EXHIBIT 10.33

 

ARTHUR J. GALLAGHER & CO.

1989 NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

(GRANT OF RETAINER OPTION)

 

You have elected to participate in the Arthur J. Gallagher & Co. 1989
Non-Employee Directors’ Stock Option Plan and to receive a retainer stock option
grant. This letter will set forth a number of the terms and conditions of the
grant; however, the grant is subject also to all of the terms and conditions of
the 1989 Non-Employee Directors’ Stock Option Plan (Plan). The grant is also
subject to the rules and regulations adopted by the Compensation Committee of
the Board of Directors of Gallagher for the administration of the Plan.

 

Effective                     , you are granted the option to purchase from
Gallagher all or part of                      shares of the Common Stock (par
value $1.00 per share) at an exercise price of $             per share. In the
event of termination of your association with Gallagher, this option shall
terminate completely on                     .

 

There are limitations on the amount of shares you may exercise. Your cumulative
exercise to purchase the Common Stock of Gallagher subject to this grant may not
exceed the following vesting schedule:

 

Years Following Date of Grant

--------------------------------------------------------------------------------

   Percentage of Total
Grant Subject to
Exercise

--------------------------------------------------------------------------------

Date of Grant through three months

       0%

Three months through six months

     25%

Six months through nine months

     50%

Nine months through twelve months

     75%

Twelve months and thereafter

   100%

 

While the vesting schedule sets forth the maximum amount of shares that may be
subject to exercise at a given time, there is also a requirement that any
exercise of an option for less than 100 shares be at least equal to 10% of your
total vested shares subject to exercise. Finally, with respect to vesting,
should your association with Gallagher be terminated, the restrictions contained
in the above vesting schedule are removed as of the date your association is
terminated and you may thereafter exercise any portion or all of the shares
subject to grant, subject only to the fact that all rights to exercise an option
shall expire on                     .

 

A termination of association after                      shall act to terminate
all rights hereunder as of the date of termination of association.

 

The Plan contains a number of additional terms and conditions, and you are urged
to read the Plan carefully. For example, this grant does not give you any rights
as a stockholder of Gallagher unless and until you actually exercise the option
and purchase the shares at the option price. Also, you have no right (except
upon death) to transfer the option rights granted to you to any other party. In

 

--------------------------------------------------------------------------------

addition, your ability to exercise an option may be limited by the Company’s
policy regarding insider trading. Contact the Legal Department to see if and how
this policy is applicable to you.

 

An exercise to purchase stock under this grant means that you will be purchasing
the stock at the price indicated above and not at the actual market value of the
stock as of the date of that exercise. You, of course, are under no obligation
to exercise any purchase option at any time. Should you purchase the stock at an
option price less than the then current market value, there will be income tax
consequences to you upon exercise, as well as at the time you may actually
dispose of the stock. While Company personnel may generally advise you of
certain taxation aspects of a stock option exercise, you are urged to consult
with your own personal tax adviser and in no event shall Gallagher be
responsible for any tax consequences to you arising out of this grant.

 

As you see from the vesting schedule, your first ability to exercise a purchase
option is as of                     . Should you wish to exercise an option,
contact                      of the Legal Department to obtain the documentation
and information necessary to exercise an option. You should contact
                     at least several days in advance of the date you intend to
actually exercise your option.

 

No action is required on your part to accept this option and acceptance does not
impose any obligations on you. However, should you have any questions, please do
not hesitate to contact                     .