Exhibit 10.1

 

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

AND

2000 EMPLOYEE INCENTIVE AND STOCK AWARD PLAN

 

Terms and Conditions of [Year] Annual Long-Term Incentive Award

to U.S. Award Recipients

 

 

This [Year] Annual Long Term Incentive Award has been granted to you on [Date]
(the “Grant Date”) under the Marsh & McLennan Companies, Inc. 2000 Senior
Executive Incentive and Stock Award Plan or the Marsh & McLennan Companies, Inc.
2000 Employee Incentive and Stock Award Plan (as applicable to you, the “Plan”)
as set forth in the Grant Letter (as defined below). For purposes of these Terms
and Conditions, “MMC” means Marsh & McLennan Companies, Inc. and any successor
thereto.

 

I.

GRANT, VESTING, EXERCISABILITY AND DISTRIBUTION OF AWARD; RESTRICTIVE COVENANTS
AGREEMENT  

 

 

A.

Grant of Award

 

 

1.

Your [Year] Annual Long Term Incentive Award consists of one or more of the
following types of equity-based awards: performance contingent nonqualified
stock options, restricted stock units, and performance based restricted stock
units. The letter delivered to you from [Name], dated [Date], announcing the
grant of your [Year] Annual Long Term Incentive Award (the “Grant Letter”) sets
forth each type of equity-based award and the number of shares of MMC common
stock covered by such equity-based award that comprises your individual award
(the “Award”). These Terms and Conditions describe the terms and conditions of
all three types of equity-based awards that may comprise a [Year] Annual Long
Term Incentive Award even though your Award may consist of fewer types of
equity-based awards, in which case, only the portions of these Terms and
Conditions that describe or relate to those types of equity-based awards shall
pertain to your Award. The description of a type of equity-based award in these
Terms and Conditions that is not a part of your Award does not give or imply any
right to such type of equity-based award. You must execute a Restrictive
Covenants Agreement (as described in Section I.E.) by the date specified in the
Grant Letter to accept the Award.

 

 

1

 

 

B.

Performance Contingent Nonqualified Stock Option

 

 

1.

General. A performance contingent nonqualified stock option (“Option”)
represents the right to purchase the number of shares of MMC common stock
specified in the Grant Letter (the “Option Shares”) at the exercise price
specified in the Grant Letter.

 

 

2.

Vesting. Subject to your continued employment, twenty-five percent (25%) of the
Option Shares covered by the Option will vest on each of the first four
anniversaries of the Grant Date. If your employment terminates prior to [Date],
your right to the unvested portion of the Option will be determined in
accordance with Section IV below.

 

 

3.

Exercisability. Except as provided in Section V.A, the Option will become
exercisable with respect to vested Option Shares 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
Option by fifteen percent (15%) or more (the “Performance Contingency”) and will
remain exercisable until the expiration date of the grant unless such Option is
subject to an earlier expiration date or forfeited in accordance with Section
IV. The Option may not be exercised with respect to Option Shares for which the
Performance Contingency is not satisfied following vesting.

 

 

C.

Restricted Stock Units

 

 

1.

General. A restricted stock unit (“RSU”) represents an unfunded and unsecured
promise to deliver (or cause to be delivered) to you, subject to these Terms and
Conditions and the terms and conditions of the Plan, one (1) share of MMC common
stock as soon as practicable after vesting or as otherwise provided herein.

 

 

2.

Vesting. Subject to your continued employment, thirty-three and one-third
percent (33 1/3%) of the RSUs are scheduled to vest on each of the first three
anniversaries of the Grant Date (each an “RSU Scheduled Vesting Date”). If your
employment terminates prior to the RSU Scheduled Vesting Date, your right to the
RSUs will be determined in accordance with Section IV below.

 

 

3.

Delivery of Shares. Shares of MMC common stock in respect of the RSUs covered by
the Award shall be distributed to you as soon as practicable after vesting, and
in no event later than 60 days after vesting. The delivery of shares in respect
of the RSUs is conditioned on your satisfaction of any applicable tax
withholding with respect to the Award.

 

 

D.

Performance Based Restricted Stock Units

 

 

1.

General. A performance based restricted stock unit (“PRU”) represents an
unfunded and unsecured promise to deliver (or cause to be delivered) to you,
subject to these Terms and Conditions and the terms and conditions of the Plan,
as soon as

 

 

2

 

practicable after vesting or as otherwise provided herein, a minimum of [Number]
share of MMC common stock up to a maximum of [Number] shares of MMC common
stock, depending on the actual achievement, as determined by the Compensation
Committee of the MMC Board of Directors (the “Committee”), of [performance
objectives]; provided that if you are one of [Group], the minimum number of
shares of MMC common stock in respect of a PRU shall be [Number]; provided
further that if your employment terminates prior to the PRU Scheduled Vesting
Date (defined below), the number of shares of MMC common stock deliverable in
respect of a PRU shall be determined as provided by Section IV below.

 

 

2.

Vesting. Subject to your continued employment, the PRUs are scheduled to vest on
the third anniversary of the Grant Date (the “PRU Scheduled Vesting Date”). If
your employment terminates prior to the PRU Scheduled Vesting Date, your right
to the PRUs, and the number of shares delivered in respect of each PRU, will be
determined in accordance with Section IV below.

 

 

3.

Delivery of Shares. Shares of MMC common stock in respect of the PRUs covered by
the Award that vest on the PRU Scheduled Vesting Date shall be distributed to
you as soon as practicable after vesting, and in no event later than 60 days
after vesting. If your employment terminates prior to the PRU Scheduled Vesting
Date, shares of MMC common stock in respect of the PRUs covered by the Award
that vest on such termination of employment shall be distributed to you as
provided in Section IV.I. The delivery of shares in respect of the PRUs are
conditioned on your satisfaction of any applicable tax withholding with respect
to the Award. The aggregate number of shares of MMC common stock delivered in
respect of PRUs covered by the Award shall be rounded up to the nearest whole
share.

 

 

E.

Restrictive Covenants Agreement

 

As provided in these Terms and Conditions, you must execute a restrictive
covenants agreement in a form determined by MMC (“Restrictive Covenants
Agreement”) to accept the Award, to exercise an Option and for your Award to
vest upon certain terminations of employment. The Restrictive Covenants
Agreement generally applies for a period of one year commencing with your
termination of employment. You may obtain a copy of the Restrictive Covenants
Agreement from MMC or an agent appointed by MMC. You may wish to consider
consulting an attorney at your own expense before signing the Restrictive
Covenants Agreement. Please retain a copy of your signed Restrictive Covenants
Agreement for your records.

 

II.

RIGHTS OF RESTRICTED STOCK UNITS AND PERFORMANCE BASED RESTRICTED STOCK UNITS

 

 

A.

Unless and until both the vesting conditions of the Award have been satisfied
and shares of MMC common stock have been delivered to you in accordance with the
terms and conditions described herein, you have only the rights of a general
unsecured creditor and

 

 

3

 

you have none of the attributes of ownership to such shares of stock (e.g.,
units cannot be used as payment for stock option exercises; units may not be
transferred or assigned; units have no voting rights).

 

 

B.

Dividend equivalents are payable on each RSU and PRU, at or after the time of
distribution of any dividend paid by MMC in respect of a share of its common
stock (a “Dividend Payment Date”), the record date of which occurs on or after
the Grant Date. You shall be entitled to receive an amount (less applicable
withholding) equal to such dividend payment as would have been made in respect
of one (1) share of MMC common stock for each RSU or PRU covered by the Award.
Payment of a dividend equivalent shall be made only with respect to RSUs or PRUs
that are outstanding on the Dividend Payment Date.

 

III.

METHOD OF EXERCISE OF A PERFORMANCE CONTINGENT NONQUALIFIED STOCK OPTION

 

 

A.

General Procedures

 

An Option may be exercised by written notice to MMC or an agent appointed by
MMC, in form and substance satisfactory to MMC, which must state the election to
exercise such Option, the number of Option Shares for which such Option is being
exercised and such other representations and agreements as may be required
pursuant to the provisions of these Terms and Conditions and the Plan (the
“Exercise Notice”). The Exercise Notice must be accompanied by (i) any required
income tax forms and (ii) a reaffirmation of the Restrictive Covenants
Agreement, unless the Option is being exercised after your death in accordance
with Section IV.A.1.

 

 

B.

Payment of Exercise Price

 

Payment of the aggregate exercise price may be made with U.S. dollars or by
tendering shares of MMC common stock (including shares acquired from a stock
option exercise or a 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.

 

 

C.

Satisfaction of Income and Social Security Tax Withholding Obligation

 

Applicable taxes (including payroll and FICA taxes) are required by law to be
withheld when an Option is exercised. A sufficient number of shares of MMC
common stock resulting from the Option exercise will be retained by MMC to
satisfy the tax-withholding obligation unless you elect in the Exercise Notice
to satisfy all applicable tax withholding by check.

 

 

D.

Registration and Distribution of Option Shares

 

 

4

 

 

1.

The shares from your Option exercise will be registered as specified in the
Exercise Notice, 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.

 

 

2.

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

 

 

3.

You will receive written confirmation of the Option exercise by mail at your
home address on file, generally within a week following the exercise date.

 

IV.

TERMINATION OF EMPLOYMENT

 

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

 

 

A.

Death

 

 

1.

Performance Contingent Nonqualified Stock Option. In the event your employment
is terminated because of your death, the Option will vest with respect to any
unvested Option Shares 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 with respect
to vested Option Shares (and any Option Shares that were vested at the time of
your death and for which the Performance Contingency is satisfied) within two
years after the date of death, but in no event shall the Option be exercised
beyond the expiration date of the Award.

 

 

2.

Restricted Stock Units. In the event your employment is terminated because of
your death, the RSUs will vest at such termination of employment and will be
distributed as described in Section I.C.3.

 

 

3.

Performance Based Restricted Stock Units. In the event your employment is
terminated because of your death, the PRUs will vest at such termination of
employment and will be distributed as described in Section IV.I.1.

 

 

B.

Permanent Disability

 

 

1.

Performance Contingent Nonqualified Stock Option. In the event your employment
is terminated due to total and permanent disability as determined under MMC’s
long-term disability program, the Option will vest with respect to any unvested
Option Shares at such termination of employment provided that you satisfy the
condition to vesting described in Section IV.G 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 is satisfied) shall be exercisable for
two years following

 

 

5

 

your termination of employment, but in no event shall the Option be exercised
beyond the expiration date of the Award.

 

 

2.

Restricted Stock Units. In the event your employment is terminated due to total
and permanent disability as determined under MMC’s long-term disability program,
the RSUs will vest at such termination of employment provided that you satisfy
the condition to vesting described in Section IV.G and will be distributed as
described in Section I.C.3.

 

 

3.

Performance Based Restricted Stock Units. In the event your employment is
terminated due to total and permanent disability as determined under MMC’s
long-term disability program, the PRUs will vest at such termination of
employment provided that you satisfy the condition to vesting described in
Section IV.G and will be distributed as described in Section IV.I.1.

 

 

C.

Normal Retirement

 

 

1.

Performance Contingent Nonqualified Stock Option. In the event you retire from
the Company on or after your Normal Retirement Date, the Option will vest with
respect to any unvested Option Shares at such termination of employment provided
that you satisfy the condition to vesting described in Section IV.G 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 is
satisfied) shall be exercisable until the earlier of the fifth anniversary of
your termination of employment and the expiration date of the Award.

 

 

2.

Restricted Stock Units. In the event you retire from the Company on or after
your Normal Retirement Date, the RSUs will vest at such termination of
employment provided that you satisfy the condition to vesting described in
Section IV.G and will be distributed as described in Section I.C.3.

 

 

3.

Performance Based Restricted Stock Units. In the event you retire from the
Company on or after your Normal Retirement Date, the PRUs will vest at such
termination of employment provided that you satisfy the condition to vesting
described in Section IV.G and will be distributed as described in Section
IV.I.1.

 

 

D.

Early Retirement

 

 

1.

Performance Contingent Nonqualified Stock Option. In the event you retire from
the Company on or after your Early Retirement Date and before your Normal
Retirement Date, the Option will vest as provided in the first sentence of
Section I.B.2, without regard to such termination of employment provided that
you satisfy the condition to vesting described in Section IV.G 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

 

 

6

 

Performance Contingency is satisfied) shall be exercisable until the earlier of
the fifth anniversary of your termination of employment and the expiration date
of the Award.

 

 

2.

Restricted Stock Units. In the event you retire from the Company on or after
your Early Retirement Date and before your Normal Retirement Date, the RSUs will
vest as provided in the first sentence of Section I.C.2, without regard to such
termination of employment provided that you satisfy the condition to vesting
described in Section IV.G and will be distributed as described in Section I.C.3.

 

 

3.

Performance Based Restricted Stock Units. In the event you retire from the
Company on or after your Early Retirement Date and before your Normal Retirement
Date, the PRUs will vest as provided in the first sentence of Section I.D.2,
without regard to such termination of employment provided that you satisfy the
condition to vesting described in Section IV.G and will be distributed as
described in Section IV.I.2.

 

 

E.

By the Company Other Than For Cause

 

 

1.

Termination Other Than For Cause

 

 

a.

Performance Contingent Nonqualified Stock Options. In the event your employment
is terminated by the Company other than for Cause (as defined below), all of
your rights, title and interest in and to any unvested Option Shares will be
forfeited upon such termination of employment. Any Option Shares that were
vested at the time of your termination of employment and for which the
Performance Contingency is satisfied shall be exercisable until the earlier of
ninety (90) days following your termination of employment and the expiration
date of the Award.

 

 

b.

Restricted Stock Units. In the event your employment is terminated by the
Company other than for Cause, the RSUs will vest at such termination of
employment on a pro rata basis as described in Section IV.H.1 provided that you
satisfy the condition to vesting described in Section IV.G and will be
distributed as described in Section I.C.3.

 

 

c.

Performance Based Restricted Stock Units. In the event your employment is
terminated by the Company other than for Cause, the PRUs will vest at such
termination of employment on a pro rata basis as described in Section IV.H.2
provided that you satisfy the condition to vesting described in Section IV.G and
will be distributed as described in Section IV.I.2.

 

 

2.

Definition of Cause

 

For purposes of these Terms and Conditions, “Cause” shall mean misappropriation
of assets of the Company 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

 

 

7

 

to the employee; willful violation of an important policy of the Company 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 Company or any of its subsidiaries or affiliates.

 

 

3.

For the avoidance of doubt, in the event of a sale or similar transaction
involving the business unit for which you work (“Employing Company”) as a result
of which the Employing Company ceases to be a subsidiary of MMC, your employment
will be deemed terminated by the Company other than for Cause, even if your
employment with the Employing Company continues after the sale.

 

 

F.

All Other Employment Terminations

 

 

1.

For all other terminations of employment, all of your rights, title and interest
in and to the Award, whether vested or unvested, shall be forfeited on the date
of such termination of employment, except to the extent that the Committee may
determine otherwise.

 

 

2.

For purposes of these Terms and Conditions, your employment will be treated as
terminated when you are no longer employed by MMC or any affiliate or subsidiary
of MMC.        

 

 

G.

Condition to Vesting of Award Upon Termination of Employment

 

In the event of your termination of employment due to total and permanent
disability, Early Retirement or Normal Retirement, or your termination of
employment other than for Cause as described in Sections IV.B. through E, any
unvested portion of the Award will vest as provided in the applicable portion of
Section IV; provided that you execute and return to MMC (or an agent appointed
by MMC) a Restrictive Covenants Agreement within 30 days following your
termination of employment. Failure to timely execute and comply with the
Restrictive Covenants Agreement will result in forfeiture of all of your rights,
title and interest in and to the Award, whether vested or unvested.

 

 

H.

Determination of Pro-Rata Vesting Upon Termination of Employment

 

 

1.

The number of RSUs that vest at such termination of employment on a pro rata
basis is equal to the sum of the “Pro Rata RSUs” for each RSU Scheduled Vesting
Date following your termination of employment. The “Pro Rata RSUs” with respect
to any such RSU Scheduled Vesting Date is the product of the number of RSUs
covered by the Award that would vest on the RSU Scheduled Vesting Date and a
fraction, the numerator of which is the number of days from the Grant Date to
the date of your termination of employment, and the denominator of which is the
number of days from the Grant Date to such RSU Scheduled Vesting Date.

 

 

2.

The number of PRUs that vest at such termination of employment on a pro rata
basis is equal to the product of the number of PRUs covered by the Award and a
fraction, the

 

 

8

 

numerator of which is the number of days from the Grant Date to the date of your
termination of employment, and the denominator of which is the number of days
from the Grant Date to the PRU Scheduled Vesting Date.

 

 

I.

Distribution in Respect of Performance Based Restricted Stock Units that Vest
Upon Termination of Employment

 

 

1.

Termination of Employment Because of Death, Total and Permanent Disability or
Normal Retirement

 

In the event of your termination of employment due to your death, total and
permanent disability or Normal Retirement as described in Section IV.A, B or C,
you will receive, promptly following such termination of employment, one (1)
share of MMC common stock in respect of each PRU covered by the Award that vests
upon your termination of employment.

 

 

2.

Termination of Employment Due to Early Retirement or Termination Other Than For
Cause

 

In the event of your termination of employment due to Early Retirement or your
termination of employment other than for Cause as described in Section IV.D or
E, you will receive, promptly following the PRU Scheduled Vesting Date, the
number of shares of MMC common stock determined under Section I.D.1 in respect
of the number of vested PRUs determined under Section IV.H.

 

 

J.

Definitions

 

As used in these terms and conditions, 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 MMC’s primary
retirement plan applicable to you upon your termination of employment.

 

V.

CHANGE IN CONTROL PROVISIONS

 

 

A.

Change in Control

 

 

1.

Upon the occurrence of a “Change in Control” of MMC, as defined in the Plan, the
Award will become fully vested on the date of the Change in Control.

 

 

2.

Performance Contingent Nonqualified Stock Options. Any Option covered by the
Award shall become exercisable beginning on the date of the Change in Control
until the expiration date of the grant.

 

 

3.

Restricted Stock Units. Except as provided in Section V.A.5, one (1) share of
MMC common stock will be distributed to you in respect of each RSU covered by
the Award as soon as practicable following the earlier of the next RSU Scheduled
Vesting Date

 

 

9

 

and your termination of employment but in no event later than 60 days following
such event.

 

 

4.

Performance Based Restricted Stock Units. Except as provided in Section V.A.5,
one (1) share of MMC common stock will be distributed to you in respect of each
PRU covered by the Award as soon as practicable following the earlier of the PRU
Scheduled Vesting Date and your termination of employment but in no event later
than 60 days following such event.

 

 

5.

If in the Change in Control transaction shareholders of MMC receive
consideration consisting of cash or other property (including securities of a
successor or parent corporation), there shall be delivered to you the
consideration which you would have received in such transaction had you been,
immediately prior to such transaction, a holder of that number of shares of MMC
common stock equal to the number of shares of MMC common stock deliverable upon
a Change in Control in respect of any RSUs or PRUs covered by the Award.

 

 

B.

Additional Payment

 

The value of the accelerated vesting of the Award because of a Change in Control
(the “Accelerated Award”) may be subject to a 20% federal excise tax under
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (the
“Excise Tax”). The Excise Tax is imposed on a select group of highly-compensated
employees when the value, as determined by applicable regulations, of payments
in the nature of compensation contingent on a Change in Control (including an
amount reflecting the value of the accelerated vesting of the Award) equals or
exceeds three times the average of your last five years’ W-2 earnings.

 

If a Change in Control occurs and vesting of the Award is accelerated, MMC will
determine if the Excise Tax is payable by you. If the 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
in respect of the Accelerated Award, 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
in respect of the Accelerated Award, you will be required to reimburse MMC for
such excess.

 

VI.

ADDITIONAL PROVISIONS APPLICABLE TO COVERED EMPLOYEES

 

Notwithstanding any other provision herein, for any employee determined by the
Committee to be likely to be a covered employee within the meaning of Section
162(m)(3) of the Code in

 

 

10

 

the year the Award vests, delivery of shares in respect of the Award shall be
postponed until the earlier of (i) the earliest date at which the Committee
reasonably anticipates that the deduction of the payment of such Award will not
be limited or eliminated by application of Section 162(m) of the Code or (ii)
the calendar year in which such employee terminates employment. According to
Internal Revenue Service regulations, “covered employees” include (1) the chief
executive officer of MMC as of the last day of the year and (2) the four
highest-paid executive officers of the Company, other than the chief executive
officer of MMC, who are employed on the last day of the year.

 

VII.

OTHER PROVISIONS

 

 

A.

No Right to Continued Employment. The granting of the Award or any exercise
thereof does not give you any right to continue to be employed by the Company
for any specific duration, or restrict, in any way, your right or the right of
your employer to terminate your employment at any time for any reason, with or
without cause or prior notice.

 

 

B.

During your lifetime, an Option shall be exercisable only by you, and no right
hereunder related to an Award shall be transferable except by will or the laws
of descent and distribution. Any shares that may be deliverable to you following
your death shall be delivered to the person or persons to whom your rights pass
by will or the law of descent and distribution, and such delivery shall
completely discharge the Company’s obligations under the Award.

 

 

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 Option
Shares subject to an Option, unless, and until, you (or such person) have
exercised the Option, paid the full exercise price thereof, and have received
the shares so acquired.

 

 

D.

The Company 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, unit or otherwise pursuant to the Plan due to you which results from
the inability of the Company 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 the Company 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 to the terms and conditions of any employment
agreement or offer letter between you and the Company regarding the treatment of
equity-based awards upon certain terminations of employment (“Contractual
Provisions”), 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, the Contractual Provisions and the provisions of the Plan, the
provisions of the Plan shall prevail. In the event of any inconsistency between
these Terms and Conditions and any Contractual Provisions, the Contractual
Provisions shall prevail. Your acceptance of the Award constitutes your
agreement that the shares of MMC

 

 

11

 

common stock acquired hereunder, if any, will not be sold or otherwise disposed
of by you in violation of any applicable securities laws or regulations.

 

 

F.

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 these Terms and Conditions or the Plan shall be
conclusive and binding. 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 Award, and references to the Committee shall be deemed to include any
such delegate.

 

 

G.

The Committee may, in its sole discretion, amend the terms of the Award;
provided, however, that if the Committee concludes that such amendment is likely
to materially impair your rights with respect to the Award, such amendment shall
not be implemented with respect to your Award without your consent.

 

 

H.

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

 

 

I.

The Plan, and the granting of Awards and exercising of Options thereunder, and
the obligations of the Company 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.

 

 

J.

The MMC 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 MMC 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.

 

 

K.

Awards relating to not more than eighty million (80,000,000) shares of MMC
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 MMC Board of Directors, may be made over the life of the Marsh &
McLennan Compa­nies, Inc. 2000 Employee Incentive and Stock Award Plan. Awards
relating to not 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
preexisting stock plans approved by MMC’s stockholders, may be issued under the
Marsh & McLennan Compa­nies, Inc. 2000 Senior Executive Incentive and Stock
Award 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. Shares of MMC common stock delivered
in respect of the Award may be obtained through open market purchases, treasury
stock or newly issued shares.

 

 

12

 

 

 

L.

The Plan is not qualified under Section 401(a) of the 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 the Company.

 

 

M.

There are no investment fees associated with your Award, and MMC pays all
administrative expenses associated with your Award, although you will be
responsible for any fees associated with the sale of any shares of MMC common
stock delivered in respect of the Award.

 

Please retain this document in your permanent records. If you have any questions
regarding the Plan or your Award or would like an account statement detailing
each type of equity-based award and the number of shares covered by such
equity-based award that comprises your Award, and the exercise price, vesting
date(s) and expiration date of such equity-based awards that comprise your Award
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.

FEDERAL INCOME TAX CONSIDERATIONS

 

The following is a summary of the United States Federal income tax consequences
of the equity-based awards that may comprise your Award. This discussion does
not address all aspects of the U.S. Federal income tax consequences that may be
relevant to you in light of your personal investment or tax circumstances and
does not discuss any state or local tax consequences of your Award. This section
is based on the Internal Revenue Code of 1986, as amended, 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. Please consult your own tax advisor
concerning the application of the U.S. Federal income tax laws to your
particular situation, as well as the applicability and effect of any state or
local tax laws before taking any actions with respect to your Award.

 

 

A.

Performance Contingent Nonqualified Stock Option

 

You will not be subject to tax upon the grant of a performance contingent
nonqualified stock option. Upon exercise of a performance contingent
nonqualified stock option, an amount equal to the excess of the fair market
value of the shares of common stock acquired on the date of exercise over the
exercise price paid is taxable to you as ordinary income. This amount of income
will be subject to income and employment tax withholding. Your basis in the
shares of common stock received will equal the fair market value of the shares
of common stock on the date of exercise, and your holding

 

13

period in such shares will begin on the day following the date of exercise. Upon
the subsequent disposition of shares of common stock acquired upon the exercise
of a performance contingent nonqualified stock option, you will recognize
capital gain or loss based upon the difference between the amount realized on
such disposition and your basis in such shares, and such amount will be
long-term capital gain or loss if such shares were held for more than 12 months.
In the taxable year in which you recognize ordinary income upon the exercise of
a performance contingent nonqualified stock option, the Company generally will
be entitled to a deduction equal to the amount of income recognized by you.

 

 

B.

Restricted Stock Units and Performance Based Restricted Stock Units

 

You will not be subject to tax upon the grant of a restricted stock unit or a
performance based restricted stock unit. Upon vesting of restricted stock units
or a performance based restricted stock units, the fair market value of the
shares of common stock covered by the Award on the vesting date will be subject
to FICA employment tax withholding. Upon distribution of the shares of common
stock (or, in the event Section V.A.5 is applicable, cash or other property)
underlying the restricted stock units or performance based restricted stock
units, you will recognize as ordinary income an amount equal to the fair market
value on the date of distribution of the shares of common stock (and/or cash or
other property) received. This amount of income will be subject to income tax
withholding on the date of distribution. Your basis in any shares of common
stock received will be equal to the fair market value of the shares of common
stock on the date of distribution, and your holding period in such shares will
begin on the day following the date of distribution. If any dividend equivalents
are paid to you, they will be includible in your income as additional
compensation (and not as dividend income) and will be subject to income and
employment tax withholding. In the taxable year in which you recognize ordinary
income on account of shares of common stock awarded to you, the Company
generally will be entitled to a deduction equal to the amount of income
recognized by you.

 

 

C.

Section 409A

 

Notwithstanding any other provision herein, your Award may be subject to
additional restrictions to ensure compliance with the requirements of Section
409A of the Code (regarding nonqualified deferred compensation) and regulations
thereunder. The Committee intends to administer the Awards in accordance with
Section 409A of the Code and reserves the right to make changes in the terms or
operations of the Awards (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 Award or the
Plan that do not yet reflect Section 409A of the Code and the regulations
thereunder. If your Award is not in compliance with Section 409A of the Code,
you may be subject to immediate taxation of all vested but unpaid awards under
the Plan that are subject to Section 409A of the Code, plus interest at the
underpayment rate plus 1%, plus a 20% penalty.

 

 

14

 

 

IX.

RESALE RESTRICTIONS

 

 

A.

If you are an “affiliate” of MMC at the time you exercise an option and/or
receive shares of MMC common stock in respect of the Award, 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.

 

 

B.

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.

 

X.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

 

A.

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.

 

 

B.

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.

 

 

C.

The Annual Report can be viewed on MMC’s website at
http://www.mmc.com/investors/current.php. 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.

 

 

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