the Company.
If the Executive provides a Physician Certification Notice to the
Company prior to January 1, 1996, the Executive may, upon 30 days prior written
notice to the Company, terminate his employment. In the case of such
termination of employment:
12
(i) the Company shall pay the Executive (or the Executive's
estate or designated beneficiary in the event of his death) any amounts due
to the Executive for services prior to the Date of Termination (as defined
in Section 7(e) hereof) pursuant to Sections 5(a) or 8(a) hereof but
unpaid, any bonus due under Section 5(b) hereof with respect to the year
prior to the year in which the Date of Termination occurs but unpaid, and a
bonus under Section 5(b) hereof for the year in which the Date of
Termination occurs on the basis of $1,000,000 prorated based upon the
number of days during such year the Executive was employed by the Company;
(ii) the Executive (or the Executive's estate or designated
beneficiary in the event of his death) shall be paid, as and when payable
pursuant to Section 5(c) hereof, a percentage (up to a maximum of 100%) of
the Performance Payment equal to the greater of (A) 20% or (B) the
percentage of the total capital commitments to Trident that have been
invested prior to the Date of Termination plus 10%;
(iii) the Executive (and, to the extent provided in any
such plan, his spouse) may participate in the retiree medical plan then in
operation for retirees of the Parent under the terms of such plan as if he
had been an eligible retiree of the Parent; and
(iv) the Company shall have no additional obligations to
the Executive under this Agreement except to the extent otherwise provided
in the applicable plans and programs of the Company.
Executive represents that to his knowledge he does not currently have
a medical condition that could lead to a Physician Certification Notice.
(j) INVESTMENT ADVISOR RELATIONSHIP. Notwithstanding anything to the
contrary in this Agreement, at any time during the 120 days preceding October 1,
1995, the Company or the Parent may request, upon at least 30 days written
notice to the Executive, that the Executive retire as an employee of the
Company, effective October
13
1, 1995 and become an investment advisor to the Company ("Investment Advisor").
In such event:
(i) the Executive shall retire from the Company and resign as Chief
Executive Officer of the Company (remaining as non-executive
Chairman) and from any officerships and directorships of the
Parent and any other Marsh & McLennan Entities, all effective
as of October 1, 1995;
(ii) in lieu of the duties as Chief Executive Officer set forth in
Section 3 hereof, the Executive shall provide "Investment
Advisory Services" (as defined below) for the Company as an
independent contractor and in lieu of the receipt of Base
Salary under Section 3 hereof shall be paid a fee (the
"Investment Advisor Fee") at the rate of Eight Hundred Thousand
Dollars ($800,000) per year, payable semi-monthly (and the term
Investment Advisor Fee shall be substituted for the term Base
Salary for purposes of Sections 7 and 8 hereof);
(iii) notwithstanding anything else in this Agreement, except as
otherwise provided in this Section 5(j), the Executive shall
for purposes of this Agreement be treated in all respects while
serving as Investment Advisor as if he were still an employee
hereunder and the Employment Period continued until September
30, 1997 (subject to earlier termination pursuant to the terms
of this Agreement);
(iv) while acting as Investment Advisor, the provisions of Section
5(g) hereof with respect to participation in benefit plans and
programs shall no longer apply to the Executive, PROVIDED,
HOWEVER, that:
14
(A) the Executive (and, to the extent provided in any such
plan, his spouse) may participate in the retiree medical plan
then in operation for retirees of the Parent under the terms of
such plan as if he had been an eligible retiree of the Parent;
(B) if the Executive converts all or a portion of his group
life insurance coverage that was provided during employment
under the Parent's Basic and Optional Life Insurance Plans to
individual coverage at or upon October 1, 1995, the Company
agrees to pay to the Executive, during the remainder of the
Employment Period (as in effect without regard to the
termination of employment pursuant to this Section 5(j)), the
excess of (1) the cost to the Executive of such converted
coverage, over (2) the amount the group life insurance would
have cost the Executive under such plans had he continued as an
active employee with the same level of coverage during such
period of time; and
(C) while an Investment Advisor, the Executive shall have the
option to pay quarterly amounts to the Parent equal to the
premiums he would be paying if he were an employee
participating in the Parent's then-in-effect disability program
for employees. In the event such premiums are paid, if the
Executive, while an Investment Advisor, becomes disabled (as
defined and administered under such program), and his
Investment Advisor status is terminated for such disability
under paragraph 7(b) of this Agreement, then the Company will
make monthly payments to the Executive equal to: (1) the amount
the Executive (had he remained a Company employee) would have
received under the Parent's then-in-effect disability program,
less (2) the
15
amount the Executive is receiving from the Parent's retirement
program.
At the end of the Employment Period, if the Employment Period has not been
terminated prior to September 30, 1997, the consulting arrangement pursuant to
Section 5(h) shall commence.
"Investment Advisory Services" shall mean (i) providing services to be
provided to Trident under the contemplated Investment Advisory Agreement between
the Company and Trident, including identifying potential investee companies and
providing information and analyses regarding potential investee companies,
making investment recommendations, and assisting in structuring and negotiating
the terms of such investments and monitoring their performance, (ii) providing
services similar to the foregoing with respect to non-Trident related activities
of the Company, and (iii) providing from time to time, consulting services to
the Parent and its subsidiaries as requested by the Chief Executive Officer of
the Parent with respect to their businesses, including services relating to the
performance and activities of the Parent's insurance investments, assessing
events in the insurance industry and other implications for the Parent's
businesses, and such other projects as may be assigned by the Chief Executive
Officer of the Parent.
Upon becoming Investment Advisor pursuant to this Section 5(j), the
Executive shall have the same rights and obligations, and be subject to the same
limitations and termination provisions as are applicable during and following
the Employment Period (except to the extent inconsistent with his no longer
being the Chief Executive Officer), including but not limited to Section 10
hereof, PROVIDED, HOWEVER, that Section 7(d)(iv) hereof shall be modified to
read as follows: "during the Employment Period, assignment of duties (including
reduction of duties) which are materially inconsistent with the Executive's
status as Investment Advisor to the Company." For purposes of Section 5(i)
hereof, the Executive's continuing service as Investment Advisor shall be
substituted for his continuing service as Chief Executive Officer for the
purpose of the Physician Certification Notice.
16
In lieu of the Executive becoming the Investment Advisor, the
Executive may elect for a corporation, all of the stock of which is owned by the
Executive, members of his immediate family or trusts for the benefit of the
Executive and members of his immediate family, to become the Investment Advisor.
Such corporation shall make the Executive available to render the Investment
Advisory Services, and all payments that would have been owed to the Executive
pursuant to the terms of this Agreement had the Employment Period continued
until September 30, 1997 (subject to earlier termination pursuant to the terms
of this Agreement) shall be paid to such corporation. In the event such
corporation is the Investment Advisor, Sections 7 and 8 hereof shall be deemed
modified to provide for the termination of such corporation's Investment Advisor
relationship upon the occurrence of the various events specified in such
sections with respect to the Executive, and the immediately preceding paragraph
of this Section 5(j) shall apply to both the Executive and such corporation.
(k) OTHER COMPANY ACTIVITIES. If during the Employment Period the
Company organizes a successor or supplemental insurance venture capital
investment fund to Trident with objectives and purposes substantially similar to
those of Trident, the Executive and the Company will discuss in good faith the
Executive's entitlement to receive a performance payment with respect to such
fund(s) based on concepts similar to those applicable to Trident and reflecting
the business conditions at the time of such discussions.
6. PERSONAL INVESTMENTS. During the Employment Period, the Parent,
in its sole discretion, may make available to the Executive and other similarly
situated senior executives of the Parent and its operating subsidiaries the
opportunity for personal investments in insurance risk assumption entities being
organized involving the solicitation of capital.
During the Employment Period, the Executive will refrain from any
personal investments in the insurance industry, other than (i) any investment in
Trident, (ii) investments made available to the Executive in accordance with the
preceding paragraph or (iii) investments in stocks, bonds, or other securities
listed on any national or regional securities exchange or that have
17
been registered under Section 12(g) of the Securities Exchange Act of 1934 if
the Executive's investment does not exceed, in the case of any class of the
capital stock of any one issuer, one percent (1%) of the issued and outstanding
shares, or, in the case of other securities, one percent (1%) of the aggregate
principal amount thereof issued and outstanding.
The Executive shall not, during the Employment Period and during the
Consulting Period, make any personal investments which would prevent or hinder,
directly or indirectly, the transaction of business by or the relationship of
any Marsh & McLennan Entity with any governmental or quasi-governmental or
public entity (including pension plans covering governmental or quasi-
governmental employees), including any state, district, territory, or possession
of the United States or any governmental subdivision, agency, or instrumentality
thereof or any insurance market, including Lloyd's, by virtue of any statute,
law, regulation, or administrative practice.
7. TERMINATION. The Executive's employment or consultancy hereunder,
as the case may be, may be terminated under the following circumstances set
forth in Sections 7(a) through 7(e) hereof without breach of this Agreement:
(a) DEATH. The Executive's employment or consultancy
hereunder, as the case may be, shall terminate upon his death, and the date of
his death shall be the Date of Termination.
(b) DISABILITY. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis (or as required pursuant to Section 5(h)
hereof) for the entire period of six consecutive months and, within thirty (30)
days after written Notice of Termination (as defined in Section 7(f) hereof) is
given, shall not have returned to the performance of his duties hereunder on a
full-time basis (or as required pursuant to Section 5(h) hereof), the Company
may terminate the Executive's employment or consultancy hereunder
("Disability"). In this event, the Date of Termination shall be thirty (30)
days after Notice of Termination is given (provided that the Executive shall not
have returned to the performance of his duties on a
18
full-time basis (or as required by Section 5(h) hereof) during such thirty (30)
day period).
(c) CAUSE. The Company may terminate the Executive's
employment or consultancy hereunder for Cause. For purposes of this Agreement,
the Company shall have "Cause" to terminate the Executive's employment or
consultancy hereunder upon the Executive's:
(i) conviction for the commission of a felony involving
moral turpitude, fraud or a violation of the United States antitrust laws;
or
(ii) willful and continuing substantial failure to perform
his duties hereunder (other than such failure resulting from the
Executive's incapacity due to physical or mental illness or subsequent to
the issuance of a Notice of Termination by the Executive for Good Reason)
after demand for cure of such failure is delivered by the Company in
writing that specifically identifies the manner in which the Company
believes the Executive has substantially failed to perform his duties; or
(iii) willful gross misconduct or willful gross neglect
(including, but not limited to, a material breach of the provisions of
Sections 6 or 10 hereof) that, in either case, is demonstrably and
materially injurious to the Company or its subsidiaries, whether monetarily
or otherwise.
Cause shall not exist unless and until the Company has delivered to the
Executive a copy of a resolution of the Board, adopted (after reasonable notice
to the Executive and an opportunity for the Executive to be heard before the
Board) at a meeting of the Board called and held for such purpose within 60 days
after the Board has knowledge of the occurrence of an event described in this
Section 7(c), finding that in the good faith opinion of the Board the Executive
was guilty of the conduct set forth in this Section 7(c) and specifying the
particulars thereof in detail. In this event, the Date of Termination shall be
the date specified in the Notice of Termination.
(d) GOOD REASON. The Executive may terminate his employment
or consultancy hereunder within sixty (60) days after the occurrence of one or
more of
19
the following events, without the written consent of the Executive, that has not
been cured within fifteen (15) business days after written notice thereof has
been given by the Executive to the Company ("Good Reason"):
(i) a reduction in the Executive's then current Base
Salary, Stipend, or Consulting Fee or the termination or material reduction
of any employee benefit set forth in Section 5(g) hereof (other than a
reduction in benefits as part of an across-the-board reduction applicable
to all executive officers of the Company or as otherwise provided in this
Agreement);
(ii) the failure to pay the Executive a Performance Payment
that is due and owed to the Executive;
(iii) during the Employment Period, the failure to elect or
reelect the Executive to either of the positions described in Section 3
hereof (unless the Company has notified the Executive in writing of the
existence of a basis for Cause or as otherwise provided in this Agreement)
or removal of him from any such position;
(iv) during the Employment Period, assignment of duties
(including reduction of duties) which are materially inconsistent with the
Executive's status as the Chairman and Chief Executive Officer of the
Company;
(v) during the Employment Period, the relocation of the
Executive's office location as assigned to him by the Company to a location
more than 50 miles from Manhattan;
(vi) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all
or substantially all of the assets of the Company within 45 days after a
merger, consolidation, sale or similar transaction;
(vii) a "Change in Control of the Parent" (as defined
below); or
20
(viii) a "Change in Control of the Company" (as defined
below).
The Executive's continued employment or consultancy shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder. In the event of a termination for Good
Reason, the Date of Termination shall be the date specified in the Notice of
Termination which shall be no more than thirty (30) days after the Notice of
Termination.
For purposes of this Agreement, a "Change in Control of the Parent"
shall have occurred if:
(1) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
(other than the Parent, any trustee or other fiduciary holding securities
under an employee benefit plan of the Parent or any corporation owned,
directly or indirectly, by the stockholders of the Parent in substantially
the same proportions as their ownership of stock of the Parent), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Parent representing 50%
or more of the combined voting power of the Parent's then outstanding
voting securities;
(2) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Parent, and any new director (other than a director
designated by a person who has entered into an agreement with the Parent to
effect a transaction described in clause (1), (3), or (4) of this Section
7(d)) whose election by the Board of Directors of the Parent or nomination
for election by the Parent's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof;
21
(3) the stockholders of the Parent approve a merger or consolidation
of the Parent with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Parent
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving or parent entity) 50% or more of the combined voting power of the
voting securities of the Parent or such surviving or parent entity
outstanding immediately after such merger or consolidation or (B) a merger
or consolidation effected to implement a recapitalization of the Parent (or
similar transaction) in which no "person" (as hereinabove defined) acquired
50% or more of the combined voting power of the Parent's then outstanding
securities; or
(4) the stockholders of the Parent approve a plan of complete
liquidation of the Parent or an agreement for the sale or disposition by
the Parent of all or substantially all of the Parent's assets (or any
transaction having a similar effect).
For purposes of this Agreement, a "Change in Control of the Company" shall have
occurred if the Parent no longer owns at least 50% of the value and voting power
of the Company.
(e) OTHER TERMINATIONS. If the Executive's employment or
consultancy is terminated hereunder for any other reason other than as set forth
in Sections 7(a) through 7(d) hereof, the date on which a Notice of Termination
is given or any later date (within 30 days) set forth in such Notice of
Termination shall be the Date of Termination, PROVIDED, HOWEVER, that upon a
termination of consultancy as a result of a failure to extend the Consulting
Period under Section 5(h) hereof, the Date of Termination shall be the last day
of such Consulting Period and, PROVIDED, FURTHER, that upon a termination of
employment pursuant to a Physician Certification Notice, the Date of Termination
shall be 30 days following the provision of such notice.
(f) NOTICE OF TERMINATION. Any termination of the Executive's
employment or consultancy hereunder by the Company or by the Executive (other
than
22
termination pursuant to Section 7(a) hereof) shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 12
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment or
consultancy under the provision so indicated. A Physician Certification Notice
shall serve as a Notice of Termination for purposes of this Section 7(f).
8. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY PERIOD. During any period that the Executive
fails to perform his duties hereunder as a result of incapacity due to physical
or mental illness ("Disability Period"), the Executive shall continue to (i)
receive his full Base Salary and Stipend (or Consulting Fee), (ii) remain
eligible (during the Employment Period) for an annual cash bonus under Section
5(b) hereof until his employment or consultancy is terminated pursuant to
Section 7(b) hereof or, if earlier, until the end of the Employment Period or
Consulting Period, as the case may be and (iii) participate in the programs
described in Section 5(g) hereof (except to the extent such participation is not
permitted under the terms of such programs). Such payments made to the
Executive during the Disability Period shall be reduced by the sum of the
amounts, if any, payable to the Executive at or prior to the time of any such
payment under disability benefit plans of the Company or under the Social
Security disability insurance program, and which amounts were not previously
applied to reduce any such payment.
(b) DEATH OR DISABILITY. If the Executive's employment or
consultancy hereunder is terminated as a result of death or Disability then:
(i) the Company shall pay the Executive (or the Executive's
estate or designated beneficiary in the event of his death) any amounts due
to the Executive for services prior to the Date of Termination pursuant to
Sections 5(a), 5(h) or 8(a)
23
hereof but unpaid, any bonus due under Section 5(b) hereof with respect to
the year prior to the year in which the Date of Termination occurs but
unpaid, and, if such termination occurs during the Employment Period, a
bonus under Section 5(b) hereof for the year in which the Date of
Termination occurs on the basis of $1,000,000 (or $750,000 in the event the
Date of Termination occurs during the nine-month period ending on September
30, 1997) prorated based upon the number of days during such year or period
the Executive was employed by the Company;
(ii) the Executive (or the Executive's estate or designated
beneficiary in the event of his death) shall be paid, as and when payable
pursuant to Section 5(c) hereof, a percentage (up to a maximum of 100%) of
the Performance Payment equal to the greater of (A) 20% or (B) the
percentage of the total capital commitments to Trident that have been
invested prior to the Date of Termination plus 10%, PROVIDED, HOWEVER, that
such percentage (i) shall be not less than 80% as of a Date of Termination
on or after October 1, 1997, (ii) shall not be less than 90% as of a Date
of Termination on or after October 1, 1998, and (iii) shall be 100% in the
event of a Date of Termination on or after October 1, 1999;
(iii) the Executive (and, to the extent provided in any
such plan, his spouse) may participate in the retiree medical plan then in
operation for retirees of the Parent under the terms of such plan as if he
had been an eligible retiree of the Parent; and
(iv) the Company shall have no additional obligations to the
Executive under this Agreement except to the extent otherwise provided in
the applicable plans and programs of the Company.
(c) CAUSE OR BY EXECUTIVE (OTHER THAN FOR GOOD REASON OR
PURSUANT TO A PHYSICIAN CERTIFICATION NOTICE). If the Executive's employment or
consultancy hereunder is terminated by the Company for Cause or by the Executive
(other than for Good Reason or pursuant to a Physician Certification Notice)
then:
24
(i) the Company shall pay the Executive any amounts due to
the Executive for services prior to the Date of Termination pursuant to
Sections 5(a), 5(h) or 8(a) hereof but unpaid, and any bonus due under
Section 5(b) hereof with respect to the year prior to the year in which the
Date of Termination occurs but unpaid; and
(ii) the Executive shall receive no further Base Salary,
Stipend, bonus or Consulting Fee and shall have no right to the Performance
Payment, and the Company shall have no additional obligations to the
Executive under this Agreement except to the extent otherwise provided in
the applicable plans and programs of the Company.
(d) TERMINATION BY COMPANY (WITHOUT CAUSE OR DISABILITY) OR
BY EXECUTIVE FOR GOOD REASON. If the Executive's employment or consultancy
hereunder is terminated by the Company (without Cause or Disability) or by the
Executive for Good Reason, then:
(i) the Company shall pay to the Executive any amounts due
to the Executive for services prior to the Date of Termination pursuant to
Sections 5(a), 5(b), 5(h) or 8(a) hereof but unpaid, and the Company shall
pay to the Executive (A) for the remainder of the Employment Period (as in
effect without regard to the termination of employment), the Base Salary
and Stipend (at the rate in effect at the time Notice of Termination is
given) and the bonus pursuant to Section 5(b) hereof (at the rate of
$1,000,000 per year (or $750,000 for the nine-month period ending September
30, 1997)), (B) for the remainder of the Consulting Period (as in effect
without regard to the termination of the consulting arrangement), the
Consulting Fee (at the rate in effect at the time Notice of Termination is
given, or at a rate of $300,000 per year if Notice of Termination is given
during the Employment Period), and (C) the Performance Payment as and when
payable pursuant to Section 5(c) hereof;
(ii) the Executive (and, to the extent provided in any such
plan, his spouse) may participate in the retiree medical plan then in
operation for retirees of the Parent under the terms
25
of such plan as if he had been an eligible retiree of the Parent;
(iii) if the Executive converts all or a portion of his
group life insurance coverage that was provided during employment under the
Parent's Basic and Optional Life Insurance Plans to individual coverage at
or upon his Date of Termination, the Company agrees to pay to the
Executive, during the remainder of the Employment Period (as in effect
without regard to the termination of employment), the excess of (A) the
cost to the Executive of such converted coverage, over (B) the amount the
group life insurance would have cost the Executive under such plans had he
continued as an active employee with the same level of coverage during such
period of time; and
(iv) the Company shall have no additional obligations to
the Executive under this Agreement except to the extent otherwise provided
in the applicable plans and programs of the Company.
(e) FAILURE TO EXTEND CONSULTING PERIOD. If the Consulting Period is
not extended pursuant to Section 5(h) hereof, then:
(i) the Company shall pay the Executive any amounts due to the
Executive pursuant to Sections 5(h) or 8(a) hereof, but unpaid;
(ii) the Executive shall be paid, as and when payable pursuant
to Section 5(c) hereof, a percentage (not to exceed 100%) of the
Performance Payment equal to the product of (A) 20% and (B) the number of
full or partial years from January 1, 1994 through the Date of Termination;
(iii) the Executive (and, to the extent provided in any such
plan, his spouse) may participate in the retiree medical plan then in
operation for retirees of the Parent under the terms of such plan as if he
had been an eligible retiree of the Parent; and
26
(iv) the Company shall have no additional obligations to the
Executive under this Agreement except to the extent otherwise provided in
the applicable plans and programs of the Company.
9. MITIGATION. The Executive shall not be required to mitigate
amounts payable pursuant to Section 8 hereof by seeking other employment or
otherwise. However, to the extent that the Executive shall receive from a
subsequent employer benefits substantially similar to those to be provided under
Sections 5(i)(iii), 5(j)(iv)(A), (B) and (C), 8(b)(iii), 8(d)(ii) and (iii), and
8(e)(iii) hereof, the benefits to be provided under such Sections shall be
correspondingly reduced.
10. CONFIDENTIAL INFORMATION, REMOVAL OF DOCUMENTS, NON-COMPETITION.
(a) CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Marsh & McLennan Entities all trade
secrets, confidential information, and knowledge or data relating to the Marsh &
McLennan Entities and the businesses and investments of the Marsh & McLennan
Entities, which shall have been obtained by the Executive during the Executive's
employment or consultancy by the Company or previously as an employee, officer
or director of any Marsh & McLennan Entity and which shall not have been or now
or hereafter have become public knowledge (other than by acts by the Executive
or representatives of the Executive in violation of this Agreement). Except as
may be required or appropriate in connection with his carrying out his duties
under this Agreement, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such trade secrets, information, knowledge or data to
anyone other than the Company and those designated by the Company or the Parent.
(b) REMOVAL OF DOCUMENTS. All records, files, drawings,
documents, models, equipment, and the like relating to the business of the Marsh
& McLennan Entities, which the Executive prepares, uses or comes into contact
with shall not be removed by the Executive from the Company's premises without
its written consent during or after the Employment Period or the Consulting
Period unless such removal shall be required or appropri-
27
ate in connection with his carrying out his duties under this Agreement, and, if
so removed by the Executive, shall be returned to the Company immediately upon
termination of the Executive's employment or consultancy, as the case may be,
hereunder.
(c) NON-COMPETITION. During the Executive's employment and
consultancy with the Company and until two (2) years after the Executive's Date
of Termination (other than a termination as a result of which the Executive
receives payments under Section 8(d) hereof or a termination by the Company
under Section 7(e) hereof, in which case until one (1) year after the
Executive's Date of Termination), the Executive will not (A) engage, anywhere
within the geographical areas in which any of the Company or Marsh & McLennan,
Incorporated and their respective directly or indirectly owned subsidiaries (the
"Designated Entities") have conducted their business operations or provided
services as of the date hereof or at any time prior to the Date of Termination,
directly or indirectly, alone, in association with or as a shareholder,
principal, agent, partner, officer, director, employee or consultant of any
other organization, in any business which is similar to or in competition with
any of the businesses conducted by the Designated Entities during the
Executive's employment and consultancy and at the time the Executive engages in
such business, (B) divert to any competitor of any of the Designated Entities
any customer of any of the Designated Entities, (C) solicit or encourage any
officer, employee or consultant of any of the Designated Entities to leave the
employ of any of the Designated Entities for employment by or with any
competitor of any of the Designated Entities or (D) enter into any relationship
pursuant to Section 3 hereof which would prevent or hinder, directly or
indirectly, the transaction of business by any of the Designated Entities or the
relationship of any of the Designated Entities with any governmental or quasi-
governmental or public entity (including pension plans covering governmental or
quasi-governmental employees), including any state, district, territory, or
possession of the United States or any governmental subdivision, agency, or
instrumentality thereof or any insurance market, including Lloyd's, by virtue of
any statute, law, regulation, or administrative practice; PROVIDED, HOWEVER,
that the Executive may (A) other than during the Employment Period, become an
officer or director of one or
28
more insurance companies organized or controlled by the Company, Trident or an
entity in which the Company has an interest similar to its interest in Trident
and (B) invest in stock, bonds, or other securities of any competitor of any of
the Designated Entities if (1) such stock, bonds, or other securities are listed
on any national or regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934; (2) his investment does
not exceed, in the case of any class of the capital stock of any one issuer, one
percent (1%) of the issued and outstanding shares, or, in the case of other
securities, one percent (1%) of the aggregate principal amount thereof issued
and outstanding; and (3) such investment would not prevent or hinder, directly
or indirectly, the transaction of business by any of the Designated Entities or
the relationship of any of the Designated Entities with any governmental or
quasi-governmental or public entity (including pension plans covering
governmental or quasi-governmental employees), including any state, district,
territory, or possession of the United States or any governmental subdivision,
agency, or instrumentality thereof or any insurance market, including Lloyd's,
by virtue of any statute, law, regulation, or administrative practice. If, at
any time, the provisions of this Section 10(c) shall be determined to be invalid
or unenforceable, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Section 10(c) shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by the court or
other body having jurisdiction over the matter; and the Executive agrees that
this Section 10(c) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.
(d) INJUNCTIVE RELIEF. In the event of a breach or threatened
breach of this Section 10, the Executive agrees that the Company and the Parent
shall be entitled to injunctive relief in a court of appropriate jurisdiction to
remedy any such breach or threatened breach, the Executive acknowledging that
damages would be inadequate and insufficient.
29
(e) CONTINUING OPERATION. Any termination of the Executive's
employment or consultancy or of this Agreement shall have no effect on the
continuing operation of this Section 10.
11. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the Company
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the business and/or
assets of the Company, provided that the assignee or transferee is the successor
to all or substantially all of the business and/or assets of the Company and
such assignee or transferee assumes the liabilities, obligations and duties of
the Company, as contained in this Agreement, either contractually or as a matter
of law. The Company will require any such successor to expressly assume and
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. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this Section
11 or which otherwise becomes bound by all the terms and provisions of this
Agreement or by operation of law.
(b) EXECUTIVE'S SUCCESSORS. This Agreement and all rights of
the Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees, and all obligations
shall be binding on any of his assigns including the corporation(s) referred to
in Sections 5(h) and (j) hereof. If the Executive should die while any amounts
would still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or other designee
or, if there be no such designee, to the Executive's estate.
30
12. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Mr. Robert Clements
Greycliff
104 Wallacks Point Drive
Stamford, CT 06902
with a copy to:
William A. Kass, Esq.
Kantor, Davidoff, Wolfe, Rabbino,
Mandelker & Kass, P.C.
51 E. 42nd Street
New York, New York 10017
If to the Company:
Marsh & McLennan Risk Capital Corp.
1166 Avenue of the Americas
New York, New York 10036
Attn: Treasurer
with a copy to:
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attn: General Counsel
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. MISCELLANEOUS. No provisions of this Agreement may be modified
unless such modification is agreed to in writing signed by the Executive and
such officer of the Company as may be specifically designated
31
for the Company by the Board. Any waiver or discharge must be in writing and
signed by the Executive or such an authorized officer of the Company, as the
case may be. No waiver by either party hereto at any time of any breach by any
of the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles.
14. ARBITRATION. Except as otherwise provided herein, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled under the rules of the American Arbitration Association then in
effect in the State of New York, as the sole and exclusive remedy of either
party, and judgment upon such award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction. In the event the arbitrator(s) find
that the Company's position in an arbitration is frivolous, costs of such
arbitration, including without limitation reasonable attorneys' fees of the
Executive, shall be borne by the Company.
15. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. ENTIRE AGREEMENT. This Agreement between the Company and the
Executive sets forth the entire agreement of the parties hereto in respect of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written,
32
by the parties hereto in respect of the subject matter contained herein; and any
prior agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MARSH & McLENNAN RISK CAPITAL
CORP.
By:/s/A.J.C. Smith
-----------------------------
Name: A.J.C. Smith
Title: Director
/s/Robert Clements
-----------------------------
Robert Clements
33
EXHIBIT A
DEFINITION OF CERTAIN TERMS USED
IN SECTION 5(C) AND IN THIS EXHIBIT A
The following terms shall have the respective meanings set forth
below, the references to the Offering Memorandum being to The Trident
Partnership, L.P. Offering Memorandum dated July 1993 relating to the private
placement of $1.0 billion of limited partnership interests in Trident and
referring therein to Marsh & McLennan Risk Capital Corp., J.P. Morgan & Co.
Incorporated, Mid Ocean Limited and BYRNE & sons, l.p. as the "Organizers":
"Advisor's Fee" shall have the meaning set forth on pages 16 and 17 of
the Offering Memorandum under the heading "Investment Advisory Agreements".
"Company's Capital Raising Fee" shall mean Investment Fees paid to the
Company by Trident less Litigation Liabilities to the extent not subtracted
in determining the Marsh & McLennan Trident Compensation.
"Investment Fees" shall mean the fees, related to the aggregate amount
of each capital call, which are described on pages 18 and 19 of the
Offering Memorandum under the heading "Investment Fees".
"Litigation Liabilities" shall mean the amount of any unreimbursed
claims, penalties, damages or liabilities to which the Marsh & McLennan
Entities become subject in connection with or arising out of or related to
the organization, financing, business or affairs of Trident.
"Marsh & McLennan Trident Compensation" shall mean the sum of:
(A) Non-Capital Distributions to Partners paid by Trident
to any Marsh & McLennan Entity as a partner of Trident,
(B) any Advisor's Fee paid to any Marsh & McLennan Entity
(after giving effect to any repayment to Trident resulting from a
"clawback" or otherwise), and
A-1
(C) dividends and other distributions paid to a Marsh &
McLennan Entity by the general partner of Trident in excess of the
capital invested in such general partner by all Marsh & McLennan
Entities,
less the sum of:
(D) payments made by Trident to the Marsh & McLennan
Entities constituting their share of the 20% Return, and
(E) Litigation Liabilities to the extent not subtracted in
determining the Company's Capital Raising Fee.
"Non-Capital Distributions to Partners" shall mean the aggregate
distribution to all Partners of Trident described on pages 19 and 20 of the
Offering Memorandum under the heading "Distributions", other than
distributions constituting return of capital referred to in clause (i) of
said description.
"Trident Annual Return" (which shall be reported on by Deloitte &
Touche or such other accounting firm of comparable national standing as may
be agreed upon by the parties hereto) shall mean the return calculated by
dividing (A) the sum of (i) all of Trident's Non-Capital Distributions to
Partners and (ii) each Advisor's Fee by (B) Trident's aggregate weighted
average capital outstanding, computed on the basis of a 365-day year.
Weighted average capital outstanding shall be determined from the date each
capital contribution is received by Trident to the date Trident makes
distributions thereof to the Partners. An example of the calculation of
Trident Annual Return is set forth in this Exhibit A on page A-5 below.
"20% Return" shall mean that portion of the Non-Capital Distributions
to Partners constituting the cumulative preferential return referred to in
clause (ii) of the description under the heading "Distribution" in the
Offering Memorandum referred above in the definition of Non-Capital
Distributions to Partners.
A-2
EXHIBIT B
TERMS OF TRUST REFERRED TO IN SECTION 5(C)(4)
GRANTOR -- The Company
BENEFICIARY -- The Executive
TRUSTEE -- Morgan Guaranty Trust Company of New York
(or as otherwise agreed pursuant to Section 5(c)(4))
INVESTMENTS -- To be determined by the Parent, with the Trustee to accept
instructions only from the Parent's Treasurer or his designee,
to be denominated in U.S. dollars, to be due and payable on
demand or with a final maturity not to exceed three years, and
to be limited to the following, except as set forth in a
writing signed by the Executive, the Company and the Parent:
(i) Securities of, or unconditionally and fully guaranteed as to
principal and return by the full faith and credit of, the
United States government.
(ii) Commercial paper or medium term notes (including that issued
by bank holding companies), provided the notes are rated at
least "A-1" or "P-1" and, if applicable, the obligor has a
long-term debt rating of at least "A" or its equivalent.
(iii) Obligations of, or instruments or securities issued or
guaranteed by, banks rated "B/C" or better by a credit
rating agency of recognized standing.
(iv) Debt instruments issued by states of the United States and
their agencies, municipalities or instrumentalities rated at
least "A" and/or "A-1" or "P-1".
INCOME: All interest and other income (exclusive of capital items) to be
distributed monthly to the Executive.
B-1
EXPENSES/TAXATION: The fees and expenses of the Trustee, as well as other trust
expenses and tax liability with respect to amounts in trust
(other than taxes payable by the Executive on amounts
received by him from the Trust), shall be paid by the
Company.
ACCOUNTING: Annual accounting, and at the termination of the Trust, to the
Company and the Executive. In addition, the Trustee shall
advise the Company and the Executive quarterly of the
investments held in the Trust.
Distribution
of Corpus/
REVERSION: (1) Except as provided in clause (2) below and in Section
5(c)(4)(A) hereof, the Trustee shall make distributions of the
corpus of the Trust to the Executive or to the Company only upon
the written instructions of the Executive and of the Company
(endorsed by the Parent), in the case of the Company and the
Parent signed by an officer of each, which instructions shall
include the amount to be so distributed and, if other than cash,
a description of the securities to be distributed.
(2) Upon written request of the Company accompanied by a
certificate signed by an officer of the Company and an officer
of the Parent, to the effect that the final liquidating
distribution has been paid by or on behalf of Trident and the
Executive is not entitled to any further payment pursuant to the
provisions of Section 5(c) hereof, to which certificate shall be
attached a consent signed by the Executive or a further
certificate by such officers that the Executive has received not
less than 30 days notice of the Company's request, and provided
that if the Executive's consent is not attached to said
certificate and the Executive does not notify the Trustee,
within five business days of the
B-2
Trustee's receipt of said certificate, of any objection to the
facts or conclusions set forth in said certificate, the Trust
shall terminate and all of its assets shall be paid over to the
Company.
(3) In the event that the Executive and the Company shall fail
to agree on the instructions given or to be given to the Trustee
pursuant to clause (1) above or the Executive notifies the
Trustee in writing of his objections pursuant to clause (2)
above, the Trustee shall make no distribution or payment until
the dispute is resolved, and the Executive and the Company shall
forthwith submit the dispute to arbitration pursuant to the
provisions of Section 14 hereof.
B-3
SCHEDULES
EXAMPLES OF EXECUTIVE'S PERFORMANCE PAYMENT
UNDER VARIOUS ASSUMPTIONS
Examples consist of five pairs of schedules illustrating "Trident Partnership
Potential Annual Return" and "Marsh & McLennan Risk Capital Corp. Compensation
Structure" at assumed levels of Trident Annual Return of 20%, 25%, 30%, 40% and
50%.
EXHIBIT 10
December 20, 1994
Mr. Robert Clements
Greycliff
104 Wallacks Point Drive
Stamford, CT 06902
Dear Mr. Clements:
Marsh & McLennan Companies, Inc., a Delaware corporation (the "Parent"), hereby
agrees to perform any and all obligations and duties owed to you by the Parent
pursuant to the terms and conditions of the Amended and Restated Employment
Agreement between Marsh & McLennan Risk Capital Corp. (the "Company") and you,
effective as of December 31, 1993 (the "Restated Employment Agreement"), and you
to agree to perform any and all obligations owed to the Parent by you pursuant
to the terms and conditions of the Restated Employment Agreement. The Parent
further agrees to guarantee to you the performance of any and all of the
Company's obligations and duties under the Restated Employment Agreement.
Agreed to: MARSH & McLENNAN COMPANIES, INC.
/s/Robert Clements By:/s/A.J.C. Smith
- -------------------------- ------------------------------
Robert Clements Name: A.J.C. Smith
Title: Chairman
EXHIBIT 10
MARSH & MCLENNAN COMPANIES, INC.
SENIOR MANAGEMENT INCENTIVE COMPENSATION PLAN
1. PURPOSES.
The purposes of the Marsh & McLennan Companies, Inc. Senior
Management Incentive Compensation Plan are to foster a partnership orientation
among selected members of senior management; to align the interests of these
employees with those of MMC's shareholders by offering significant variable
compensation opportunities payable in the form of cash or equity awards; to
promote and reinforce achievement of corporate, organizational, financial and
business development goals; and to qualify the compensation paid under this Plan
as "qualified performance-based compensation" within the meaning of Section
162(m) of the Code.
2. DEFINITIONS.
The following terms, as used herein, shall have the following meanings:
(a) "Award" shall mean an annual incentive compensation award granted
pursuant to this Plan with respect to a Performance Period.
(b) "Award Pool" shall mean the aggregate amount available for Awards
under this Plan in respect of a Performance Period, the size of which
shall be based upon the percentage of Pre-Tax NOI determined pursuant
to Section 5(a) hereof.
(c) "Board" shall mean the Board of Directors of MMC.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended,
including the regulations and other guidance issued thereunder.
(e) "Committee" shall mean those members of the Compensation Committee of
the Board who satisfy the requirements of "outside directors" within
the meaning of Section 162(m) of the Code, and who shall not be fewer
than two in number.
(f) "Common Stock" shall mean the common stock, par value $1.00 per share,
of MMC.
(g) "Company" shall mean, collectively, MMC and its subsidiaries.
(h) "Covered Employee" shall have the meaning set forth in Section
162(m)(3) of the Code.
(i) "Deferral Plan" shall mean the Marsh & McLennan Companies, Inc. Cash
Bonus Award Voluntary Deferral Plan, as amended from time to time, or
any successor plan thereto, or other deferred compensation plans or
arrangements of the Company.
(j) "Extraordinary Adjustments" shall mean unusual or nonrecurring events
affecting MMC or any subsidiary, or any business division or unit or
the financial statements of MMC or any subsidiary, such as major
restructurings, reorganizations, special dividends, consolidations,
spin-offs, combinations or other corporate transactions or events or
in response to changes in applicable laws and regulations (including
interpretations thereof), accounting principles, tax rates and
regulations or business conditions. The foregoing adjustments are
intended to be objectively determinable and nondiscretionary and, as
such, consistent with the qualification of Awards as "qualified
performance-based compensation" under Section 162(m) of the Code,
and shall be construed accordingly. To the extent it shall be
determined that any such adjustment would likely cause compensation
relating to an Award to a Covered Employee to fail to be deductible
under Section 162(m) of the Code, such adjustment shall not be
authorized or made, unless otherwise determined by the Committee.
(k) "Fair Market Value" on any given date shall mean the arithmetic mean
of the high and low prices of the Common Stock on the New York Stock
Exchange on the last trading day preceding such date.
(l) "MMC" shall mean Marsh & McLennan Companies, Inc., a Delaware
corporation.
(m) "1992 Plan" shall mean the Marsh & McLennan Companies, Inc. 1992
Incentive and Stock Award Plan, as amended from time to time, or any
successor plan thereto.
(n) "Participant" shall mean a senior management employee of the Company
who is, pursuant to Section 4 of this Plan, selected to participate
herein.
(o) "Performance Period" shall mean each fiscal year of the Company, or
such other period as may be established by the Committee in a manner
consistent with the requirements of Section 162(m) of the Code.
(p) "Plan" shall mean this Marsh & McLennan Companies, Inc. Senior
Management Incentive Compensation Plan, as amended from time to time.
- 2 -
(q) "Pre-Tax-Income" for a Performance Period shall mean, except as
otherwise provided herein, the consolidated pre-tax net operating
income of the Company, as determined in accordance with generally
accepted accounting principles and reported in the Company's audited
financial statements for such Performance Period, before any provision
for amounts paid or accrued in respect of annual incentive awards
under this Plan and other bonus plans of the Company and before
provision for any Extraordinary Adjustments.
3. ADMINISTRATION.
This Plan shall be administered by the Committee. The Committee shall have
the authority in its sole discretion, subject to and not inconsistent with the
express provisions of this Plan, to administer this Plan and to exercise all the
powers and authorities either specifically granted to it under this Plan or
necessary or advisable in the administration of this Plan, including, without
limitation, the authority to grant Awards; to determine the persons to whom and
the time or times at which Awards shall be granted; to determine the terms,
conditions and restrictions relating to any Award; to determine whether, to what
extent, and under what circumstances an Award may be settled, cancelled,
forfeited, or surrendered; to determine the form and timing of payment in
settlement of an Award; to construe and interpret this Plan and any Award; to
prescribe, amend and rescind rules and regulations relating to this Plan; and to
make all other determinations deemed necessary or advisable for the
administration of this Plan. All decisions, determinations and interpretations
of the Committee shall be final and binding on all persons, including the
Company, the Participant (or any person claiming any rights under this Plan from
or through any Participant) and any shareholder of MMC.
No member of the Board or the Committee shall be liable for any action
taken or determinations made in good faith with respect to this Plan or any
Award granted hereunder.
4. ELIGIBILITY.
Awards may be granted to senior management employees of the Company in the
sole discretion of the Committee, including for this purpose senior management
employees whose employment with the Company commences or terminates during the
Performance Period. In determining the persons to whom Awards shall be granted,
the Committee shall take into account such factors as the Committee shall deem
appropriate in connection with accomplishing the purposes of this Plan.
- 3 -
5. AWARD POOL; PAYMENT OF AWARDS.
(a) The size of the Award Pool in respect of a Performance Period shall be
an amount equal to the sum of (a) five percent (5%) of Pre-Tax Income for such
Performance Period plus (b) an additional two-tenths of one percent (.2%) of
Pre-Tax Income for each full percentage increase in Pre-Tax Income over the
preceding Performance Period; PROVIDED, HOWEVER, that in no event shall the
Award Pool in respect of any Performance Period exceed ten percent (10%) of Pre-
Tax Income for such Performance Period. To the extent permitted by Section
162(m) of the Code, if the Committee establishes a Performance Period other than
a fiscal year of the Company, then (1) the Award Pool for such Performance
Period shall be based upon annualized Pre-Tax Income and the annualized increase
in Pre-Tax Income for such Performance Period, and (2) annualized Pre-Tax Income
for such Performance Period shall be utilized for purposes of applying clause
(b) above for the next succeeding Performance Period. Annualized Pre-Tax Income
and the annualized increase in Pre-Tax Income shall be determined in accordance
with the books and records of the Company and in a manner consistent with the
terms of this Plan.
(b) Awards granted to Participants in respect of a Performance Period
shall consist of such portion of the Award Pool as the Committee may determine;
PROVIDED, HOWEVER, that no Participant who is a Covered Employee for the
calendar year with which or in which the Performance Period ends may be
allocated an amount in excess of twenty percent (20%) of such Award Pool.
Unless otherwise determined by the Committee, no payment shall be made to any
such Covered Employee unless the Committee shall have previously certified that
the performance goals necessary to the establishment and size of the Award Pool
had been attained. The Committee shall not be obligated to grant Awards
representing the entire Award Pool.
(c) Except as hereinafter provided, all payments in respect of Awards
granted under this Plan shall be made within a reasonable period after the end
of the Performance Period. Such payment shall be made, in the sole discretion
of the Committee, in the form of (1) cash, (2) an award of shares of restricted
stock, restricted stock units or a similar stock-based award, pursuant to and
subject to the terms and conditions of the 1992 Plan, or (3) a combination of
the foregoing. For purposes of the preceding sentence, the value of shares of
Common Stock represented by the restricted stock, restricted stock units or
other stock-based form of payment shall be determined based on the Fair Market
Value per share of Common Stock on the date of payment. Amounts otherwise
payable in cash under this Plan may be deferred in accordance with the terms
and conditions of the Deferral Plan.
- 4 -
6. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL REQUIREMENTS. This Plan and the granting and
payment of Awards and the other obligations of the Company under the Plan shall
be subject to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be required.
(b) NONTRANSFERABILITY. Awards shall not be transferable by a
Participant.
(c) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Plan or in any
Award granted under this Plan shall confer upon any Participant the right to
continue in the employ of the Company or to be entitled to any remuneration or
benefits not set forth in this Plan or to interfere with or limit in any way the
right of the Company to terminate such Participant's employment.
(d) WITHHOLDING TAXES. In the event a Participant or other person is
entitled to receive an Award under this Plan, the Company shall withhold from
payment of such Award the amount of any taxes that the Company is required to
withhold with respect to such payment.
(e) AMENDMENT, TERMINATION AND DURATION OF THIS PLAN. The Committee may
at any time and from time to time alter, amend, suspend, or terminate this Plan
in whole or in part; PROVIDED THAT, no amendment that requires shareholder
approval in order for this Plan to continue to comply with Code Section 162(m)
shall be effective unless the same shall be approved by the requisite vote of
the shareholders of MMC. Notwithstanding the foregoing, no amendment shall
affect adversely any of the rights of any Participant, without such
Participant's consent, under any Award theretofore granted under this Plan.
(f) PARTICIPANT RIGHTS. No Participant shall have any claim to be granted
any Award under this Plan, and there is no obligation for uniformity of
treatment among Participants.
(g) UNFUNDED STATUS OF AWARDS. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing contained
in this Plan or any Award shall give any such Participant any rights that are
greater than those of a general creditor of the Company.
(h) GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of Delaware
without giving effect to the conflict of laws principles thereof.
- 5 -
(i) EFFECTIVE DATE. This Plan shall become effective as of January 1,
1994, subject to the requisite approval of the shareholders of MMC in order to
comply with Section 162(m) of the Code. In the absence of such approval, this
Plan (and any Awards theretofore made pursuant to this Plan) shall be null and
void.
(j) INTERPRETATION. This Plan is designed and intended to comply, to the
extent applicable, with Section 162(m) of the Code, and all provisions hereof
shall be construed in a manner to so comply. If any provision of this Plan
shall be determined by the Internal Revenue Service or a court of competent
jurisdiction to be contrary to said Section 162(m), said provision shall be
limited to the extent necessary so that such provision complies with said
Section 162(m) and such determination shall not affect any other provisions of
this Plan, which provisions shall remain in full force and effect.
- 6 -