EXHIBIT 10.43
MORGAN STANLEY DEAN WITTER & CO.
KEY EMPLOYEE PRIVATE EQUITY RECOGNITION PLAN
Section 1. Purpose. The purposes of the Key Employee Private Equity
Recognition Plan are to attract, retain and motivate certain employees of the
Company and to compensate them for their contributions to the growth and profits
of the Company by providing an opportunity to defer compensation into
participations, through notional interests, in private equity investments that
the Company directly or indirectly makes.
Section 2. Definitions. As used in this Plan, the following terms shall
have the indicated meanings:
"Account" means the memorandum account that the Company establishes and
maintains for a Participant pursuant to Section 8.
"Annex" shall have the meaning set forth in Section 16(e).
"Beneficiary Designation Form" (an initial form of which is attached hereto
as Exhibit D, as may be amended from time to time) shall have the meaning set
forth in Section 14(b).
"Board" means the Board of Directors of MSDW from time to time or the
Compensation Committee thereof.
"Bonus" means the pre-tax portion of any fiscal year-end discretionary
bonus that the Company awards to an Eligible Person. In calculating the amount
of an Eligible Person's Bonus, "Bonus" shall not include the amount of any non-
elective compensation that the Company awards (for example, under the EICP) to
such Eligible Person. For purposes of this definition, "EICP" means the
Company's Equity Incentive Compensation Plan.
"Bonus Declaration Year" means the fiscal year in respect of which the
Company declares Bonuses.
"Bonus Payout Year" means the fiscal year immediately following a Bonus
Declaration Year in which the Company pays Bonuses declared in respect of such
Bonus Declaration Year.
"Cause", with respect to any Participant, shall have the meaning set forth
in such Participant's Plan Certificate.
"Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations thereunder.
"Committee" means (i) a committee consisting of employees of the Company
whom the Chief Financial Officer of MSDW and the Chief Strategic and
Administrative Officer of MSDW appoint from time to time or (ii) any other
committee that the Board establishes to administer this Plan.
"Company" means Morgan Stanley Dean Witter & Co. and its consolidated
subsidiaries.
"Delegate" shall have the meaning set forth in Section 4(c).
"Disability", with respect to any Participant, shall have the meaning in
the Company's long-term disability plan in effect on the date of such
Participant's disabling event and applicable to such Participant.
"Election Form" (an initial form of which is attached hereto as Exhibit B,
as may be amended from time to time) shall have the meaning set forth in Section
6(a).
"Eligible Person" means (i) an employee of the Institutional Securities
Division of the Company or (ii) an employee in another business unit of the
Company, if senior management of the Company selects such employee, in either
case satisfying the eligibility requirements set forth in Section 5.
"fiscal year" and "fiscal quarter" mean the Company's fiscal year and the
Company's fiscal quarter, respectively.
"Forfeiture Event", with respect to any Participant, shall have the meaning
set forth in such Participant's Plan Certificate. A "Forfeiture Event" may
include any other occurrence or event that is deemed to constitute an occurrence
or event of forfeiture under the EICP for the Bonus Declaration Year in respect
of which such Participant participates in this Plan.
"Full Career Retirement" means, with respect to any Participant, the
termination of such Participant's employment with the Company on or after the
date on which such Participant:
(i) has attained age 50 and completed at least 12 years of service
with the Company as a:
(A) Managing Director of the Company or equivalent elected
officer title; or
(B) Member of the Management Committee, Executive Vice
President, Senior Vice President or First Vice President of Van Kampen
Investments Inc.;
(ii) has attained age 50 and completed at least 15 years of service
as an elected officer of the Company;
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(iii) has completed at least 20 years of service with the Company;
or
(iv) has attained age 55 and has completed at least 5 years of
service with the Company and the sum of such Participant's age and years of
service equals or exceeds 65.
"Indemnified Person" shall have the meaning set forth in Section 4(d).
"MSDW" means Morgan Stanley Dean Witter & Co.
"Notional Administration Fee" shall have the meaning set forth in Section
8(b).
"Notional Advance" means, with respect to any Participant, any notional
non-recourse advance that the Company has made or will make to this Plan on
behalf of such Participant.
"Notional Advance Ratio" shall have the meaning set forth in Section 7(a).
"Notional Equity Contribution" means, with respect to any Participant, the
notional equity contribution that such Participant makes to this Plan.
"Participant" means an Eligible Person who participates in this Plan.
"Plan" means this Morgan Stanley Dean Witter & Co. Key Employee Private
Equity Recognition Plan.
"Plan Certificate" means a certificate (an initial form of which is
attached hereto as Exhibit C, as may be amended from time to time) that the
Company issues pursuant to Section 10 and that evidences a Participant's
participation in this Plan.
"Plan Investment" means an investment that this Plan notionally acquires in
accordance with the investment guidelines set forth in Exhibit A attached
hereto, as may be amended from time to time.
"Plan Investment Profit" means, with respect to any Participant, any Plan
Investment and the aggregate amount of Proceeds realized in respect of such Plan
Investment at any time, the excess, if any, of (i) such Participant's notional
share of such Proceeds over (ii) the aggregate amount of such Participant's
Notional Equity Contribution and any related Notional Advances notionally
invested in such Plan Investment at such time.
"Proceeds" means the cash proceeds that the Company realizes directly or
indirectly in respect of (i) any Plan Investment or (ii) any securities or other
property that the Company receives in respect of any Plan Investment; provided
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that, "Proceeds" shall not include any proceeds that the Company receives as a
"carried interest," management fee or any other fee or share of profits from a
third party investor or a portfolio company of any fund.
"Proprietary Information" shall have the meaning set forth in a
Participant's Plan Certificate.
"Retirement" means, with respect to any Participant, the termination of
such Participant's employment with the Company on or after the date on which
such Participant:
(i) has attained age 65; or
(ii) has attained age 55 and completed at least 10 years of service
with the Company.
"Section 162(m) Participant" means, for any fiscal year, any Participant
whom the Board designates by not later than 90 days following the start of such
fiscal year (or such other date as may be required or permitted by Section
162(m) of the Code) as a Participant whose compensation from the Company for
such fiscal year may be subject to the limit on deductible compensation that
Section 162(m) of the Code imposes.
"service with the Company" includes, for purposes of the definitions of
"Full Career Retirement" and "Retirement", any period of service with the
Company or the following entities and any of their predecessors: (1) Morgan
Stanley Group Inc. and its subsidiaries ("Morgan Stanley") prior to the merger
with and into Dean Witter, Discover & Co., (2) Miller Anderson & Sherrerd, LLP
prior to its acquisition by Morgan Stanley Group Inc.; (3) Van Kampen
Investments Inc. and its subsidiaries prior to its acquisition by Morgan Stanley
Group Inc.; and (4) Dean Witter, Discover & Co. and its subsidiaries ("DWD")
prior to the merger of Morgan Stanley Group Inc. with and into Dean Witter,
Discover & Co.; provided that, a former employee of DWD transferred employment
from DWD directly to Morgan Stanley & Co. Incorporated or its affiliates
subsequent to February 5, 1997 and that a former employee of Morgan Stanley
transferred employment from Morgan Stanley directly to Dean Witter Reynolds Inc.
or its affiliates subsequent to February 5, 1997.
"Total Notional Investment" means, with respect to any Participant at any
time, such Participant's interest in this Plan that is attributable to such
Participant's Notional Equity Contribution at such time and any related Notional
Advances that the Company has made on behalf of such Participant at such time.
"Total Notional Investment Fair Market Value" means, with respect to any
Participant at any time, the fair market value (determined by reference to the
lesser of (i) the value that the Company's books and records show as of the then
most recent fiscal quarter end and (ii) the value that the Company's books and
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records show as of the then current fiscal quarter end) of such Participant's
Total Notional Investment at such time.
"Total Notional Investment Original Cost Value" means, with respect to any
Participant at any time, the lesser of:
(i) such Participant's Total Notional Investment Fair Market Value
at such time; and
(ii) the original cost of such Participant's Total Notional
Investment minus any amounts previously paid to such Participant in respect
of such Participant's Total Notional Investment, in each case at such time.
"Treasury Rate" means the cumulative rate per annum equal to the discounted
rate for 90-day U.S. Treasury bills determined by the last U.S. Treasury bill
auction in the relevant fiscal quarter.
Section 3. Effectiveness. (a) This Plan shall become effective upon its
adoption by the Board. Prior to such adoption, the Company shall permit
Eligible Persons to elect to participate in this Plan pursuant to Section 6,
subject to such adoption. The Company reserves the right not to make available
any plan similar to this Plan (in whole or in part) nor to permit any future
elections at any time after elections are made in respect of Bonuses for the
2000 Bonus Declaration Year.
(b) The Company reserves the right not to implement this Plan in any
Bonus Payout Year in which, after it reviews the elections that Eligible Persons
have made pursuant to Section 6 in the relevant Bonus Declaration Year, the sum
of (i) the aggregate amount of Notional Equity Contributions and (ii) the
aggregate amount of any related Notional Advances is less than $25,000,000;
provided that, if the Company implements this Plan when such sum is less than
$25,000,000, then this Plan shall not notionally invest in any private
investment funds that rely on Section 3(c)(7) of the Investment Company Act of
1940, as amended.
Section 4. Administration. (a) The Committee shall administer this Plan.
In addition to other express powers and authorizations that this Plan confers on
the Committee, the Committee shall have full power and authority, subject to the
express provisions hereof, applicable law and contractual provisions binding
upon the Company and any internal policies and procedures of the Company:
(i) to determine the size and terms of each Notional Advance;
(ii) to determine the terms and conditions of each Plan
Certificate;
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(iii) to determine the time and the manner in which to sell,
liquidate or otherwise dispose of any securities held as a Plan Investment
or in respect of a Plan Investment;
(iv) to construe and interpret this Plan, any Plan Certificate or
any summary of the foregoing;
(v) to prescribe, amend, rescind or waive rules and procedures
relating to this Plan with respect to all Participants;
(vi) to waive the provisions of Section 6(b)(i) with respect to any
Participant;
(vii) to waive any provision of this Plan or the Plan Certificate
with respect to all Participants; and
(viii) to make all other determinations necessary or advisable for
the administration of this Plan.
Notwithstanding the foregoing, no provision of the investment guidelines set
forth in Exhibit A shall be waived unless expressly permitted thereby.
All determinations by the Committee in administering, construing or interpreting
this Plan shall be final, binding and conclusive for all purposes and upon all
persons.
(b) The Board or Committee may modify, amend, suspend or terminate this
Plan, any Plan Certificate or any provision hereof or thereof (in whole or in
part) at any time; provided that, such modification, amendment, suspension or
termination shall not, without a Participant's consent, affect adversely the
rights of such Participant under this Plan. No such action shall give rise to a
claim of constructive termination on the part of such Participant. Upon a
termination of this Plan, subject to Section 13, the Company shall pay each
Participant an amount equal to such Participant's Total Notional Investment Fair
Market Value (determined as of the time of such termination) as soon as
reasonably practicable after such termination. The Company shall make such
payments in accordance with Section 12.
(c) The Committee may delegate such of its responsibilities hereunder as
it deems appropriate to one or more officers or directors of the Company (each,
a "Delegate"). In connection with the performance of its responsibilities
hereunder, the Committee may consult with any third party it deems necessary or
advisable, including without limitation, any outside consultant or advisor.
(d) Neither the Company nor any member of the Board, the Committee, any
Delegate and their respective affiliates and employees (each, an "Indemnified
Person") shall be liable in any manner whatsoever in connection
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with the administration, construction or interpretation of this Plan, any Plan
Certificate or any summary of the foregoing, except for any liability arising
out of such person's willful misconduct. Under no circumstances shall any
Indemnified Person be liable for any act or omission of any other Indemnified
Person. In the performance of its, his or her functions with respect to this
Plan, each Indemnified Person shall be entitled to rely upon information and
advice furnished by the Company's officers, the Company's accountants, the
Company's counsel, the Company's tax advisers and any other person the Committee
deems necessary or advisable, and no Indemnified Person shall be liable for any
action taken or not taken in reliance upon any such advice. The Company shall
indemnify each Indemnified Person for any loss or damages that it, he or she
incurs in connection with, or arising out of, this Plan, except for any loss or
damages that result from such Indemnified Person's willful misconduct.
Section 5. Eligibility. In order for an employee of the Company to be an
Eligible Person in a Bonus Declaration Year, such employee shall (x) have had
individual cash income (before any elective deferrals) from the Company or a
previous employer (if applicable) in excess of $200,000 for each of the two
calendar years preceding such Bonus Declaration Year and (y) have a reasonable
expectation of receiving individual cash income (before any elective deferrals)
from the Company or a previous employer (if applicable) in excess of $200,000
for the calendar year applicable to such Bonus Declaration Year.
Section 6. Election; Notional Equity Contribution. (a) In accordance with
any rules and procedures that the Committee establishes, on or prior to August
31 of any Bonus Declaration Year in respect of which the Company makes this Plan
available, an Eligible Person may elect to defer a portion of such Eligible
Person's Bonus for such Bonus Declaration Year. Such election, which such
Eligible Person shall make by filing an election form (the "Election Form") with
MSDW's Executive Compensation Department, KEPER Group shall be irrevocable.
Nothing in this Plan shall obligate the Company to award or pay a Bonus to any
person. Any such election shall be subject to Sections 3 and 5 and shall not
constitute a guarantee of Plan participation.
(b) As part of the election that a Participant makes pursuant to Section
6(a), such Participant shall designate the amount of such Participant's Notional
Equity Contribution, which amount (i) shall be at least $10,000 and (ii) shall
not exceed the limits applicable to such Participant as set forth in the
Election Form.
(c) Each Participant's Notional Equity Contribution shall accrue notional
interest at the Treasury Rate from the date of actual payment of such
Participant's Bonus until the Company uses such Notional Equity Contribution to
notionally fund Plan Investments pursuant to Section 9(a) or pays such Notional
Equity Contribution to such Participant pursuant to Section 6(d).
(d) If at any time the Company determines that the entire amount of a
Participant's Notional Equity Contribution will not be notionally invested in or
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reserved for Plan Investments, then the Committee may cause the Company to pay
the uninvested portion of such Notional Equity Contribution (together with
notional interest accrued thereon to the date of payment) to such Participant as
compensation income.
Section 7. Notional Advance. (a) At the time that any Participant makes an
election to participate in this Plan pursuant to Section 6, such Participant may
request, and the Company at its election may provide, a Notional Advance to such
Participant in connection with such Participant's Notional Equity Contribution.
At such time, such Participant shall select a ratio corresponding to the amount
of such Participant's Notional Advance to the amount of such Participant's
Notional Equity Contribution, as further described in Section 7(b) (a "Notional
Advance Ratio"), from among the choices set forth in the Election Form.
Notwithstanding the foregoing, the Company reserves the right to change such
Notional Advance Ratio choices at any time, with or without notice.
(b) If the Company elects to provide a Notional Advance to any
Participant, then for each US$1 (or local currency unit) of Notional Equity
Contribution made by such Participant pursuant to Section 6 and notionally
invested pursuant to this Plan, the Company shall provide a Notional Advance in
an aggregate amount determined in accordance with the Notional Advance Ratio
that such Participant selects pursuant to Section 7(a).
(c) The Company shall periodically credit Notional Advances to a
Participant's Account when such Notional Advances are required to fund such
Participant's notional share of Plan Investments.
(d) Each Notional Advance shall bear notional interest at the Treasury
Rate during the period that such Notional Advance is deemed to be outstanding.
Section 8. Establishment Of Accounts; Notional Administration Fee. (a) For
purposes of this Plan, in any Bonus Payout Year, the Company shall treat a
Participant as having made such Participant's Notional Equity Contribution to
this Plan on the date of actual payment of Bonuses for the relevant Bonus
Declaration Year. As of such time, the Company shall establish an Account for
such Participant, to which it shall credit such Participant's Notional Equity
Contribution and any related Notional Advances. Each Participant's Account
shall reflect such Participant's notional share of each Plan Investment that
this Plan notionally acquires.
(b) The Company shall reduce each Participant's Account by a notional
annual administration fee (the "Notional Administration Fee") in an amount that
the Committee determines in its discretion from time to time, which amount shall
not exceed 1.5% of the sum of the Notional Equity Contribution that such
Participant makes pursuant to Section 6 plus the aggregate amount of any related
Notional Advances. The Notional Administration Fee shall accrue every fiscal
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quarter in arrears and shall be deducted from such Participant's notional share
of Proceeds.
Section 9. Plan Investments. (a) This Plan shall notionally acquire Plan
Investments for the benefit of Participants for a purchase price equal to the
fair market value (as the Committee shall determine) of such Plan Investments at
the time of their acquisition. Participants shall participate in each Plan
Investment pro rata based on their respective Total Notional Investments, unless
the Committee determines otherwise in its sole discretion on a Plan Investment-
by-Plan Investment basis. Each Participant's notional share of any Plan
Investment shall be deemed to have been notionally funded by such Participant's
Notional Equity Contribution and any related Notional Advances made by the
Company on behalf of such Participant in accordance with such Participant's
Notional Advance Ratio.
(b) The Company reserves the right to limit the aggregate amount of
Notional Equity Contributions, together with the aggregate amount of any related
Notional Advances, based upon the availability of Plan Investments (such
availability as the Committee determines in its sole discretion). The Plan
Certificate shall describe the manner in which the Company imposes such
limitation, if any.
Section 10. Plan Certificate. The Company shall issue to each Participant
a Plan Certificate setting forth the terms and conditions of participation in
this Plan in respect of a particular Bonus Declaration Year.
Section 11. Vesting. (a) Subject to Sections 11(b) and 13, a Participant's
Total Notional Investment shall vest as set forth in such Participant's Plan
Certificate.
(b) Upon termination of a Participant's employment with the Company as a
result of such Participant's Full Career Retirement or Retirement (as the case
may be) or Disability or death, such Participant's Total Notional Investment
shall vest as set forth in such Participant's Plan Certificate.
(c) Notwithstanding the foregoing, the Committee may accelerate the
vesting of a Participant's Total Notional Investment and may in its discretion
determine other circumstances under which a Participant's Total Notional
Investment shall vest. Nothing in this Plan or in any Plan Certificate shall
entitle a Participant to request or receive any payment upon the vesting of all
or any portion of such Participant's Total Notional Investment.
Section 12. Payments. (a) Unless the Committee determines otherwise, the
Company shall make payments in respect of each Participant in accordance with
such Participants' Plan Certificate. The Company may, in its sole discretion,
withhold from any payment an amount sufficient to satisfy any obligation that
such Participant owes to the Company.
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(b) Notwithstanding anything in the Plan or in the Plan Certificate to
the contrary, unless the Committee determines otherwise, the Company shall make
all payments under this Plan in respect of a Section 162(m) Participant in
accordance with this Section 12(b). The Company shall hold all or a portion of
the Proceeds payable to each Section 162(m) Participant pursuant to this Plan
and/or such 162(m) Participant's Plan Certificate to the extent necessary to
avoid any non-deductibility of such Section 162(m) Participant's compensation
that Section 162(m) of the Code imposes. During the period that the Company
holds such Proceeds, such Proceeds shall accrue interest at a rate that the
Committee shall determine in its sole discretion. Without further action by the
Committee, the provisions of this Section 12(b) shall cease to apply on the
effective date of the repeal of Section 162(m) of the Code (and any successor
provision thereto).
Section 13. Forfeiture Events; Termination Of Employment. With respect to
a Participant at any time, upon the occurrence of (a) a Forfeiture Event or (b)
a termination of employment with the Company for any reason, the Company's right
to cause such Participant to forfeit such Participant's Total Notional
Investment shall be as set forth in such Participant's Plan Certificate.
Section 14. Transferability. (a) No Participant may transfer (other than
by will or by the laws of descent and distribution), pledge, hypothecate or
otherwise dispose of or encumber such Participant's interest in this Plan.
(b) During a Participant's lifetime, the Company shall make any payment
in respect of such Participant's Total Notional Investment only to such
Participant. A Participant may designate in writing on a form filed with MSDW's
Executive Compensation Department, KEPER Group (the "Beneficiary Designation
Form") a beneficiary or beneficiaries to receive all or part of the amounts that
the Company shall pay in respect of such Participant's Total Notional Investment
in the event of such Participant's death. A Participant may replace or revoke a
designation of a beneficiary at any time by filing a new Beneficiary Designation
Form.
(c) In the event of a Participant's death, the Company shall make any
payment in respect of such Participant's Total Notional Investment as set forth
in such Participant's Plan Certificate.
Section 15. Withholding Taxes. The Company may withhold from any amounts
payable under this Plan any such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation, whether
foreign or domestic.
Section 16. Miscellaneous. (a) The Notional Administration Fee shall cover
all expenses and costs that the Company incurs in connection with the
administration of this Plan.
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(b) The headings of sections herein are included solely for the
convenience of reference and shall not affect the meaning of any of the
provisions of this Plan.
(c) THIS PLAN AND ALL RIGHTS HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. ANY DISPUTE OR
CLAIM ARISING OUT OF THIS PLAN SHALL BE RESOLVED THROUGH ARBITRATION CONDUCTED
BY THE AMERICAN ARBITRATION ASSOCIATION IN NEW YORK, NEW YORK.
(d) Neither this Plan nor any Plan Certificate shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company, a Participant or any other person or shall
create or be construed to create a segregation by the Company of assets to fund
this Plan. To the extent any Participant has a right to receive payments from
the Company pursuant to this Plan, such right shall be no greater than the right
of any unsecured general creditor of the Company.
(e) A Participant's participation in this Plan shall be conditioned on
the Company making any filings and the Company's receipt of any consents or
authorizations required to comply with, or required to be obtained under,
applicable local law. To the extent necessary to comply with the local law of
any jurisdiction in which the Company offers and implements this Plan, the
Company may supplement this Plan and/or the Plan Certificate with an annex (an
"Annex"), which Annex shall set forth certain terms and conditions applicable to
such offer and implementation in such jurisdiction. If there is a conflict
between the provisions of this Plan and the provisions contained in an Annex,
then the provisions of such Annex shall govern.
(f) If any provision of this Plan or any Plan Certificate is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Participant, or would disqualify this Plan or such Plan Certificate under
applicable law, such provision shall be construed or deemed amended to conform
to such law, or if it cannot be construed or deemed amended without materially
altering the intent of this Plan or such Plan Certificate, then such provision
shall be stricken as to such jurisdiction or as to such Participant, and the
remainder of this Plan or such Plan Certificate shall remain in full force and
effect.
[END OF THIS PLAN]
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