Exhibit 10.2

 

 

 

This document constitutes part of a prospectus covering securities that have

been registered under the Securities Act of 1933.

The date of this prospectus is [Date].

 

Marsh & McLennan Companies, Inc.

2000 Senior Executive Incentive and Stock Award Plan

 

Terms and Conditions for 2005 Award of Nonqualified Performance Contingent Stock
Options

to U.S. Grant Recipients

 

This award of nonqualified stock options (the “Award”) has been granted to you
on [Date] (the “Grant Date”) under the Marsh & McLennan Companies, Inc. (“MMC”)
2000 Senior Executive Incentive and Stock Award Plan (the “Plan”). The Award
represents an option to purchase shares of MMC common stock and is subject to
the following terms and conditions:

 

I.

VESTING AND EXERCISABILITY OF OPTION

 

A.

Vesting

 

Subject to your continued employment, twenty-five percent (25%) of the aggregate
number of shares covered by these options will vest on each of the first four
anniversaries of the Grant Date, beginning with the first anniversary of the
Grant Date. Subject to the provisions of Section V herein, in the event of your
death, permanent disability or retirement, unvested options will vest at such
termination of employment. For all other terminations of employment, all
options, whether vested or unvested, will be forfeited as of the date of your
termination of employment.

 

B.

Exercisability

 

Except as provided in Section VI.A., vested options will become exercisable on
the trading day following the tenth consecutive trading day that the closing
price of a share of MMC common stock on the New York Stock Exchange exceeds the
grant price of the options by fifteen percent (15%) or more (the “Performance
Contingency”) and will remain exercisable until the expiration date of the grant
unless such options are subject to an earlier expiration date or forfeited in
accordance with Section V. Vested options for which the Performance Contingency
is not thereafter satisfied may not be exercised.

 

II.

METHOD OF EXERCISE

 

Follow the steps set forth below to exercise a stock option. Your option
exercise will be effective on the date on which MMC Global Compensation receives
your completed Notice of Option Exercise Form, full payment of the aggregate
exercise price and an executed Non-Solicitation Agreement or, if received on
different days, the latest of those dates.

 

 

 

 

 

 

A.

Notice of Option Exercise Form

 

Complete and return a Notice of Option Exercise Form as the form instructs. Oral
notices of exercise of options and exercises of less than 200 shares (unless
acquiring all vested shares from the option grant) are not accepted. Please
indicate whether you are an MMC Insider (e.g., MMC Executive Officer, MMC
Controller).

 

B.

Payment

 

Notice of Option Exercise Forms will not be processed until payment is received.
Payment may be made with (l) U.S. dollars or (2) MMC common stock as follows:

 

l.

Payment with U.S. Dollars

 

Send a certified or bank check, payable to Marsh & McLennan Companies, Inc., for
the full amount of the aggregate exercise price, or wire transfer the full
amount in U.S. dollars to account number XXX-XXX-XXXX (ABA #XXX-XX-XXXX) at
Chase Manhattan Bank in New York, New York. Wire transfers are not considered
received until the date on which Chase confirms that the funds have been
transferred to MMC’s account.

 

2.

Payment with Shares of MMC Common Stock

 

You may pay the aggregate exercise price by tendering shares of MMC common stock
(including shares acquired from a stock option exercise or stock award vesting)
which you have owned for at least six months prior to the exercise date, having
a value equal to or greater than the aggregate exercise price, as follows:

 

a.

Delivery of Stock Certificate(s)

 

The stock certificate(s) must be delivered to MMC

 

(l)

endorsed to Marsh & McLennan Companies, Inc. (the assignee)

- or -

(2)

accompanied by a stock power endorsed to Marsh & McLennan Companies, Inc.

 

The endorsement must be identical to the registrant's name indicated on the face
of the certificate. The signature of endorsement must be guaranteed by a
commercial bank or stockbroker.

 

b.

Valuation of Shares

 

Any MMC shares delivered as payment of the aggregate exercise price of an option
will be valued at the Fair Market Value of MMC common stock. Fair Market Value
on a given date means the per share value of stock as determined by using the
average of the high and low selling prices of such stock on the immediately
preceding date (or, if the New York Stock Exchange was not open that day, the
next preceding day that the NYSE was open for trading and the stock was traded)

 

2

 

 

 

 

as reported for such date in the table entitled “NYSE Composite Transactions”,

contained in The Wall Street Journal or an equivalent successor table. For
example, for a stock option exercise on April 5th, the Fair Market Value of
shares tendered, on a per share basis, would be the average of the high and low
selling prices of MMC common stock on April 4th.

 

If the stock submitted for payment exceeds the number of shares required, the
excess shares will be returned to you.

 

C.

Non-Solicitation Agreement

 

An executed Non-Solicitation Agreement must accompany your completed Notice of
Option Exercise Form unless you are exercising the option after you have retired
on or after your Normal Retirement Date.

 

l.

While Employed

 

An executed Non-Solicitation Agreement must accompany your Notice of Option
Exercise Form. You may obtain a copy of the Agreement for execution from MMC
Global Compensation. You may wish to consider consulting an attorney before
signing the Agreement. Please retain a copy of your signed Agreement for your
records.

 

2.

Upon Early Retirement

 

If you retire on or after your Early Retirement Date and before your Normal
Retirement Date, all your options will be forfeited as of your termination of
employment unless you sign the Non-Solicitation Agreement for Early Retirees (as
described in Section V). You may obtain a copy of the Agreement for execution
from MMC Global Compensation. You may wish to consider consulting an attorney
before signing the Agreement. Please retain a copy of your signed Agreement for
your records.

 

III.

WITHHOLDING  

 

Applicable taxes (including FICA) are required by law to be withheld when a
nonqualified stock option is exercised. A sufficient number of the MMC shares
resulting from the option exercise will be retained by MMC to satisfy the tax
withholding obligation unless you elect on your Notice of Option Exercise Form
to satisfy all applicable tax withholding by check.

 

IV.

REGISTRATION AND DISTRIBUTION OF SHARES

 

A.

The shares from your stock option exercise will be registered as specified in
your Notice of Option Exercise Form, as of the date of exercise. The shares may
be registered only in (i) your name or (ii) your name and your spouse’s name as
joint tenants with rights of survivorship.

 

B.

The shares from your stock option exercise will be distributed as specified in
your Notice of Option Exercise Form, after you have satisfied your tax
withholding obligation.

 

3

 

 

 

 

C.

You will receive written confirmation of your stock option exercise by mail,
generally within a week following the exercise date.

 

V.

TERMINATION OF EMPLOYMENT

 

If your employment with MMC or any of its subsidiaries or affiliates (the
“Company”) terminates, the following shall apply:

 

A.

Death

 

In the event your employment is terminated because of your death, any unvested
option will vest at such termination of employment and will become exercisable
upon the satisfaction of the Performance Contingency. The person or persons to
whom your rights under the option shall pass by will or the laws of descent and
distribution shall be entitled to exercise such option (and any option shares
that were vested at the time of your death and for which the Performance
Contingency has been satisfied) within one year after the date of death, but in
no event shall the option be exercised beyond the expiration date of the grant.

 

B.

Permanent Disability

 

Should your employment terminate due to total and permanent disability as
determined under MMC’s long-term disability program, any unvested option will
vest at such termination of employment and will become exercisable upon the
satisfaction of the Performance Contingency. Such vested option shares (and any
option shares that were vested at the time of your termination of employment and
for which the Performance Contingency has been satisfied) shall be exercisable
until the expiration date of the grant.

 

C.

Retirement

 

In the event you retire from the Company on or after your Normal Retirement
Date, any unvested option will vest at such termination of employment and will
become exercisable upon the satisfaction of the Performance Contingency. Such
vested option shares (and any option shares that were vested at the time of your
termination of employment and for which the Performance Contingency has been
satisfied) shall be exercisable until the expiration date of the grant.

 

D.

Early Retirement

 

If you (i) retire from the Company on or after your Early Retirement Date and
before your Normal Retirement Date and (ii) execute and comply with the
Non-Solicitation Agreement for Early Retirees for a period of three years
commencing with your termination of employment, or such lesser period as may be
applicable, then any unvested option will vest at such termination of employment
and will become exercisable upon the satisfaction of the Performance
Contingency. Such vested option shares (and any option shares that were vested
at the time of your termination of employment and for which the

 

4

 

 

 

 

Performance Contingency has been satisfied) shall be exercisable until the
earlier of the fifth anniversary of your termination of employment and the
expiration date of the grant. Failure to execute and comply with the
Non-Solicitation Agreement will result in forfeiture of all your options,
whether vested or unvested.

 

E.

Definitions

 

As used in Section V.C. and D., the terms “Normal Retirement Date” and “Early
Retirement Date” shall have the respective meanings given such terms (or any
comparable substitute terms or concepts) set forth in the Company's primary
retirement plan applicable to you upon your termination of employment.

 

F.

All Other Employment Terminations

 

For all other terminations of employment, all options, whether vested or
unvested, shall be forfeited on the date of termination, except to the extent
that the Committee may determine otherwise.

 

VI.

CHANGE IN CONTROL PROVISIONS

 

A.

Change in Control

 

Upon the occurrence of a “Change in Control” of MMC, as defined in the Plan, all
stock options you hold will become fully vested and exercisable, and any
restrictions contained in the terms and conditions of the option grants shall
lapse.

 

B.

Additional Payment

 

The value of the accelerated vesting of options because of a Change in Control
(the “Accelerated Award”) may be subject to a 20% federal excise tax under
Section 4999 of the Code (the “Excise Tax”). The Excise Tax is imposed when the
value, as determined by applicable regulations, of payments in the nature of
compensation contingent on a Change in Control (including the Accelerated Award)
equals or exceeds three times the average of your last five years’ W-2 earnings.

 

If a Change in Control occurs and the vesting of your options is accelerated,
MMC will determine if the Excise Tax is payable by you. If Excise Tax is payable
by you, MMC will pay to you, within five days of making the determination, an
amount of money (the “Additional Payment”) such that after payment of applicable
federal, state and local income taxes, employment taxes and any Excise Tax
imposed upon the Additional Payment, you will retain an amount of the Additional
Payment equal to the Excise Tax imposed in respect of the Accelerated Award. If
the Additional Payment, after payment of applicable taxes, is later determined
to be less than the amount necessary to reimburse you for the Excise Tax you
owe, a further payment will be made to you. If the Additional Payment, after
payment of applicable taxes, is later determined to be more than the amount
necessary to reimburse you for the Excise Tax you owe, you will be required to
reimburse MMC for such excess.

 

5

 

 

 

 

VII.

OTHER PROVISIONS

 

A.

Neither the granting of the Award nor any exercise thereof gives you any right
to continue to be employed by the Company, or restricts, in any way, your right
or the right of your employer to terminate your employment at any time for any
reason not specifically prohibited by law.

 

B.

During your lifetime, an option shall be exercisable only by you, and no right
thereunder shall be transferable except by will or the laws of descent and
distribution.

 

C.

Neither you nor any person entitled to exercise your rights in the event of your
death shall have any of the rights of a stockholder with respect to the shares
of MMC common stock subject to an option, unless, and until, you have exercised
the option, paid the full exercise price thereof, and have received the shares
so acquired.

 

D.

MMC is not liable for the non-issuance or non-transfer, nor for any delay in the
issuance or transfer, of any shares of MMC common stock subject to an option or
otherwise pursuant to the Plan which results from the inability of MMC to
obtain, or in any delay in obtaining, from each regulatory body having
jurisdiction, all requisite authority to issue or transfer shares of MMC common
stock, if counsel for MMC deems such authority necessary for the lawful issuance
or transfer of any such shares.

 

E.

The Award is subject to all of these terms and conditions and to the terms and
conditions of the Plan, and your acceptance of the Award shall constitute your
agreement to the terms and conditions of the Plan and the administrative
regulations of the Committee. In the event of any inconsistency between these
terms and conditions and the provisions of the Plan, the provisions of the Plan
shall prevail. Your acceptance of the Award constitutes your agreement that the
shares of MMC common stock acquired hereunder will not be sold or otherwise
disposed of by you in violation of any applicable securities laws or
regulations.

 

F.

An option shall be exercised in accordance with, and the Award shall be subject
to, such additional administrative regulations as the Committee may from time to
time adopt. All decisions of the Committee upon any questions arising under the
Plan or under these terms and conditions shall be conclusive and binding.

 

G.

The Plan, and the granting and exercising of options or awards thereunder, and
the obligations of MMC and employees under the Plan, shall be subject to all
applicable governmental laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may be required, including, but not
limited to, tax and securities regulations. This provision takes precedence over
all aforementioned terms and conditions.

 

H.

The Committee has full discretion and authority to control and manage the
operation and administration of the Award and the Plan. The Committee is
comprised of at least two members of the MMC Board of Directors (the “Board of
Directors”).

 

6

 

 

 

 

I.

The Board of Directors may amend, alter, suspend, discontinue or terminate the
Plan or the Committee’s authority to grant awards under the Plan, except that,
without the consent of an affected participant, no such action may materially
adversely affect the rights of such participant under any award theretofore
granted to him or her. Following the occurrence of a Change in Control (as
defined in the Plan), the Board of Directors may not terminate the Plan or amend
the Plan with respect to awards that have already been granted in any manner
adverse to employees.

 

J.

No more than eight million (8,000,000) shares of MMC common stock (par value
$1.00 per share), plus such number of shares remaining unused under pre-existing
stock plans approved by MMC's stockholders, may be issued under the Plan.
Employees of the Company will be eligible for awards under the Plan. MMC common
stock is traded on the New York Stock Exchange under the symbol “MMC” and is
subject to market price fluctuation. The shares delivered upon exercise of an
option may be obtained through open market purchases, treasury stock or newly
issued shares.

 

K.

The Plan is not qualified under Section 401(a) of the Internal Revenue Code and
is not subject to the provisions of the Employee Retirement Income Security Act
of 1974. Your right to payment of your Award is the same as the right of an
unsecured general creditor of MMC.

 

L.

There are no investment fees associated with your Award, and MMC pays all
administrative expenses associated with your Award.

 

Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant or would like an account statement
detailing the number and vesting date of your options or any other information,
please contact:

 

MMC Global Compensation

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, New York l0036-2774

Telephone Number: 212-345-5000

Facsimile Number: (212) 345-4767

 

 

VIII.

RESALE RESTRICTIONS

 

If you are an “affiliate” of MMC at the time you exercise an option and receive
shares of MMC common stock, your ability to resell those shares may be
restricted. In order to resell such shares, you will be required either to
observe the resale limitations of Rule 144 of the Securities Act of 1933, as
amended (the “Securities Act”), or offer your shares for resale in compliance
with another applicable exemption from the registration requirements of the
Securities Act.

 

7

 

 

 

 

An “affiliate” is defined, for purposes of the Securities Act, as a person who
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, MMC. A “person” is defined to
include any relative or spouse of the person and any relative of the person’s
spouse who has the same home as the person, any trust, estate, corporation or
other organization in which the person or any of the foregoing persons has
collectively more than 10% beneficial interest, and any trust or estate for
which the person or any of the foregoing persons serves as trustee, executor or
in any similar capacity. A person “controls, is controlled by or is under common
control” with MMC when that person directly or indirectly possesses the power to
direct or cause the direction of the management and policies of MMC whether
through the ownership of voting securities, by contract or otherwise.

 

IX.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

The Annual Report on Form 10-K of MMC for its last fiscal year, MMC’s
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC’s Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), are incorporated by
reference herein.

 

All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC’s last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.

 

The Annual Report can be viewed on MMC’s website at
http://www.mmc.com/annualreport.html. Participants may receive without charge,
upon written or oral request, a copy of any of the documents incorporated herein
by reference and any other documents that constitute part of this Prospectus by
contacting MMC Global Compensation as indicated above.

 

8

 

 

 

 

 

 

 

 

Marsh & McLennan Companies, Inc.

2000 Senior Executive Incentive and Stock Award Plan

 

Terms and Conditions for [Date] Award of Nonqualified Performance Contingent
Stock Options

to Non-U.S. Grant Recipients

 

These terms and conditions are dated as of [Date].

 

 

This award of nonqualified stock options (the “Award”) has been granted to you
on [Date] (the “Grant Date”) under the Marsh & McLennan Companies, Inc. (“MMC”)
2000 Senior Executive Incentive and Stock Award Plan (the “Plan”). The Award
represents an option to purchase shares of MMC common stock and is subject to
the following terms and conditions:

 

I.

VESTING AND EXERCISABILITY OF OPTION

 

A.

Vesting

 

Subject to your continued employment, twenty-five percent (25%) of the aggregate
number of shares covered by these options will vest on each of the first four
anniversaries of the Grant Date, beginning with the first anniversary of the
Grant Date. Subject to the provisions of Section V herein, in the event of your
death, permanent disability or retirement, unvested options will vest at such
termination of employment. For all other terminations of employment, all
options, whether vested or unvested, will be forfeited as of the date of your
termination of employment.

 

B.

Exercisability

 

Except as provided in Section VI.A., vested options will become exercisable on
the trading day following the tenth consecutive trading day that the closing
price of a share of MMC common stock on the New York Stock Exchange exceeds the
grant price of the options by fifteen percent (15%) or more (the “Performance
Contingency”) and will remain exercisable until the expiration date of the grant
unless such options are subject to an earlier expiration date or forfeited in
accordance with Section V. Vested options for which the Performance Contingency
is not thereafter satisfied may not be exercised.

 

II.

METHOD OF EXERCISE

 

Follow the steps set forth below to exercise a stock option. Your option
exercise will be effective on the date on which MMC Global Compensation receives
your completed Notice of Option Exercise Form, full payment of the aggregate
exercise price and an executed Non-Solicitation Agreement or, if received on
different days, the latest of those dates.

 

A.

Notice of Option Exercise Form

 

Complete and return a Notice of Option Exercise Form as the form instructs. Oral
notices of exercise of options and exercises of less than 200 shares (unless
acquiring all vested

 

 

 

 

 

 

shares from the option grant) are not accepted. Please indicate whether you are
an MMC Insider (e.g., MMC Executive Officer, MMC Controller).

 

B.

Payment

 

Notice of Option Exercise Forms will not be processed until payment is received.
Payment may be made with (l) U.S. dollars or (2) MMC common stock as follows:

 

l.

Payment with U.S. Dollars

 

Send a certified or bank check, payable to Marsh & McLennan Companies, Inc., for
the full amount of the aggregate exercise price, or wire transfer the full
amount in U.S. dollars to account number XXX-XXX-XXXX (ABA #XXX-XX-XXXX) at
Chase Manhattan Bank in New York, New York. Wire transfers are not considered
received until the date on which Chase confirms that the funds have been
transferred to MMC’s account.

 

2.

Payment with Shares of MMC Common Stock

 

You may pay the aggregate exercise price by tendering shares of MMC common stock
(including shares acquired from a stock option exercise or stock award vesting)
which you have owned for at least six months prior to the exercise date, having
a value equal to or greater than the aggregate exercise price, as follows:

 

a.

Delivery of Stock Certificate(s)

 

The stock certificate(s) must be delivered to MMC

 

(l)

endorsed to Marsh & McLennan Companies, Inc. (the assignee)

 

- or -

 

(2)

accompanied by a stock power endorsed to Marsh & McLennan Companies, Inc.

 

The endorsement must be identical to the registrant’s name indicated on the face
of the certificate. The signature of endorsement must be guaranteed by a
commercial bank or stockbroker.

 

b.

Valuation of Shares

 

Any MMC shares delivered as payment of the aggregate exercise price of an option
will be valued at the Fair Market Value of MMC common stock. Fair Market Value
on a given date means the per share value of stock as determined by using the
average of the high and low selling prices of such stock on the immediately
preceding date (or, if the New York Stock Exchange was not open that day, the
next preceding day that the NYSE was open for trading and the stock was traded)
as reported for such date in the table entitled “NYSE Composite Transactions”,
contained in The Wall Street Journal or an equivalent successor table. For
example,

 

2

 

 

 

 

for a stock option exercise on April 5th, the Fair Market Value of shares
tendered, on a per share basis, would be the average of the high and low selling
prices of MMC common stock on April 4th.

 

If the stock submitted for payment exceeds the number of shares required, the
excess shares will be returned to you.

 

C.

Non-Solicitation Agreement

 

An executed Non-Solicitation Agreement must accompany your completed Notice of
Option Exercise Form unless you are exercising the option after you have retired
on or after your Normal Retirement Date.

 

l.

While Employed

 

An executed Non-Solicitation Agreement must accompany your Notice of Option
Exercise Form. You may obtain a copy of the Agreement for execution from MMC
Global Compensation. You may wish to consider consulting an attorney before
signing the Agreement. Please retain a copy of your signed Agreement for your
records.

 

2.

Upon Early Retirement

 

If you retire on or after your Early Retirement Date and before your Normal
Retirement Date, all your options will be forfeited as of your termination of
employment unless you sign the Non-Solicitation Agreement for Early Retirees (as
described in Section V). You may obtain a copy of the Agreement for execution
from MMC Global Compensation. You may wish to consider consulting an attorney
before signing the Agreement. Please retain a copy of your signed Agreement for
your records.

 

III.

WITHHOLDING  

 

MMC and/or your local employer shall have the power and the right to deduct or
withhold, or require you to remit to MMC and to the your local employer, an
amount sufficient to satisfy taxes imposed under the laws of any country, state,
province, city or other jurisdiction, including but not limited to income taxes,
capital gain taxes, transfer taxes, and social security contributions, and
National Insurance Contributions that are required by law to be withheld with
respect to the grant of the option, any exercise of your rights under these
Terms and Conditions, the sale of shares acquired from the exercise of the
option, and/or payment of dividends on shares acquired pursuant to exercise of
the option.

 

An election to satisfy all applicable withholding taxes, either (1) by check or
(2) by having a sufficient number of the shares resulting from the option
exercise retained by MMC, must be made on or before the exercise date. If such
an election is not made by that time then, by default, shares will be retained
to satisfy the tax withholding obligation. Such shares will be valued at the
Fair Market Value of MMC common stock.

 

3

 

 

 

 

 

IV.

REGISTRATION AND DISTRIBUTION OF SHARES

 

A.

The shares from your stock option exercise will be registered as specified in
your Notice of Option Exercise Form, as of the date of exercise. The shares may
be registered only in (i) your name or (ii) your name and your spouse’s name as
joint tenants with rights of survivorship.

 

B.

The shares from your stock option exercise will be distributed as specified in
your Notice of Option Exercise Form, after you have satisfied your tax
withholding obligation.

 

C.

You will receive written confirmation of your stock option exercise by mail,
generally within a week following the exercise date.

 

V.

TERMINATION OF EMPLOYMENT

 

If your employment with MMC or any of its subsidiaries or affiliates (the
“Company”) terminates, the following shall apply:

 

A.

Death

 

In the event your employment is terminated because of your death, any unvested
option will vest at such termination of employment and will become exercisable
upon the satisfaction of the Performance Contingency. The person or persons to
whom your rights under the option shall pass by will or the laws of descent and
distribution shall be entitled to exercise such option (and any option shares
that were vested at the time of your death and for which the Performance
Contingency has been satisfied) within one year after the date of death, but in
no event shall the option be exercised beyond the expiration date of the grant.

 

B.

Permanent Disability

 

Should your employment terminate due to total and permanent disability as
determined under MMC’s long-term disability program, any unvested option will
vest at such termination of employment and will become exercisable upon the
satisfaction of the Performance Contingency. Such vested option shares (and any
option shares that were vested at the time of your termination of employment and
for which the Performance Contingency has been satisfied) shall be exercisable
until the expiration date of the grant.

 

C.

Retirement

 

In the event you retire from the Company on or after your Normal Retirement
Date, any unvested option will vest at such termination of employment and will
become exercisable upon the satisfaction of the Performance Contingency. Such
vested option shares (and any option shares that were vested at the time of your
termination of employment and for

 

4

 

 

 

 

which the Performance Contingency has been satisfied) shall be exercisable until
the expiration date of the grant.

 

D.

Early Retirement

 

If you (i) retire from the Company on or after your Early Retirement Date and
before your Normal Retirement Date and (ii) execute and comply with the
Non-Solicitation Agreement for Early Retirees for a period of three years
commencing with your termination of employment, or such lesser period as may be
applicable, then any unvested option will vest at such termination of employment
and will become exercisable upon the satisfaction of the Performance
Contingency. Such vested option shares (and any option shares that were vested
at the time of your termination of employment and for which the Performance
Contingency has been satisfied) shall be exercisable until the earlier of the
fifth anniversary of your termination of employment and the expiration date of
the grant. Failure to execute and comply with the Non-Solicitation Agreement
will result in forfeiture of all your options, whether vested or unvested.

 

E.

Definitions

 

As used in Section V.C. and D., the terms “Normal Retirement Date” and “Early
Retirement Date” shall have the respective meanings given such terms (or any
comparable substitute terms or concepts) set forth in the Company’s primary
retirement plan applicable to you upon your termination of employment.

 

F.

All Other Employment Terminations

 

For all other terminations of employment, all options, whether vested or
unvested, shall be forfeited on the date of termination, except to the extent
that the Committee may determine otherwise.

 

VI.

CHANGE IN CONTROL PROVISIONS

 

A.

Change in Control

 

Upon the occurrence of a “Change in Control” of MMC, as defined in the Plan, all
stock options you hold will become fully vested and exercisable, and any
restrictions contained in the terms and conditions of the option grants shall
lapse.

 

B.

Additional Payment

 

The value of the accelerated vesting of options because of a Change in Control
(the “Accelerated Award”) may be subject to a 20% federal excise tax under
Section 4999 of the Code (the “Excise Tax”). The Excise Tax is imposed when the
value, as determined by applicable regulations, of payments in the nature of
compensation contingent on a Change in Control (including the Accelerated Award)
equals or exceeds three times the average of your last five years’ W-2 earnings.

 

5

 

 

 

 

If a Change in Control occurs and the vesting of your options is accelerated,
MMC will determine if the Excise Tax is payable by you. If Excise Tax is payable
by you, MMC will pay to you, within five days of making the determination, an
amount of money (the “Additional Payment”) such that after payment of applicable
federal, state and local income taxes, employment taxes and any Excise Tax
imposed upon the Additional Payment, you will retain an amount of the Additional
Payment equal to the Excise Tax imposed in respect of the Accelerated Award. If
the Additional Payment, after payment of applicable taxes, is later determined
to be less than the amount necessary to reimburse you for the Excise Tax you
owe, a further payment will be made to you. If the Additional Payment, after
payment of applicable taxes, is later determined to be more than the amount
necessary to reimburse you for the Excise Tax you owe, you will be required to
reimburse MMC for such excess.

 

VII.

OTHER PROVISIONS

 

A.

No Right to Continued Employment. Neither the granting of the Award nor any
exercise thereof gives you any right to continue to be employed by the Company,
or restricts, in any way, your right or the right of your employer to terminate
your employment at any time for any reason not specifically prohibited by law.
Nothing in these Terms and Conditions or the Plan gives you any right to
continue in the employ of the Company or to interfere in any way with the right
of the Company to terminate your employment at any time.

 

B.

Discretionary Nature of Award. By accepting this award, you agree to be bound by
these Terms and Conditions and acknowledge that:

 

(1) MMC (and not your local employer) is granting your options. Furthermore,
these Terms & Conditions are not derived from any preexisting labor relationship
between you and MMC, but rather from a mercantile relationship.

 

(2) MMC will administer the Plan from outside your country of residence and that
U.S. law will govern all options granted under the Plan.

 

(3) That benefits and rights provided under the Plan are wholly discretionary
and, although provided by MMC, do not constitute regular or periodic payments.

 

(4) The benefits and rights provided under the Plan are not to be considered
part of your salary or compensation under your employment with your local
employer for purposes of calculating any severance, resignation, redundancy or
other end of service payments, vacation, bonuses, long-term service awards,
indemnification, pension or retirement benefits, or any other payments, benefits
or rights of any kind. You waive any and all rights to compensation or damages
as a result of the termination of employment with your local employer for any
reason whatsoever insofar as those rights result or may result from the loss or
diminution in value of such rights under the Plan or your ceasing to have any
rights under, or ceasing to be entitled to any rights under the Plan as a result
of such termination.

 

6

 

 

 

 

(5) The grant of options, hereunder, and any future grant of options under the
Plan is entirely voluntary, and at the complete discretion of MMC. Neither the
grant of the option nor any future grant of an option by MMC shall be deemed to
create any obligation to grant any further options, whether or not such a
reservation is explicitly stated at the time of such a grant. MMC has the right,
at any time and/or on an annual basis, to amend, suspend or terminate the Plan;
provided, however, that no such amendment, suspension, or termination shall
adversely affect your rights hereunder.

 

(6) The Plan shall not be deemed to constitute, and shall not be construed by
you to constitute, part of the terms and conditions of employment. The Company
shall not incur any liability of any kind to you as a result of any change or
amendment, or any cancellation, of the Plan at any time.

 

(7) Participation in the Plan shall not be deemed to constitute, and shall not
be deemed by you to constitute, an employment or labor relationship of any kind
with MMC.

 

C.

Limitations. Payment of shares is not secured by a trust, insurance contract or
other funding medium, and you do not have any interest in any fund or specific
asset of MMC by reason of the option.

 

D.

During your lifetime, an option shall be exercisable only by you, and no right
thereunder shall be transferable except by will or the laws of descent and
distribution.

 

E.

Neither you nor any person entitled to exercise your rights in the event of your
death shall have any of the rights of a stockholder with respect to the shares
of MMC common stock subject to an option, unless, and until, you have exercised
the option, paid the full exercise price thereof, and have received the shares
so acquired.

 

F.

MMC is not liable for the non-issuance or non-transfer, nor for any delay in the
issuance or transfer, of any shares of MMC common stock subject to an option or
otherwise pursuant to the Plan which results from the inability of MMC to
obtain, or in any delay in obtaining, from each regulatory body having
jurisdiction, all requisite authority to issue or transfer shares of MMC common
stock, if counsel for MMC deems such authority necessary for the lawful issuance
or transfer of any such shares.

 

G.

The Award is subject to all of these terms and conditions and to the terms and
conditions of the Plan, and your acceptance of the Award shall constitute your
agreement to the terms and conditions of the Plan and the administrative
regulations of the Committee. In the event of any inconsistency between these
terms and conditions and the provisions of the Plan, the provisions of the Plan
shall prevail. Your acceptance of the Award constitutes your agreement that the
shares of MMC common stock acquired hereunder will not be sold or otherwise
disposed of by you in violation of any applicable securities laws or
regulations.

 

7

 

 

 

 

 

H.

An option shall be exercised in accordance with, and the Award shall be subject
to, such additional administrative regulations as the Committee may from time to
time adopt. All decisions of the Committee upon any questions arising under the
Plan or under these terms and conditions shall be conclusive and binding.

 

I.

The Plan, and the granting and exercising of options or awards thereunder, and
the obligations of MMC and employees under the Plan, shall be subject to all
applicable governmental laws, rules and regulations, and to such approvals by
any regulatory or governmental agency as may be required, including, but not
limited to, tax and securities regulations. This provision takes precedence over
all aforementioned terms and conditions.

 

J.

The Committee has full discretion and authority to control and manage the
operation and administration of the Award and the Plan. The Committee is
comprised of at least two members of the MMC Board of Directors (the “Board of
Directors”).

 

K.

The Board of Directors may amend, alter, suspend, discontinue or terminate the
Plan or the Committee’s authority to grant awards under the Plan, except that,
without the consent of an affected participant, no such action may materially
adversely affect the rights of such participant under any award theretofore
granted to him or her. Following the occurrence of a Change in Control (as
defined in the Plan), the Board of Directors may not terminate the Plan or amend
the Plan with respect to awards that have already been granted in any manner
adverse to employees.

 

L.

No more than eight million (8,000,000) shares of MMC common stock (par value
$1.00 per share), plus such number of shares remaining unused under pre-existing
stock plans approved by MMC’s stockholders, may be issued under the Plan.
Employees of the Company will be eligible for awards under the Plan. MMC common
stock is traded on the New York Stock Exchange under the symbol “MMC” and is
subject to market price fluctuation. The shares delivered upon exercise of an
option may be obtained through open market purchases, treasury stock or newly
issued shares.

 

M.

The Plan is not qualified under Section 401(a) of the Internal Revenue Code and
is not subject to the provisions of the Employee Retirement Income Security Act
of 1974. Your right to payment of your Award is the same as the right of an
unsecured general creditor of MMC.

 

N.

There are no investment fees associated with your Award, and MMC pays all
administrative expenses associated with your Award.

 

O.

Data Privacy Consent.

 

(1)

By signing these Terms and Conditions, and as a condition of the grant of the
options, you expressly consent to the collection, use, and transfer of personal

 

8

 

 

 

 

data as described in this Section VII.O. to the full extent permitted by and in
full compliance with applicable law.

 

(2)

You understand that your local employer holds, by means of an automated data
file, certain personal information about you, including, but not limited to,
name, home address and telephone number, date of birth, social insurance number,
salary, nationality, job title, any shares or directorships held by MMC, details
of all options or other entitlement to shares awarded, canceled, exercised,
vested, unvested, or outstanding in your favor, for the purpose of managing and
administering the Plan (“Data”).

 

(3)

You further understand that part or all of your Data may be also held by MMC
and/or its subsidiaries or affiliates, pursuant to a transfer made in the past
with your consent, in respect of any previous grant of options or awards, which
was made for the same purposes of managing and administering of previous
award/incentive plans, or for other purposes.

 

(4)

You further understand that your local employer will transfer Data to MMC and/or
its subsidiaries or affiliates among themselves as necessary for the purposes of
implementation, administration, and management of the your participation in the
Plan, and that MMC and/or its subsidiaries or affiliates may transfer data among
themselves, and/or each, in turn, further transfer Data to any third parties
assisting MMC in the implementation, administration, and management of the Plan
(“Data Recipients”).

 

(5)

You understand that MMC and/or its subsidiaries or affiliates, as well as the
Data Recipients, are or may be located in your country of residence or
elsewhere, such as the United States. You authorize MMC and/or its subsidiaries
or affiliates, as well as Data Recipients to receive, possess, use, retain, and
transfer Data in electronic or other form, for the purposes of implementing,
administering, and managing your participation in the Plan, including any
transfer of such Data, as may be required for the administration of the Plan
and/or the subsequent holding of shares on your behalf, to a broker or third
party with whom the shares acquired on exercise may be deposited.

 

(6)

You understand that you may show your opposition to the processing and transfer
of your Data, and, may at any time, review the Data, request that any necessary
amendments be made to it, or withdraw your consent herein in writing by
contacting MMC. You further understand that withdrawing consent may affect your
ability to participate in the Plan.

 

Please retain this document in your permanent records. If you have any questions
regarding the Plan or your stock option grant or would like an account statement
detailing the number and vesting date of your options or any other information,
please contact:

 

9

 

 

 

 

MMC Global Compensation

Marsh & McLennan Companies, Inc.

1166 Avenue of the Americas

New York, New York l0036-2774

United States of America

Telephone Number: 212-345-5000

Facsimile Number: (212) 345-4767

 

 

VIII.

RESALE RESTRICTIONS

 

If you are an “affiliate” of MMC at the time you exercise an option and receive
shares of MMC common stock, your ability to resell those shares may be
restricted. In order to resell such shares, you will be required either to
observe the resale limitations of Rule 144 of the Securities Act of 1933, as
amended (the “Securities Act”), or offer your shares for resale in compliance
with another applicable exemption from the registration requirements of the
Securities Act.

 

An “affiliate” is defined, for purposes of the Securities Act, as a person who
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, MMC. A “person” is defined to
include any relative or spouse of the person and any relative of the person’s
spouse who has the same home as the person, any trust, estate, corporation or
other organization in which the person or any of the foregoing persons has
collectively more than 10% beneficial interest, and any trust or estate for
which the person or any of the foregoing persons serves as trustee, executor or
in any similar capacity. A person “controls, is controlled by or is under common
control” with MMC when that person directly or indirectly possesses the power to
direct or cause the direction of the management and policies of MMC whether
through the ownership of voting securities, by contract or otherwise.

 

IX.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

The Annual Report on Form 10-K of MMC for its last fiscal year, MMC’s
Registration Statement on Form 8 dated February 3, 1987, describing MMC common
stock, including any amendment or reports filed for the purpose of updating such
description, and MMC’s Registration Statement on Form 8-A/A dated January 26,
2000, describing the Preferred Stock Purchase Rights attached to the common
stock, including any further amendment or reports filed for the purpose of
updating such description, which have been filed by MMC under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), are incorporated by
reference herein.

 

All documents subsequently filed by MMC pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, subsequent to the end of MMC’s last fiscal year
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which

 

10

 

 

 

 

deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents.

 

The Annual Report can be viewed on MMC’s website at
http://www.mmc.com/annualreport.html. Participants may receive without charge,
upon written or oral request, a copy of any of the documents incorporated herein
by reference and any other documents that constitute part of this Prospectus by
contacting MMC Global Compensation as indicated above.

 

*                  *                  *

 

IN WITNESS WHEREOF, MMC has caused these Terms& Conditions to be duly executed
by the facsimile signature of its Director Global Compensation & Benefits as of
the day and year first above written. By consenting to these Terms and
Conditions, you agree to the following: (i) you have carefully read, fully
understand and agree to all of the terms and conditions described herein and the
Plan; and (ii) you understand and agree that these Terms & Conditions and the
Plan constitute the entire understanding between you and MMC regarding the
option, and that any prior agreements, commitments or negotiations concerning
the option are replaced and superseded. You will be deemed to consent to the
application of the terms and conditions set forth in these Terms and Conditions
and the Plan unless you contact MMC Global Compensation in writing within thirty
(30) days of the date of these Terms and Conditions.

 

 

 

Stephen Pennacchio

 

 

_________________

Participant’s signature

 

 

11

 

 

 

 

 

 

 

This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933, as amended.

The date of this prospectus is [Date].

 

MARSH & McLENNAN COMPANIES

 

2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN

AND

2000 EMPLOYEE INCENTIVE AND STOCK AWARD PLAN  

 

Summary of Terms and Conditions

Applicable to Mandatory Deferrals of [Year] Annual Bonuses

 

 

1.

MANDATORY DEFERRAL

 

a.

Participation

All active employees of Marsh Inc. and its subsidiaries (collectively, “the
Company”) who are awarded an annual incentive bonus for [Year] of $106,000 or
above (unless subject to prior agreement) shall participate in the mandatory
deferral program (the “Program”). The granting of an annual incentive bonus
award is discretionary and delivery of materials applicable to the Program shall
not affect entitlement to such an award. An employee who participates in the
Program is referred to herein as a “Participant”.

 

b.

Mandatory Deferral

Fifty percent (50%) of a Participant’s [Year] annual incentive bonus in excess
of $100,000 is subject to mandatory deferral (the “Deferral”).

 

c.

Bonus Award Date

The bonus award date for [Year] annual incentive bonuses is the date on which
bonus amounts which are not subject to mandatory deferral are paid, targeted to
be [Date].

 

d.

Minimum Deferral

The minimum deferral amount is $3,000.

 

e.

Vesting Date

The Deferral is scheduled to vest on the earlier of (1) [Date] or (2) such
earlier date in accordance with Sections 3(a) or 4 (in either case, the “Vesting
Date”).

 

 

 

 

 

 

 

2.

DEFERRED BONUS ACCOUNT  

 

a.

Deferred Bonus Account. Deferrals shall be credited to a bookkeeping account
(the “Deferred Bonus Account”) the value of which shall be equal to the amount
of the Deferral, credited with simple interest at a rate of 2% per year.

 

b.

Statement of Account. A Participant may obtain an account statement setting
forth the balance credited to his or her Deferred Bonus Account by contacting
Marsh Inc. Compensation at:

 

Marsh Inc.

Attention: Compensation Group

1166 Avenue of the Americas

New York, NY 10036-2774

Telephone: (212) 345-0815 or (212) 345-9934

Facsimile: (212) 345-4665

 

c.

Payment of Deferred Amounts

 

(i)

Payment Date. A Participant’s Deferred Bonus Account, with interest accrued
through the date of payment, shall be paid on, or as soon as practicable after,
the Vesting Date; provided, however, that no payment shall be made to a
Participant who is determined by the Compensation Committee of the Company’s
Board of Directors (the “Committee”) to be a “key employee” under Section 409A
of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations thereunder before the six month anniversary of his or her
termination of employment.

 

(ii)

Form of Payment. A Participant’s Deferred Bonus Account shall be distributed in
a single lump sum, less applicable withholding taxes. Distribution of the
Deferred Bonus Account will be made either in cash or in shares of the common
stock of Marsh & McLennan Companies, Inc. (the “Corporation”), at the election
of the Company. If the Company elects to distribute shares, the number of shares
distributed shall be determined by dividing the value of the Deferred Bonus
Account in U.S. Dollars by the average of the high and low selling prices of the
common stock of the Corporation on the New York Stock Exchange on the trading
day immediately preceding the Vesting Date.

 

3.

TERMINATION OF EMPLOYMENT

 

a.

If the Participant’s employment with the Company or any of its affiliates
terminates prior to [Date], all amounts credited to a Participant’s Deferred
Bonus Account shall vest as of the date of termination of employment, provided
that such termination of employment is on account of:

 

-2-

 

 

 

 

 

(i)

Total and Permanent Disability (as determined under the Company’s Long-Term
Disability Plan applicable to the Participant and Section 409A of the Code and
the regulations thereunder);

 

(ii)

Early, Normal or Deferred Retirement (as such terms are defined in the Company’s
primary retirement plan applicable to the Participant). In the event of Early
Retirement, the Participant will be required to execute a Non-Solicitation
Agreement for Early Retirees. It being understood that failure to comply with
said Non-Solicitation Agreement will cause the Early Retirement to be treated as
termination of employment under Section 3(b), below;

 

(iii)

Termination By the Company without Cause. For purposes of these terms and
conditions, Cause shall mean misappropriation of assets of the Corporation or
any of its subsidiaries or affiliates; willful misconduct in the performance of
the employee’s duties; continued failure after notice, or refusal, to perform
the duties of the employee; violation of a written code of conduct applicable to
the employee; willful violation of an important policy of the Corporation or any
of its subsidiaries or affiliates; breach of fiduciary duty or breach of trust;
conviction of a felony, or of any other crime involving moral turpitude;
imprisonment for any crime; or any other action likely to bring substantial
discredit to the Corporation or any of its subsidiaries or affiliates; or

 

(iv)

the Participant’s death.

 

b.

All Other Employment Terminations. If a Participant ceases to be an active
employee of the Corporation or any of its subsidiaries or affiliates prior to
[Date] for any other reason, the Participant’s Deferred Bonus Account shall be
forfeited, except to the extent that the Committee may determine otherwise.

 

4.

CHANGE IN CONTROL

 

a.

Change in Control. Notwithstanding any other provision in the Plan to the
contrary, in the event of a “Change in Control” of the Corporation, as defined
in the Corporation’s 2000 Senior Executive Incentive and Stock Award Plan (the
“2000 Senior Executive Plan”) and 2000 Employee Incentive and Stock Award Plan
(the “2000 Employee Plan”), or upon the sale of the business unit in which the
Participant works, all amounts credited to the Participant’s Deferred Bonus
Account as of the effective date of such Change in Control will vest and be
distributed, less applicable withholding taxes, as soon as practicable
thereafter in accordance with Section 409A of the Code and the regulations
thereunder.

 

-3-

 

 

 

 

b.

Form of Payment. In the event of a Change in Control of the Corporation,
distribution of a Participant’s Deferred Bonus Account, less applicable
withholding taxes, shall be made in cash.

 

5.

PAYMENT TO DECEASED PARTICIPANT

Any amounts payable under the Program to a deceased Participant shall be paid to
the person or persons to whom such Participant’s rights pass by will or the law
of descent and distribution, and such payment shall completely discharge the
Corporation’s obligations under the Program.

 

6.

ADMINISTRATION, AMENDMENT AND TERMINATION OF THE PROGRAM

Except as otherwise provided herein, the Program shall be administered by the
Committee. The Committee shall have authority in its sole discretion to
interpret the Program and make all determinations with respect to the Program.
All determinations made by the Committee shall be final, binding and conclusive
on all Participants and beneficiaries. The Committee may delegate to any other
individual or entity the authority to perform any or all of the functions of the
Committee under the Program, and references to the Committee shall be deemed to
include any such delegate. The Committee may, at its discretion and at any time,
amend the Program in whole or in part. The Committee may also terminate the
Program in its entirety at any time.

 

7.

MISCELLANEOUS

 

a.

A Participant under the Program is a general (not secured) creditor, and nothing
contained in the Program, the 2000 Senior Executive Plan or the 2000 Employee
Plan shall create a trust of any kind or a fiduciary relationship between the
Corporation and the Participant or the Participant’s estate or beneficiary.
Nothing contained herein shall be construed as conferring upon the Participant
the right to continued employment with the Corporation or its subsidiaries, or
to a bonus award. Except as otherwise provided by applicable law, benefits
payable under the Program may not be assigned or hypothecated, and no such
benefits shall be subject to legal process or attachment for the payment of any
claim of any person entitled to receive the same.

 

b.

Participation in the Program is subject to these terms and conditions and to the
terms and conditions of (A) the 2000 Senior Executive Plan with respect to those
Participants hereunder who are subject thereto and (B) the 2000 Employee Plan
with respect to all other Participants. Participation in the Program shall
constitute an agreement by the Participant to all such terms and conditions and
to the administrative regulations of the Committee. In the event of any
inconsistency between these terms and conditions and the provisions of the 2000
Senior Executive Plan or the 2000 Employee Plan, as applicable, the provisions
of the latter shall prevail. The Program, the 2000 Senior Executive Plan and the
2000

 

-4-

 

 

 

 

Employee Plan are not qualified under Section 401(a) of the Code and are not
subject to the periodic reporting and funding provisions of the Employee
Retirement Income Security Act of 1974.

 

c.

Not more than eight million (8,000,000) shares of the Corporation’s common stock
(par value $1.00 per share), plus such number of shares remaining unused under
pre-existing stock plans approved by the Corporation’s stockholders, may be
issued under the 2000 Senior Executive Plan.

 

d.

Not more than eighty million (80,000,000) shares of the Corporation’s common
stock (par value $1.00 per share), plus such number of shares authorized and
reserved for awards pursuant to certain preexisting share resolutions adopted by
the Corporation’s Board of Directors, may be issued under the 2000 Employee
Plan.

 

e.

The Corporation’s common stock is traded on the New York Stock Exchange under
the symbol “MMC” and is subject to market price fluctuation. The shares of the
Corporation’s common stock delivered in respect of the Deferred Bonus Account
may be obtained through open market purchases, treasury stock or newly issued
shares.

 

f.

There are no investment fees or administrative expenses charged against a
Participant’s Deferred Bonus Account.

 

8.

FEDERAL INCOME TAX CONSIDERATIONS

 

The following is a summary of the United States Federal income tax consequences
of participating in the Program. This discussion does not address all aspects of
the U.S. Federal income tax consequences that may be relevant to a Participant
in light of his or her personal investment or tax circumstances and does not
discuss any state or local tax consequences Plan participation. This section is
based on the Internal Revenue Code of 1986, as amended (the “Code”), its
legislative history, existing and proposed regulations under the Code, and
published rulings and court decisions, all as currently in effect. These laws
are subject to change, possibly on a retroactive basis. A Participant should
consult his or her own tax advisor concerning the application of the U.S.
Federal income tax laws to his or her particular situation, as well as the
applicability and effect of any state or local tax laws before taking any
actions with respect participation in the Program.

 

Under present Federal income tax laws, no portion of the balance credited to a
Participant’s Deferred Bonus Account will be includable in income for Federal
income or FICA tax purposes until it is vested and distributable. When the
Deferred Bonus Account is actually paid to the Participant, such portion will be
includable in income, and Federal, state and local income tax withholding and
FICA tax withholding will apply, and such amount will generally be deductible by
the Corporation. The Corporation may make necessary arrangements in order to
effectuate any such withholding, including the mandatory

 

-5-

 

 

 

 

withholding of shares of common stock of the Corporation which would otherwise
be distributed to a Participant.

 

Notwithstanding any other provision herein, a Participant’s Deferred Bonus
Account may be subject to additional restrictions to ensure compliance with the
requirements of Section 409A of the Code (relating to nonqualified deferred
compensation) and the regulations thereunder. The Committee intends to
administer the Plan in accordance with Section 409A of the Code and reserves the
right to make changes in the terms or operation of the Program and the Deferred
Bonus Account (including changes that may have retroactive effect) deemed
necessary or desirable to comply with Section 409A of the Code. This means, for
example, that the timing of distributions may be different from those described
in this document or in other materials relating to the Program, the 2000 Senior
Executive Plan and the 2000 Employee Plan that do not yet reflect Section 409A
of the Code. If a Participant’s Deferred Bonus Account is not in compliance with
Section 409A of the Code, he or she will be subject to immediate taxation of all
vested but unpaid amounts under the Program that are subject to Section 409A of
the Code, plus interest at the underpayment rate plus 1%, plus a 20% penalty.

 

9.

RESALE RESTRICTIONS

 

If a Participant is an “affiliate” of the Corporation at the time he or she
receives a distribution under the Program in the form of shares of the
Corporation’s common stock, his or her ability to resell those shares may be
restricted. In order to resell such shares, such Participant will be required
either to observe the resale limitations of Rule 144 of the Securities Act of
1933, as amended (the “Securities Act’), or offer his or her shares for resale
in compliance with another applicable exemption from the registration
requirements of the Securities Act.

 

An “affiliate” is defined, for purposes of the Securities Act, as a person who
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Corporation. A “person” is
defined to include any relative or spouse of the person and any relative of the
person’s spouse who has the same home as the person, any trust, estate,
corporation or other organization in which the person or any of the foregoing
persons has collectively more than 10% beneficial interest, and any trust or
estate for which the person or any of the foregoing persons serves as trustee,
executor or in any similar capacity. A person “controls, is controlled by or is
under common control” with the Corporation when that person directly or
indirectly possesses the power to direct or cause the direction of the
management and policies of the Corporation whether through the ownership of
voting securities, by contract or otherwise.

 

10.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE  

 

The Annual Report on Form 10-K of the Corporation for its last fiscal year, the
Corporation’s Registration Statement on Form 8 dated February 3, 1987,
describing the Corporation’s common stock, including any amendment or reports
filed for the purpose of

 

-6-

 

 

 

 

updating such description, and the Corporation’s Registration Statement on Form
8-A/A dated January 26, 2000, describing the Preferred Stock Purchase Rights
attached to the common stock, including any further amendment or reports filed
for the purpose of updating such description, which have been filed by the
Corporation under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), are incorporated by reference herein.

 

All documents subsequently filed by the Corporation pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of the
Corporation’s last fiscal year and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents.

 

Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting

 

Marsh & McLennan Companies, Inc.

Attention: Senior Manager, Executive Compensation

Mandatory Deferrals of [Year] Annual Bonuses

1166 Avenue of the Americas

New York, New York 10036-2774

Telephone: (212) 345-5659 or (212) 345-5000

 

 

 

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This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933, as amended.

The date of this prospectus is [Date].

 

MARSH & McLENNAN COMPANIES

 

2000 SENIOR EXECUTIVE INCENTIVE AND STOCK AWARD PLAN

AND

2000 EMPLOYEE INCENTIVE AND STOCK AWARD PLAN  

 

Summary of Terms and Conditions

Applicable to Mandatory Deferrals of [Year] Annual Bonuses

 

1.

MANDATORY DEFERRAL

 

a.

Participation

Certain active employees of Mercer Inc. and its subsidiaries (collectively, “the
Company”) who are awarded an annual incentive bonus for [Year] shall participate
in the mandatory deferral program (the “Program”). An employee who participates
in the Program is referred to herein as a “Participant”. Under the Program, a
percentage of a Participant’s [Year] annual incentive bonus is subject to
mandatory deferral (the “Deferral”). The granting of an annual incentive bonus
award is discretionary and delivery of materials applicable to the Program shall
not affect entitlement to such an award.

 

b.

Bonus Award Date

The bonus award date for [Year] annual incentive bonuses is the date on which
bonus amounts which are not subject to mandatory deferral are paid, targeted to
be [Date].

 

c.

Vesting Date

The Deferral is scheduled to vest on the earlier of (1) [Date] or (2) such
earlier date in accordance with Sections 3(a) or 4 (in either case, the “Vesting
Date”).

 

2.

DEFERRED BONUS ACCOUNT  

 

a.

Deferred Bonus Account. Deferrals shall be credited to a bookkeeping account
(the “Deferred Bonus Account”) the value of which shall be equal to the amount
of the Deferral, credited with simple interest at a rate of 2% per year.

b.

Statement of Account. A Participant may obtain an account statement setting
forth the balance credited to his or her Deferred Bonus Account by contacting
the Participant’s Mercer entity Human Resources Group.

 

 

 

 

 

 

c.

Payment of Deferred Amounts

 

(i)

Payment Date. A Participant’s Deferred Bonus Account, with interest accrued
through the date of payment, shall be paid on, or as soon as practicable after,
the Vesting Date; provided, however, that no payment shall be made to a
Participant who is determined by the Compensation Committee of the Company’s
Board of Directors (the “Committee”) to be a “key employee” under Section 409A
of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and the
regulations thereunder before the six month anniversary of his or her
termination of employment.

 

(ii)

Form of Payment. A Participant’s Deferred Bonus Account shall be distributed in
a single lump sum, less applicable withholding taxes. Distribution of the
Deferred Bonus Account will be made either in cash or in shares of the common
stock of Marsh & McLennan Companies, Inc. (the “Corporation”), at the election
of the Company. If the Company elects to distribute shares, the number of shares
distributed shall be determined by dividing the value of the Deferred Bonus
Account in U.S. Dollars by the average of the high and low selling prices of the
common stock of the Corporation on the New York Stock Exchange on the trading
day immediately preceding the Vesting Date.

 

3.

TERMINATION OF EMPLOYMENT

 

a.

If the Participant’s employment with the Company or any of its affiliates
terminates prior to [Date], all amounts credited to a Participant’s Deferred
Bonus Account shall vest as of the date of termination of employment, provided
that such termination of employment is on account of:

 

(i)

Total and Permanent Disability (as determined under the Company’s Long-Term
Disability Plan applicable to the Participant and Section 409A of the Code and
the regulations thereunder);

 

(ii)

Early, Normal or Deferred Retirement (as such terms are defined in the Company’s
primary retirement plan applicable to the Participant). In the event of Early
Retirement, the Participant will be required to execute a Non-Solicitation
Agreement for Early Retirees. It being understood that failure to comply with
said Non-Solicitation Agreement will cause the Early Retirement to be treated as
termination of employment under Section 3(b), below;

 

(iii)

Termination By the Company without Cause. For purposes of these terms and
conditions, Cause shall mean misappropriation of assets of the Corporation or
any of its subsidiaries or affiliates; willful misconduct in the performance of
the employee’s duties; continued failure after notice, or refusal, to perform
the duties of the employee; violation of a written code of conduct applicable to
the

 

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employee; willful violation of an important policy of the Corporation or any of
its subsidiaries or affiliates; breach of fiduciary duty or breach of trust;
conviction of a felony, or of any other crime involving moral turpitude;
imprisonment for any crime; or any other action likely to bring substantial
discredit to the Corporation or any of its subsidiaries or affiliates; or

 

(iv)

the Participant’s death.

 

b.

All Other Employment Terminations. If a Participant ceases to be an active
employee of the Corporation or any of its subsidiaries or affiliates prior to
[Date] for any other reason, the Participant’s Deferred Bonus Account shall be
forfeited, except to the extent that the Committee may determine otherwise.

 

4.

CHANGE IN CONTROL

 

a.

Change in Control. Notwithstanding any other provision in the Plan to the
contrary, in the event of a “Change in Control” of the Corporation, as defined
in the Corporation’s 2000 Senior Executive Incentive and Stock Award Plan (the
“2000 Senior Executive Plan”) and 2000 Employee Incentive and Stock Award Plan
(the “2000 Employee Plan”), or upon the sale of the business unit in which the
Participant works, all amounts credited to the Participant’s Deferred Bonus
Account as of the effective date of such Change in Control will vest and be
distributed, less applicable withholding taxes, as soon as practicable
thereafter in accordance with Section 409A of the Code and the regulations
thereunder.

 

b.

Form of Payment. In the event of a Change in Control of the Corporation,
distribution of a Participant’s Deferred Bonus Account, less applicable
withholding taxes, shall be made in cash.

 

5.

PAYMENT TO DECEASED PARTICIPANT

Any amounts payable under the Program to a deceased Participant shall be paid to
the person or persons to whom such Participant’s rights pass by will or the law
of descent and distribution, and such payment shall completely discharge the
Corporation’s obligations under the Program.

 

6.

ADMINISTRATION, AMENDMENT AND TERMINATION OF THE PROGRAM

Except as otherwise provided herein, the Program shall be administered by the
Committee. The Committee shall have authority in its sole discretion to
interpret the Program and make all determinations with respect to the Program.
All determinations made by the Committee shall be final, binding and conclusive
on all Participants and beneficiaries. The Committee may delegate to any other
individual or entity the authority to perform any or all of the functions of the
Committee under the Program, and references to the Committee shall be deemed to
include any such delegate. The Committee may, at its discretion and at any time,
amend the Program in whole or in part. The Committee may also terminate the
Program in its entirety at any time.

 

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7.

MISCELLANEOUS

 

a.

A Participant under the Program is a general (not secured) creditor, and nothing
contained in the Program, the 2000 Senior Executive Plan or the 2000 Employee
Plan shall create a trust of any kind or a fiduciary relationship between the
Corporation and the Participant or the Participant’s estate or beneficiary.
Nothing contained herein shall be construed as conferring upon the Participant
the right to continued employment with the Corporation or its subsidiaries, or
to a bonus award. Except as otherwise provided by applicable law, benefits
payable under the Program may not be assigned or hypothecated, and no such
benefits shall be subject to legal process or attachment for the payment of any
claim of any person entitled to receive the same.

 

b.

Participation in the Program is subject to these terms and conditions and to the
terms and conditions of (A) the 2000 Senior Executive Plan with respect to those
Participants hereunder who are subject thereto and (B) the 2000 Employee Plan
with respect to all other Participants. Participation in the Program shall
constitute an agreement by the Participant to all such terms and conditions and
to the administrative regulations of the Committee. In the event of any
inconsistency between these terms and conditions and the provisions of the 2000
Senior Executive Plan or the 2000 Employee Plan, as applicable, the provisions
of the latter shall prevail. The Program, the 2000 Senior Executive Plan and the
2000 Employee Plan are not qualified under Section 401(a) of the Code and are
not subject to the periodic reporting and funding provisions of the Employee
Retirement Income Security Act of 1974.

 

c.

Not more than eight million (8,000,000) shares of the Corporation’s common stock
(par value $1.00 per share), plus such number of shares remaining unused under
pre-existing stock plans approved by the Corporation’s stockholders, may be
issued under the 2000 Senior Executive Plan.

 

d.

Not more than eighty million (80,000,000) shares of the Corporation’s common
stock (par value $1.00 per share), plus such number of shares authorized and
reserved for awards pursuant to certain preexisting share resolutions adopted by
the Corporation’s Board of Directors, may be issued under the 2000 Employee
Plan.

 

e.

The Corporation’s common stock is traded on the New York Stock Exchange under
the symbol “MMC” and is subject to market price fluctuation. The shares of the
Corporation’s common stock delivered in respect of the Deferred Bonus Account
may be obtained through open market purchases, treasury stock or newly issued
shares.

 

f.

There are no investment fees or administrative expenses charged against a
Participant’s Deferred Bonus Account.

 

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8.

FEDERAL INCOME TAX CONSIDERATIONS

 

The following is a summary of the United States Federal income tax consequences
of participating in the Program. This discussion does not address all aspects of
the U.S. Federal income tax consequences that may be relevant to a Participant
in light of his or her personal investment or tax circumstances and does not
discuss any state or local tax consequences Plan participation. This section is
based on the Internal Revenue Code of 1986, as amended (the “Code”), its
legislative history, existing and proposed regulations under the Code, and
published rulings and court decisions, all as currently in effect. These laws
are subject to change, possibly on a retroactive basis. A Participant should
consult his or her own tax advisor concerning the application of the U.S.
Federal income tax laws to his or her particular situation, as well as the
applicability and effect of any state or local tax laws before taking any
actions with respect participation in the Program.

 

Under present Federal income tax laws, no portion of the balance credited to a
Participant’s Deferred Bonus Account will be includable in income for Federal
income or FICA tax purposes until it is vested and distributable. When the
Deferred Bonus Account is actually paid to the Participant, such portion will be
includable in income, and Federal, state and local income tax withholding and
FICA tax withholding will apply, and such amount will generally be deductible by
the Corporation. The Corporation may make necessary arrangements in order to
effectuate any such withholding, including the mandatory withholding of shares
of common stock of the Corporation which would otherwise be distributed to a
Participant.

 

Notwithstanding any other provision herein, a Participant’s Deferred Bonus
Account may be subject to additional restrictions to ensure compliance with the
requirements of Section 409A of the Code (relating to nonqualified deferred
compensation) and the regulations thereunder. The Committee intends to
administer the Plan in accordance with Section 409A of the Code and reserves the
right to make changes in the terms or operation of the Program and the Deferred
Bonus Account (including changes that may have retroactive effect) deemed
necessary or desirable to comply with Section 409A of the Code. This means, for
example, that the timing of distributions may be different from those described
in this document or in other materials relating to the Program, the 2000 Senior
Executive Plan and the 2000 Employee Plan that do not yet reflect Section 409A
of the Code. If a Participant’s Deferred Bonus Account is not in compliance with
Section 409A of the Code, he or she will be subject to immediate taxation of all
vested but unpaid amounts under the Program that are subject to Section 409A of
the Code, plus interest at the underpayment rate plus 1%, plus a 20% penalty.

 

9.

RESALE RESTRICTIONS

 

If a Participant is an “affiliate” of the Corporation at the time he or she
receives a distribution under the Program in the form of shares of the
Corporation’s common stock, his or her ability to resell those shares may be
restricted. In order to resell such shares, such Participant

 

 

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will be required either to observe the resale limitations of Rule 144 of the
Securities Act of 1933, as amended (the “Securities Act’), or offer his or her
shares for resale in compliance with another applicable exemption from the
registration requirements of the Securities Act.

 

An “affiliate” is defined, for purposes of the Securities Act, as a person who
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Corporation. A “person” is
defined to include any relative or spouse of the person and any relative of the
person’s spouse who has the same home as the person, any trust, estate,
corporation or other organization in which the person or any of the foregoing
persons has collectively more than 10% beneficial interest, and any trust or
estate for which the person or any of the foregoing persons serves as trustee,
executor or in any similar capacity. A person “controls, is controlled by or is
under common control” with the Corporation when that person directly or
indirectly possesses the power to direct or cause the direction of the
management and policies of the Corporation whether through the ownership of
voting securities, by contract or otherwise.

 

10.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE  

 

The Annual Report on Form 10-K of the Corporation for its last fiscal year, the
Corporation’s Registration Statement on Form 8 dated February 3, 1987,
describing the Corporation’s common stock, including any amendment or reports
filed for the purpose of updating such description, and the Corporation’s
Registration Statement on Form 8-A/A dated January 26, 2000, describing the
Preferred Stock Purchase Rights attached to the common stock, including any
further amendment or reports filed for the purpose of updating such description,
which have been filed by the Corporation under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), are incorporated by reference herein.

 

All documents subsequently filed by the Corporation pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, subsequent to the end of the
Corporation’s last fiscal year and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such documents.

 

Participants may receive without charge, upon written or oral request, a copy of
any of the documents incorporated herein by reference and any other documents
that constitute part of this Prospectus by contacting

 

Marsh & McLennan Companies, Inc.

Attention: Senior Manager, Executive Compensation

Mandatory Deferrals of [Year] Annual Bonuses

1166 Avenue of the Americas

New York, New York 10036-2774

Telephone: (212) 345-5659 or (212) 345-5000

 

 

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