Document:

EX-10.45

   

  Exhibit 10.45

  	 

  EMPLOYMENT AGREEMENT

  This EMPLOYMENT AGREEMENT (“Agreement”) is made effective as of the 25th day of February, 2015 between Willis Group Holdings Public Limited Company (“Willis”), and Matthew Furman (“Employee”). 

  In consideration of the mutual covenants and promises contained herein and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

  1.	Employment, Compensation and Benefits.  During the Term (as defined in Section 2 below), Willis agrees to employ Employee, and to provide or cause one of its subsidiaries to provide the remuneration and benefits described below.

  (a)	Title and Duties.

  (i)	During the Term, Employee shall be employed as Executive Vice President and the General Counsel of Willis (together with its subsidiaries, the “Willis Group”) and as such will be the chief legal officer of the Willis Group.  Employee shall also be appointed, without additional compensation, to such director and senior executive positions of one or more subsidiaries of Willis as the Board of Directors of Willis (the “Board”) deems appropriate.  

  (ii)	Employee shall have during the Term the customary duties, responsibilities and authority attendant to the position of general counsel of a company the size and nature of Willis Group and any other duties commensurate with such position that may be reasonably assigned by the Chief Executive Officer or the Board.

  (iii)	During the Term, Employee shall report directly to the Chief Executive Officer of Willis.

  (iv)	Employee’s principal place of employment during the Term shall be New York, New York.  Employee acknowledges and agrees that he shall be regularly required to travel in connection with the performance of his duties hereunder. 

  (v)	During the Term, Employee agrees to devote substantially all of his business attention and time to the business and affairs of the Willis Group.  During the Term, it shall not be a violation of this Agreement for Employee to (A) serve on one (1) for-profit board or committee with the prior written approval of the Board, (B) serve on civic or charitable boards or committees, and (C) manage personal matters and investments; provided that such activities do not, individually or in the aggregate, materially interfere with the performance of Employee’s duties and responsibilities with respect to the Willis Group.

  (b)	Base Salary.  During the Term, Employee’s initial base salary (“Base Salary”) will be $45,833.33 per month, which is equivalent to $550,000 on an annual basis, less applicable withholdings, payable in accordance with normal payroll practices and no less frequently than on 

   

  

   

  a monthly basis.  The amount of Employee’s Base Salary shall be reviewed annually and may, at the discretion of the Board, be increased (but not decreased).  Any such increased amount shall constitute “Base Salary” hereunder.  All dollar amounts referred to in this Agreement are in U.S. dollars.

  (c)	Annual Incentive Plan (“AIP”).  Employee will participate in the Willis Annual Incentive Plan (the terms of which may be modified by Willis from time to time) during the Term with a target annual payment at least equal to 125% of Base Salary (“Target AIP”).  Employee’s participation in the AIP shall be subject to the other terms and conditions of such plan.  Among other conditions, Employee must be in the active employ of the Willis Group at the time that any AIP Award is normally paid in order to be eligible to receive such award, subject to the termination provisions of Section 3 hereof.  Employee is eligible to receive a full AIP award for the 2015 fiscal year.

  (d)	Annual Equity Participation.  Each year during the Term, Employee will be awarded options, restricted stock units, other equity-based awards or any combination thereof having a total target fair market value as of the date of grant of at least $750,000, as determined in accordance with the valuation methodologies of the Willis Group.  Such equity awards will be granted during the fiscal year (starting with 2015) at the same time, in the same manner and upon the terms and conditions (including whether to receive dividend equivalents) as annual long term equity incentive awards are provided generally to executive officers of the Willis Group.  Subject to this Section 1(d), the annual equity awards will be governed by and made pursuant to Willis’ 2012 Equity Incentive Plan (the “2012 EIP”), or any successor plan, and award agreements thereunder that will reflect the terms of this paragraph as well as other terms and conditions established by the Board.

  (e)	Transition Equity Award.  At the next regularly scheduled grant date immediately following the Commencement Date (as defined below), Employee will be granted time-vested restricted stock units (the “Transition RSU Award”) with a total fair market value as of the date of grant of $1,200,000.  Provided Employee is employed by the Willis Group on the applicable vesting date, the Transition RSU Award will vest in equal one-third installments on each of the first three anniversaries of the Commencement Date (as defined below).  The Transition RSU Award will have dividend equivalents that will be subject to the same vesting conditions as the Transition RSU Award.  The Transition RSU Award will be governed by and made pursuant to the 2012 EIP, and an award agreement that will reflect the terms of this paragraph as well as other terms and conditions established by the Compensation Committee of the Board.  

  (f)	General Benefits.  During the Term, Employee will be eligible to participate in those employee benefit programs which are generally made available to similarly situated executive employees of Willis, in accordance with and subject to the normal terms and conditions of such plans.

  (g)	Vacation.  During the Term, Employee will be entitled to vacation time and holidays as are provided generally to similarly situated executive employees of Willis but shall, in any event, be entitled to no less than four weeks of vacation per year.

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  (h)	Expenses.  Willis or one of its subsidiaries will reimburse Employee for all reasonable business expenses incurred by Employee in performing Employee’s duties for the Willis Group during the Term, in accordance with the business expense reimbursement policies of Willis as in effect from time to time.

  2.	Term.  This Agreement shall commence on April 1, 2015 or such earlier date mutually agreed by the Employee and Willis (the “Commencement Date”) and shall continue until terminated (i) by either party, without Good Cause or with or without Good Reason (as defined below), upon 60 calendar days’ prior written notice, (ii) immediately by the Willis Group with Good Cause, or (iii) immediately upon the Employee’s death or disability (as disability is defined in the Long Term Disability Benefits Plan in which Employee participates) (“Disability”) (such period, the “Term”).  If this Agreement is terminated by either party on 60 days’ prior written notice pursuant to this Section 2, Employee shall remain an employee of the Willis Group through the effective date of such termination, subject to all of the rights and obligations of an employee during such period, and Employee’s employment hereunder shall terminate at the end of the notice period.  At its sole option, the Willis Group may elect to direct Employee not to report to work and/or enter the Willis Group’s office premises or otherwise perform certain services during such 60 day notice period, and Employee shall comply with any such direction.  During such 60 day notice period, the Willis Group shall pay Employee the Base Salary due to Employee during the notice period in accordance with its normal payroll practices.  Sections 3 through 9 shall survive any termination of this Agreement.

  3.	Effect of Certain Terminations.  If during the Term, (i) Employee’s employment is terminated by the Willis Group without Good Cause (and other than by reason of death or Disability), or (ii) Employee terminates from employment for Good Reason, then Employee shall be entitled to:

  (a)	continued payment of one (1.0) times Base Salary during the 12-month period following the termination date (the “Severance Period”) payable in accordance with normal payroll practices, beginning on the first payroll date on or after the 60th day following the termination date; provided that, in the event such termination occurs within 24 months following a “Change in Control” (as defined in the 2012 EIP), such payment shall equal two (2) times Base Salary and shall be made in a cash lump sum on the first business day on or after the 60th day following the termination date; 

  (b)	payment of an amount equal to one (1.0) times the Target AIP, payable in equal installments during the Severance Period in accordance with normal payroll practices, beginning on the first payroll date on or after the 60th day following the termination date; provided that, in the event such termination occurs within 24 months following a “Change in Control” (as defined in the 2012 EIP but only if such Change in Control also satisfies the requirements of Treasury Regulation 1.409A-3-(i)(5)), such payment shall equal two (2) times Target AIP and shall be made in a cash lump sum on the first business day on or after the 60th day following the termination date;

  (c)	payment of a pro-rated AIP for the fiscal year of such termination equal to the AIP Employee is entitled based on Willis’ actual performance for such year, multiplied by a fraction, the numerator of which is the number of days in the fiscal year of Employee’s termination prior to the termination date, and the denominator of which is 365, payable at the time as AIP bonuses are 

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  paid generally to participants for the applicable year; provided that, in the event such termination occurs within 24 months following a “Change in Control” (as defined in the 2012 EIP), such pro-rated AIP for the fiscal year of termination shall be determined based upon the Target AIP rather than actual AIP, and otherwise under the pro-ration formula and time of payment as above;

  (d)	continued participation for Employee and his spouse and then covered dependents in the applicable group medical plan of the Willis Group, if any, in which Employee and his eligible spouse and dependents participate as of the date of termination in accordance with the terms of such plan in effect from time to time for executive officers of Willis generally and so long as such continued participation is permissible under applicable law and does not result in any penalty or additional tax (other than taxes applicable to the payment of wages) upon Employee or the Willis Group or, in lieu of such continued coverage and solely in order to avoid any such penalty or additional tax, monthly payments equal to the excess of the COBRA rate (or equivalent rate) under such group medical plan over the amount payable generally by executive officers of Willis, in each case until the earlier of (x) 12 months following the termination date or (y) the date that Employee (or any eligible spouse or dependent but only as to the eligibility of such spouse or dependent) obtains new employment that offers group medical coverage;

  (e)	for purposes of determining the achievement of any employment or service-based vesting requirements applicable to any outstanding stock options, restricted stock units or other equity-based awards made during the Term, Employee shall be treated as having an additional 12 months of employment or service as of the date of termination; provided that, in the case of the Transition RSU Award, the award shall become fully vested as of the date of termination; provided further that, in the event such termination without Good Cause or for Good Reason occurs within 24 months following a “Change in Control,” (as defined in the 2012 EIP), all employment or service-based vesting requirements in all such awards shall be waived as of the date of termination; and 

  (f)	each stock option granted to Employee which is vested (or deemed vested in accordance with this Section 3) on Employee’s termination date will remain exercisable until the earlier of (A) one (1) year following the date of such termination without Good Cause or for Good Reason (or, if later, the post-termination expiration date specified in the option) and (B) the normal expiration date of such stock option that would have applied if Employee’s employment with Willis had continued.  

  Any and all amounts payable and other benefits provided pursuant to this Section 3 will only be payable or provided if Employee delivers to Willis and does not revoke a general release substantially in the form attached hereto as Exhibit A within 60 days following the termination date.

  For purposes of this Agreement, “Good Cause” is defined as (i) Employee’s gross and/or chronic neglect of Employee’s duties, (ii) Employee’s conviction of a felony or misdemeanor involving moral turpitude, (iii) dishonesty, embezzlement, fraud or other material willful misconduct by Employee in connection with Employee’s employment, (iv) the issuance of any final order for Employee’s removal as an associate of Willis by any state or federal regulatory agency, (v) Employee’s violation of the restrictive covenant provisions contained in this Agreement or other agreement with Willis or its affiliates, (vi) Employee’s material breach of any duty owed to Willis 

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  or its affiliates, including, without limitation, the duty of loyalty, (vii) Employee’s material breach of any of Employee’s other material obligations under this Agreement other agreement with Willis or its affiliates, (viii) any material breach of the Willis Group’s Code of Ethics by Employee or (ix) Employee’s failure to maintain any insurance or other license necessary to the performance of the duties of Employee’s position.  Good Cause shall not include an immaterial, isolated instance of ordinary negligence or failure to act, whether due to an error in judgment or otherwise, if Employee has exercised substantial efforts in good faith to perform the duties reasonably assigned or appropriate to Employee’s position.  

  For purposes of this Agreement, “Good Reason” means one or more of the following events has occurred without Employee’s written consent: (i) a material adverse diminution in Employee’s position, authority or responsibilities or the assignment to Employee of duties or responsibilities which are materially inconsistent with Employee’s position; provided, that, a material diminution in the foregoing shall not be deemed to have occurred solely as a result of the occurrence of a Change in Control or Willis ceasing to be a public company, so long as the position, authority or responsibilities of Employee with Willis or any successor is not otherwise materially diminished, (ii) a reduction in Employee’s monthly base salary or Target AIP percentage; or (iii) Employee is required to relocate Employee’s office outside a radius of 35 miles from the current office location of One World Financial Center at 200 Liberty Street in New York City.  Employee may not resign or otherwise terminate Employee’s employment for any reason set forth above as Good Reason unless Employee first notifies Willis in writing describing such Good Reason within 90 days of the first occurrence of such circumstances, and, thereafter, such Good Reason is not corrected by Willis within 30 days of Employee’s written notice of such Good Reason, and Employee actually terminates employment within 90 days following the expiration of Willis’ 30-day cure period described above.  Except as may be required by applicable law, Employee will not be entitled to severance pay of any type following employment termination for any other reason or pursuant to any severance policy of the Willis Group.

  4.	Excise Tax.  Notwithstanding any other provision to the contrary in this Agreement, in any other agreement between Employee and Willis or any of its affiliates, or in any plan maintained by Willis or any of its affiliates, if there is a Section 280G Change in Control (a change in the ownership or effective control of Willis or in the ownership of a substantial portion of the assets of Willis, as determined in accordance with section 280G(b)(2) of the Code and the regulations issued thereunder), the provisions set forth below shall apply:

  (a)	Except as otherwise provided in Section 4(b) below, if it is determined in accordance with Section 4(d) below that any portion of the Payments (defined as payments or benefits in the nature of compensation that are to be paid or provided to Employee or for his benefit in connection with a 280G Change in Control (whether under this Agreement or otherwise, including by the entity, or by any affiliate of the entity, whose acquisition of the stock of Willis or its assets constitutes the Change in Control) if Employee is a “disqualified individual” (as defined in section 280G(c) of the Code) at the time of the 280G Change in Control, to the extent that such payments or benefits are “contingent” on the 280G Change in Control within the meaning of section 280G(b)(2)(A)(i) of the Code and the regulations issued thereunder) that otherwise would be paid or provided to Employee or for his benefit in connection with the 280G Change in Control would be subject to the excise tax imposed under section 4999 of the Code (“Excise Tax”), then 

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  such Payments shall be reduced by the smallest amount necessary in order for no portion of Employee’s total Payments to be subject to the Excise Tax.

  (b)	No reduction in any of Employee’s Payments shall be made pursuant to Section 4(a) above if the After Tax Amount of the Payments payable to him without such reduction would exceed the After Tax Amount of the reduced Payments payable to him in accordance with Section 4(a) above.  For purposes of the foregoing, (i) the “After Tax Amount” of Employee’s Payments, as computed with, and as computed without, the reduction provided for under Section 4(a), shall mean the amount of the Payments, as so computed, that Employee would retain after payment of all taxes (including without limitation any federal, state or local income taxes, the Excise Tax or other excise taxes, any employment, social security or Medicare taxes, and any other taxes) imposed with respect to such Payments in the year or years in which payable; and (ii) the amount of such taxes shall be computed at the rates in effect under the applicable tax laws in the year in which the 280G Change in Control occurs, or if then ascertainable, the rates in effect in any later year in which any Payment is expected to be paid following the 280G Change in Control, and in the case of any income taxes, by using the maximum combined federal, state and (if applicable) local income tax rates then in effect under such laws.

  (c)	The payment reduction (if any) contemplated by this Section 4(a) shall be implemented by (i) first reducing any cash severance payments, (ii) then reducing any cash retention payments, (iii) then reducing any restricted shares that are fully valued in reverse order of vesting, (iv) then reducing any options valued without regard to Treas. Reg. 1-280G Q & A 24(c) (“24(c)”) in reverse order of vesting, (v) then reducing any restricted shares that are valued based on 24(c) in reverse order of vesting, (vi) then reducing any options valued based on 24(c) in reverse order of vesting and (vii) then reducing all other payments and benefits, in each case, with amounts having later payment dates being reduced first. Notwithstanding the foregoing, to the extent permitted by Internal Revenue Code Sections 409A, 4999 and 280G the Employee and Willis may agree on an alternative method of reduction.

  (d)	A determination as to whether any reduction in Employee’s Payments is required pursuant to Section 4(a) above, and if so, as to which Payments are to be reduced and the amount of the reduction to be made to any such Payments, shall be made by no later than 30 days prior to the closing of the transaction or the occurrence of the event that constitutes the 280G Change in Control, or as soon thereafter as administratively practicable.  Such determinations, and the assumptions to be utilized in arriving at such determinations, shall be made by Willis’s independent auditor or, if such auditor is not permitted to provide such advice, by a nationally recognized public accounting firm reasonably selected by the Board with the consent of Employee, which consent shall not be unreasonably withheld or delayed (“Auditor”).  The Auditor shall provide a written report of its determinations hereunder, including detailed supporting calculations, both to Employee and to Willis.  The fees and expenses of the auditor shall be paid entirely by Willis and the determinations made by Auditor hereunder shall be binding upon Employee and Willis.

  5.	Confidential Information and Work for Hire. 

  (a)	Confidential Information.  The Willis Group shall provide Employee with access to nonpublic information of the Willis Group to the extent reasonably necessary to the performance 

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  of Employee’s job duties.  Employee acknowledges that all non-public information (including, but not limited to, information regarding the Willis Group’s clients), owned or possessed by the Willis Group (collectively, “Confidential Information”) constitutes a valuable, special and unique asset of the business of the Willis Group.  Other than in the good faith performance of his duties hereunder or in connection with an arbitration or suit between Employee and the Willis Group, Employee shall not, during or after the period of his/her employment with the Willis Group (i) disclose, in whole or in part, such Confidential Information to any third party without the consent of the Willis Group or (ii) use any such Confidential Information for his/her own purposes or for the benefit of any third party.  These restrictions shall not apply to any information in the public domain provided that Employee was not responsible, directly or indirectly, for such information entering the public domain without the Willis Group’s consent.  Upon termination of Employee’s employment hereunder, Employee shall promptly return to the Willis Group all materials, information and other property (including all files, computer discs and manuals) of the Willis Group as may then be in Employee’s possession or control.

  (b)	Work for Hire.  Any work prepared by Employee as an employee of the Willis Group including written and/or electronic reports and other documents and materials shall be “work for hire” and shall be the exclusive property of the Willis Group.  If, and to the extent that, any rights to such work do not vest in the Willis Group automatically, by operation of law, Employee shall be deemed to hereby unconditionally and irrevocably assign to the Willis Group all rights to such work and Employee shall cooperate with the Willis Group’s efforts (and at its cost and expense) to establish and protect its rights to such work.

  6.	Employee Loyalty, Non-competition and Non-solicitation.  Employee understands that Employee owes a duty of loyalty to the Willis Group.  All business activity participated in by Employee as an employee of the Willis Group shall be undertaken solely for the benefit of the Willis Group.  Employee shall have no right to share in any commission or fee resulting from such business activity other than the compensation referred to in Section 1.  While this Agreement is in effect and for a period of 12 months following termination of Employee’s employment with the Willis Group, Employee shall not, within the “Territories” described below:

  (a)	directly or indirectly solicit, accept, or perform, other than on the Willis Group’s behalf, insurance brokerage, insurance agency, risk management, claims administration, consulting or other business performed by the Willis Group from or with respect to (i) clients of the Willis Group with whom Employee had business contact or provided services to, either alone or with others, while employed by the Willis Group and, further provided, such clients were clients of the Willis Group either on the date of termination of Employee’s employment with the Willis Group or within twelve (12) months prior to such termination (the “Restricted Clients”) and (ii) active prospective clients of the Willis Group with whom Employee had business contacts regarding the business of the Willis Group within six (6) months prior to termination of Employee’s employment with the Willis Group (the “Restricted Prospects”).  This provision shall not be violated by providing legal services or other support services in the ordinary course of Employee’s duties to persons soliciting, accepting or performing the activities set forth in this Section 6(a).  

  (b)	directly or indirectly, other than in the good faith performance of his duties for the Willis Group, (i) solicit any employee of the Willis Group (“Protected Employees”) to work for 

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  Employee or any third party, including any competitor (whether an individual or a competing company) of the Willis Group or (ii) induce any such employee of the Willis Group to leave the employ of the Willis Group; provided, however, that the review of documentation relating to any Protected Employee that is provided to Employee by a subsequent employer for legal compliance purposes in the ordinary course of Employee’s duties shall not be deemed to be a solicitation or inducement under this Section 6(b) and further provided that solicitation shall not be violated by advertising not targeted at employees of Willis Group or serving as a reference upon request of an employee with regard to an entity with which Executive is not affiliated.  

  (c)	directly or indirectly, involved as an owner, officer, director, employee, contractor, advisor or agent of any business principally engaged in insurance brokerage, reinsurance brokerage, surety brokerage, bond brokerage, insurance agency, underwriting agency or managing general agency business (including, but not limited to, the following businesses and their respective subsidiaries and/or other affiliates: Aon Corporation, Arthur J Gallagher & Co. and Marsh Incorporated) (a “Competitor”).  For purposes of the prior sentence, “principally” shall be determined based on the activities of the employer’s full control group, except if Employee is serving as counsel to one entity in a group with substantially all of his responsibilities devoted to that entity and its subsidiaries, then “principally” shall be measured based on that entity and its subsidiaries.  Because the Willis Group’s business competes on a global basis, Employee understands and acknowledges that his obligations hereunder shall apply anywhere in the world.  Notwithstanding the foregoing, it shall not be a violation of this Agreement for:  (i) Employee to have beneficial ownership of less than 1% of the outstanding amount of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on a national securities exchange or quoted on an inter-dealer quotation system or an indirect interest in any equity securities held in any investment company or fund over which Employee does not exercise investment authority or control; or (ii) following termination or resignation of Employee’s employment with the Willis Group, for Employee to engage in, or become associated in any capacity with, a business or entity that provides consulting, investment banking, asset management or fund formation and management advice and services to third parties, as long as Employee does not use or disclose any Confidential Information and Employee does not directly provide such advice and services to a Competitor.

  (d)	Other than in the good faith performance of his duties to the Willis Group, directly or indirectly, orally, in writing or through any medium including, but not limited to, the press or other media, computer networks or bulletin boards, or any other form of communication, publicly disparage the Willis Group, its affiliates or their respective employees, directors or business relations.  Willis shall not at any time during or after the Term, make any public statement such as a press release which disparages Employee.  Nothing in this provision shall be construed to prohibit either party from (i) correcting any misstatement of fact by any person, (ii) testifying truthfully in any legal or administrative proceeding or investigation, but each party shall inform the other party as soon as reasonably practicable before delivering any such testimony or (iii) making normal competitive type statements as to comparisons of entities and services.

  For purposes of this Section 5, “Territories” shall refer to those counties where the Restricted Clients, Restricted Prospects, or Protected Employees of the Willis Group are present and available for solicitation.

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  The Employee agrees that if the employee violates any of the provisions of this Section 5, the Willis Group would sustain irreparable harm and, therefore, the Willis Group shall be entitled to obtain from any court of competent jurisdiction, without posting any bond or other security, temporary, preliminary and permanent injunctive relief as well as damages and an equitable accounting of all earnings, profits and other benefits arising from such violation, which rights shall be cumulative and in addition to any other rights or remedies in law or equity to which the Willis Group may be entitled.  Moreover, if any provision or clause of this Section 5, or portion thereof, shall be held by a court of competent jurisdiction to be illegal, void, unreasonable or unenforceable, the remainder of such provisions shall not thereby be affected and shall be given full force and effect, without regard to the invalid portion.  It is the intention of the parties that, if a court construes any provision or clause of this Agreement, or any portion thereof, to be illegal, void, unreasonable or unenforceable because of the duration of such provision or the area or matter covered thereby, such court shall modify the duration, area, or matter of such provision and, in its modified form, such provision shall then be enforceable and shall be enforced to the fullest extent of law.  Section 5 and Section 6 hereof shall not be interpreted to restrict the employee’s post-employment right to practice law in violation of the applicable rules of professional conduct or in violation of the ethics rules of the jurisdiction(s) in which the Employee is licensed to practice law.

  7.	Mandatory Binding Arbitration.  Except for a claim beginning with a request for injunctive relief brought by the Willis Group or Employee, the Willis Group and Employee agree that any dispute arising either under this Agreement or from the employment relationship shall be resolved by arbitration – it is understood that disputes arising either under this Agreement or from the employment relationship shall be understood to include, but not be limited to, any and all disputes concerning any claim by the Employee against the Willis Group concerning or relating to (a) alleged illegal discrimination against the Employee in the terms and conditions of employment (including but not limited to any claim of alleged illegal discrimination on the basis of race, color, religion, sex, gender, national origin, age, physical disability and/or mental disability), (b) alleged public policy violations, (c) alleged wrongful employment termination and/or (d) any other disputes arising from or in connection with the employment relationship.  Each party expressly waives any right, whether pursuant to any applicable federal, state, or local statute, to a jury trial and/or to have a court of law determine rights and award damages with respect to any such dispute.  The party invoking arbitration shall notify the other party in writing (the “Written Notice”).  The parties shall exercise their best efforts, in good faith, to agree upon selection of a single arbitrator.  If the parties are unable to agree upon selection of a single arbitrator, they shall so notify the American Arbitration Association or another agreed upon arbitration administrator and request that the arbitration provider work with the parties to select a single arbitrator.  The arbitration shall be (x) conducted in accordance with the American Arbitration Association’s National Rules for the Resolution of Employment Disputes, (y) held at a location reasonably convenient to that office of the Willis Group at which the Employee had most recently been assigned and (z) completed within six months (or within such other time as the parties may mutually agree) of the receipt of Written Notice by the party being notified.  The arbitrator shall have no authority to assess punitive or exemplary damages as to any dispute arising out of or concerning the provisions of this Agreement or otherwise arising out of the employment relationship, except as and unless such damages are expressly authorized by otherwise applicable and controlling statutes.  The arbitrator’s decision shall be final and binding and enforceable in any court of competent jurisdiction, to the extent permitted by applicable law, each party shall bear its own costs, including attorneys’ fees, and share all costs of the arbitration equally.  Nothing provided herein shall 

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  interfere with either party’s right to seek or receive damages or costs as may be allowed by applicable statutory law.  Willis will pay all of Employee’s reasonable legal fees and expenses and, if applicable, Employee’s share of arbitration costs, with respect to any particular claim on which Employee prevails; provided, however, that if there are multiple claims and Employee prevails on at least half of such claims, Willis shall pay all of Employee’s reasonable legal fees and expenses and all of the costs of such arbitration.  For purposes of the previous sentence, the number of claims and the party prevailing on a claim shall be determined by the arbitrator(s).

  8.	Representations and Warranties.  Employee represents and warrants:

  (a)	Except as specifically provided by Employee to the Willis Group in writing, Employee is not subject to either an agreement with any former employer or otherwise or any court order, judgment or decree which places restrictions on Employee’s business activities and that if employee is subject to any of the foregoing, Employee will, by the earlier of the commencement date of employment or execution of the Agreement provide the Willis Group with a copy of such agreement, order, judgment, or decree.

  (b)	Employee has reviewed and will abide by the Willis Group Code of Ethics.

  (c)	Employee will not bring or use any confidential materials, proprietary materials or property (including, but not limited to, files, computer disks or other documentation or property) belonging to Employee’s prior employer(s).

  9.	Legal Fees.  Willis shall promptly reimburse Employee for his reasonable legal fees and expenses incurred in connection with entering into this Agreement, up to a maximum of $25,000.

  10.	Miscellaneous.  This Agreement sets forth the entire agreement between the parties and supersedes any and all prior agreements and understandings regarding the subject matter herein.  This Agreement may only be modified by a written instrument signed by both parties.  If any term of this Agreement is rendered invalid or unenforceable by judicial, legislative or administrative action, the remaining provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated.  Except for notices by the Willis Group to Employee which the Willis Group chooses to hand deliver to Employee, any notices given pursuant to this Agreement shall be sent by first class US postal service or overnight courier service to the addresses set forth below (or, to the then current address of a party, with both parties agreeing to promptly provide the other party with written notice of any change in address).  This Agreement shall be governed by the laws of the state of New York, without giving effect to that state’s conflicts of law principles.  The waiver by either party of any breach of this Agreement shall not operate or be construed as a waiver of that party’s rights upon any subsequent breach.  This Agreement shall inure to the benefit of and be binding upon and enforceable against the heirs, legal representatives and assigns of Employee and the successors and assigns of Willis.  Upon the commencement by the Employee of employment with any third party, during the two year period following termination of employment hereunder, the Employee shall promptly inform such new employer of the substance of Sections 4 and 5 of this Agreement.  Notwithstanding anything else herein to the contrary, Willis may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment, 

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  or other taxes or contributions as may be required to be withheld pursuant to any applicable law or regulation.

  11.	Section 409A.

  (a)	Compliance.  The intent of the parties is that payments and benefits under this Agreement are either exempt from or comply with Section 409A of the Internal Revenue Code (“Section 409A”) and, accordingly, to the maximum extent permitted, the Agreement shall be interpreted to that end.  

  (b)	Six Month Delay for Specified Employees.  If any payment, compensation or other benefit provided to Employee in connection with his employment termination is determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A and Employee is a “specified employee” as defined in Section 409A, no part of such payments shall be paid before the day that is six months plus one day after Employee’s date of termination or, if earlier, Employee’s death (the “New Payment Date”).  The aggregate of any payments that otherwise would have been paid to Employee during the period between the date of termination and the New Payment Date shall be paid to Employee in a lump sum on such New Payment Date.

  (c)	Payments for Reimbursements and In-Kind Benefits.  All reimbursements for costs and expenses under this Agreement shall be paid in no event later than the end of the calendar year following the calendar year in which Employee incurs such expense.  With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursements or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

  (d)	Termination as a Separation from Service; Separate Payments.  A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a termination of employment until such termination is also a “separation from service” within the meaning of Section 409A.  If under this Agreement, an amount is paid in two or more installments, for purposes of Section 409A, each installment shall be treated as a separate payment.

   

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  IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement to become effective as of the date first above written.

  		
	EMPLOYEE:
Matthew Furman
 
/s/ Matthew Furman
	WILLIS GROUP HOLDINGS PUBLIC LIMITED COMPANY
 
By:  /s/ Celia R. Brown______________

	Matthew Furman
	TITLE:  Executive Vice President, Group Human Resources Director
 

	Address as set forth in the records
of the Company
	Willis Group Holdings Public Limited Company
200 Liberty Street
New York, NY 10281
 

   

   

   

   

   

  

   

  EXHIBIT A

   

  GENERAL RELEASE

   

  	I, Matthew Furman, in consideration of and subject to the performance by Willis Group Holdings Public Limited Company (together with its subsidiaries, the “Company”), of its obligations under the Employment Agreement dated as of _______ __, 2015 (the “Agreement”), do hereby release and forever discharge as of the date hereof the Company and its respective affiliates and all present, former and future managers, directors, officers, employees, successors and assigns of the Company and its affiliates and direct or indirect owners (collectively, the “Released Parties”) to the extent provided below (this “General Release”).  The Released Parties are intended to be third-party beneficiaries of this General Release, and this General Release may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such Released Parties hereunder.  Terms used herein but not otherwise defined shall have the meanings given to them in the Agreement.

  1.	I understand that any payments or benefits paid or granted to me under Section 3 of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled.  I understand and agree that I will not receive certain of the payments and benefits specified in Section 3 of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter.  Such payments and benefits will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates.

  2.	Except as provided in paragraphs 4 and 5 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter‐claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date that this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have, which arise out of or are connected with my employment with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under:  Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, 

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  fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).

  3.	I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by paragraph 2 above.

  4.	I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

  5.	I agree that I hereby waive all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Parties of any kind whatsoever in respect of any Claim, including, without limitation, reinstatement, back pay, front pay, and any form of injunctive relief.  Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under law, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however, that I disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding.  Additionally, I am not waiving (i) any right to any accrued benefits or any severance benefits to which I am entitled under the Agreement, (ii) any claim relating to directors’ and officers’ liability insurance coverage or any right of indemnification under the Company’s organizational documents or otherwise, or (iii) my rights as an equity or security holder in the Company or its affiliates.

  6.	In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state or local statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied.  I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement.  I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law.  I further agree that I am not aware of any pending claim of the type described in paragraph 2 above as of the execution of this General Release.

  7.	I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

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  8.	I agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including reasonable attorneys’ fees.

  9.	I hereby acknowledge that Sections 3 through 7 and 9 through 11 of the Agreement shall survive my execution of this General Release.

  10.	I represent that I am not aware of any claim by me other than the claims that are released by this General Release.  I acknowledge that I may hereafter discover claims or facts in addition to or different than those which I now know or believe to exist with respect to the subject matter of the release set forth in paragraph 2 above and which, if known or suspected at the time of entering into this General Release, may have materially affected this General Release and my decision to enter into it. 

  11.	Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.

  12.	Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

   

  BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

  1.	I HAVE READ IT CAREFULLY;

  2.	I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

  3.	I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

  4.	I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

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  5.	I HAVE HAD AT LEAST [21][45] DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE TO CONSIDER IT, AND THE CHANGES MADE SINCE MY RECEIPT OF THIS RELEASE ARE NOT MATERIAL OR WERE MADE AT MY REQUEST AND WILL NOT RESTART THE REQUIRED [21][45]‐DAY PERIOD;

  6.	I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

  7.	I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

  8.	I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

   

  SIGNED:							DATED:				

   

  4Document

Exhibit 4.10

THE CHARLES SCHWAB CORPORATION
DESCRIPTION OF SECURITIES REGISTERED PURSUANT TO
 SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

As of December 31, 2021, The Charles Schwab Corporation (“CSC, we, us, and our”) had three classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended: (1) our common stock, (2) our Depositary Shares, Each Representing a 1/40th Interest in a Share of 5.95% Non-Cumulative Perpetual Preferred Stock, Series D, and (3) our Depositary Shares, Each Representing a 1/40th Interest in a Share of 4.450% Non-Cumulative Perpetual Preferred Stock, Series J.

DESCRIPTION OF COMMON STOCK

The following description of our common stock does not purport to be complete and is qualified by our Fifth Restated Certificate of Incorporation, as amended, (“Certificate of Incorporation”) and Fourth Restated Bylaws, as amended, (“Bylaws”) which are filed as exhibits to the Annual Report on Form 10-K of which this exhibit is a part. Additionally, the General Corporation Law of Delaware (“Delaware Law”), as amended, may also affect the terms of our common stock.

General

We have 3,000,000,000 shares of authorized common stock, $0.01 par value per share. Holders of our common stock, together with the holders of our nonvoting common stock, are entitled to receive dividends when, as and if declared by our board of directors out of any funds legally available for dividends. Holders of our common stock and holders of our nonvoting common stock are also entitled to share equally, upon our liquidation, and after claims of creditors and any class or series of preferred stock outstanding at the time of liquidation, to receive a pro rata distribution of our net assets. We pay dividends on our common stock and nonvoting common stock only if we have paid or provided for all dividends on any outstanding series of preferred stock, for the then current period and, in the case of any cumulative preferred stock, all prior periods. Our nonvoting common stock has the same rights and privileges as, ranks equally and shares proportionately with, and is identical in all respects as to all matters to, the common stock, except that the nonvoting common stock has no voting rights other than those voting rights required by law.

Our preferred stock will have preference over our common stock with respect to the payment of dividends and the distribution of assets in the event of our liquidation or dissolution. Our preferred stock also will have such other preferences as may be fixed by our board of directors.

Holders of our common stock are entitled to one vote for each share that they hold and are vested with all of the voting power of our capital stock, except as our board of directors has provided, or may provide in the future, with respect to our preferred stock. Our Certificate of Incorporation provides for a classified board but does not provide for cumulative voting. Shares of our common stock are not redeemable, and have no subscription, conversion or preemptive rights.

Our common stock is listed on the New York Stock Exchange. Outstanding shares of our common stock are fully paid and non-assessable. 

Restrictions on Ownership

Under the Home Owners’ Loan Act (“HOLA”), any “savings and loan holding company,” as defined in HOLA, is required to obtain the approval of the Federal Reserve prior to the acquisition of more than 5% of our common stock. Under the Bank Holding Company Act, a bank holding company is required to receive the Federal Reserve’s approval prior to acquiring more than 5% of our common stock. Any other person, other thank a saving and loan holding company and bank holding company, is required to obtain prior non-objection of the Federal Reserve to acquire 10% or more of our common stock. Any company holding more than 25% of our common stock or total equity, or that otherwise exercises a “controlling influence” over us, is subject to regulation as a savings and loan holding company under HOLA.

Business Combination Statute

Under Delaware law, a corporation is prohibited from engaging in any business combination with any interested stockholder, defined as the beneficial owner of 15% or more of the voting power of the corporation, for a period of three years following the date that such stockholder became an interested stockholder, unless:

•prior to that date, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;

•upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation; or

•on or subsequent to that date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.
  
    Under Delaware law, a corporation has the option to opt-out of the above business combination statute. Neither our Certificate of Incorporation nor our Bylaws excludes us from the restrictions imposed by this provision.

Supermajority Vote Requirement

Our Certificate of Incorporation requires the approval of a supermajority of our stockholders for some business combinations with interested stockholders. Our Certificate of Incorporation defines an interested stockholder as a person, partnership or group which directly or indirectly beneficially owns more than 15% of the voting power of our outstanding shares, or an affiliate or associate of a 15% owner. Notwithstanding any lesser percentage permitted by law, under our Certificate of Incorporation, 80% of the voting power of our stockholders, voting together as a single class, must approve any of the following business combinations:
 

•a merger of CSC or any of our subsidiaries with an interested stockholder or an affiliate or associate of an interested stockholder;

•any sale to an interested stockholder of assets of CSC or one of our subsidiaries, if those assets have a fair market value of $5,000,000 or more;

•any sale to CSC or any of our subsidiaries of assets of the interested stockholder, if those assets have a fair market value of $5,000,000 or more;

•the issuance or transfer by CSC or any of our subsidiaries of any of our securities or any securities of our subsidiaries to an interested stockholder, unless the fair market value of the property received has a fair market value of less than $5,000,000;

•any reclassification of our securities, our merger or consolidation with any of our subsidiaries, or any similar transaction which has the effect of increasing the proportionate amount of the outstanding shares of any class of equity securities of CSC or any of our subsidiaries which is directly or indirectly owned by any interested shareholder or its affiliate or associate; or

•the adoption of any plan or proposal for the liquidation or dissolution of CSC.
 
The supermajority vote requirement does not apply to business combinations approved by a majority of disinterested directors. A disinterested director is any member of our board who:

•is not an interested stockholder;

•is not an affiliate or a representative of an interested shareholder;

•is not a party to an agreement or arrangement with an interested stockholder to act in concert with that interested stockholder to direct our management or policies; and

•either was a member of our board before the interested stockholder became an interested stockholder or was nominated to succeed a disinterested director by a majority of the disinterested directors; provided that, this requirement does not apply if the business combination involves a party that was an interested stockholder of CSC on July 30, 1987.

    The supermajority requirement does not apply to business combinations meeting fair price and procedural requirements set forth in our Certificate of Incorporation.

DESCRIPTION OF PREFERRED STOCK AND DEPOSITARY SHARES 

The following description of the terms of our 5.95% Non-Cumulative Perpetual Preferred Stock, Series D (“Series D Preferred Stock”) and our 4.450% Non-Cumulative Perpetual Preferred Stock, Series J (“Series J Preferred Stock” and, together with the Series D Preferred Stock, “Preferred Stock”) does not purport to be complete and is qualified by our Certificates of Designations of the Series D Preferred Stock and Series J Preferred Stock, which are filed as exhibits to the Annual Report on Form 10-K of which this exhibit is a part. 
The depositary is the sole holder of the Preferred Stock, as described under “Description of Depositary Shares” below, and all references in this description to the holders of the Preferred Stock shall mean the depositary. However, the holders of depositary shares are entitled, through the depositary, to exercise the rights and preferences of the holder of the Preferred Stock, as described under “Description of Depositary Shares.”

Our authorized capital stock includes 9,940,000 shares of preferred stock, par value $0.01 per share as reflected in our certificate of incorporation. Our board of directors is authorized without further stockholder action:

•to fix or alter the voting rights, powers, preferences and privileges, and the relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of preferred stock;

•to fix the number of shares constituting any such series and the designation thereof; and

•to increase or decrease the number of shares of any series of preferred stock (but not below the number of shares thereof then outstanding).
 
The Series D Preferred Stock and the Series J Preferred Stock are each single series of our authorized preferred stock and are fully paid and nonassessable.

The Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of CSC. The Preferred Stock does not have any maturity date and is not subject to any sinking fund or other obligation of CSC to redeem or repurchase the Preferred Stock.

Shares of Preferred Stock that are redeemed, purchased or otherwise acquired by CSC shall be cancelled and shall revert to authorized but unissued shares of preferred stock undesignated as to series.

Additional Shares of Preferred Stock and Additional Depositary Shares

We may in the future from time to time, without notice to or consent of the holder of Preferred Stock or the holders of the depositary shares, issue additional shares of the Preferred Stock; provided, that any such additional shares of Preferred Stock are not treated as “disqualified preferred stock” within the meaning of Section 1059(f)(2) of the Internal Revenue Code and such additional shares are otherwise treated as fungible with the outstanding Preferred Stock for U.S. federal income tax purposes. In the event that we issue additional Preferred Stock, dividends on such additional shares may accrue from the date of initial issuance or any other date we specify at the time such additional shares are issued. In the event we issue additional shares of Preferred Stock, we will issue a corresponding number of additional depositary shares.

Ranking

Shares of the Preferred Stock rank:

•senior to our junior stock;

•equally with each other series of parity stock, including the Series A Preferred Stock, the Series E Preferred Stock, the Series F Preferred Stock, the Series G Preferred Stock, the Series H Preferred Stock, the Series I Preferred Stock, and any other series of Preferred Stock we may issue in the future; and

•junior to any series of stock we may issue in the future that ranks senior to the Preferred Stock in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of CSC, and to all of our existing and future debt obligations.
  
As used herein, “junior stock” means our common stock, nonvoting common stock and any other class or series of stock of CSC hereafter authorized over which the Preferred Stock has preference or priority in the payment of dividends or in the distribution of assets on any liquidation, dissolution or winding up of CSC.

As used in this description, “parity stock” means any other class or series of stock of CSC that ranks on parity with the Preferred Stock in the payment of dividends and in the distribution of assets on any liquidation, dissolution or winding up of CSC. 

Dividends

Dividends on the Preferred Stock are not cumulative. If our board of directors or a duly authorized committee of our board of directors does not declare a dividend on the Preferred Stock in respect of a dividend period, then no dividend shall be deemed to have accrued for such dividend period, be payable on the applicable dividend payment date, or be cumulative, and we will have no obligation to pay any dividend for that dividend period to the holder of Preferred Stock, including the holders of the depositary shares, and no related distribution will be made on the depositary shares, whether or not our board of directors or a duly authorized committee of our board of directors declares a dividend on the Preferred Stock for any future dividend period.

The holder of Preferred Stock will be entitled to receive, when, as, and if declared by our board of directors or a duly authorized committee of our board of directors, out of assets legally available for the payment of dividends under Delaware law, non-cumulative cash dividends based on the liquidation preference of the Preferred Stock which for the Series D Preferred Stock is at a rate equal to 5.95% per annum for each quarterly dividend period and for the Series J Preferred Stock is at a rate equal to 4.450% per annum for each quarterly dividend period.

If declared by our board of directors or a duly authorized committee of our board of directors, we will pay dividends on the Preferred Stock, in arrears, on March 1, June 1, September 1 and December 1 of each year, each such date referred to as a dividend payment date.

    If any date on which dividends would otherwise be payable is not a business day, then the dividend payment date will be the next business day without any adjustment to the amount of dividends paid. A “business day” means any day other than (i) a Saturday or Sunday or (ii) a day on which banking institutions in San Francisco, California or New York, New York are authorized or obligated by law or executive order to close.

Dividends will be payable to holders of record of Preferred Stock as they appear on our stock register at 5:00 p.m., New York City time, on the applicable record date, which shall be the 15th calendar day before the applicable dividend payment date, or such other record date, not exceeding 30 days before the applicable dividend payment date, as shall be fixed by our board of directors or a duly authorized committee of our board of directors. See “Description of Depositary Shares – Dividends and Other Distributions.”

A dividend period is the period from, and including, a dividend payment date to, but excluding, the next dividend payment date. Dividends payable on the Preferred Stock will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dollar amounts resulting from that calculation will be rounded to the nearest cent, with one-half cent being rounded upwards. Dividends on the Preferred Stock will cease to accrue on the redemption date, if any, as described below under “– Redemption,” unless we default in the payment of the redemption price of the shares of the Preferred Stock called for redemption.

We generally will be able to pay dividends and distributions upon liquidation, dissolution or winding up only out of assets legally available for such payment (after satisfaction of all claims for indebtedness and other non-equity claims). See “Description of Depositary Shares – Dividends and Other Distributions” for information about dividends on the depositary shares representing the Preferred Stock.

Additionally, dividends on the Preferred Stock will be subject to our receipt of required prior approval by the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency), if any, and to the satisfaction of conditions set forth in the capital adequacy guidelines or regulations of the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency) applicable to dividends on the Preferred Stock, if any.

Dividend Stopper

During each dividend period while the Preferred Stock is outstanding, unless the full dividends for the immediately preceding dividend period on all outstanding shares of preferred stock have been declared and paid or declared and a sum sufficient for the payment thereof has been set aside:

•no dividend will be declared or paid or set aside for payment and no distribution will be declared or made or set aside for payment on any junior stock, other than:
 
•a dividend payable solely in the junior stock, or

•any dividend in connection with the implementation of a stockholders’ rights plan, or the redemption or repurchase of any rights under any such plan; and

•no shares of junior stock shall be repurchased, redeemed or otherwise acquired for consideration by us, directly or indirectly (nor shall any monies be paid to or made available for a sinking fund for the redemption of any such securities by us) other than:
 
•as a result of a reclassification of junior stock for or into other junior stock;

•the exchange or conversion of one share of junior stock for or into another share of junior stock;

•through the use of the proceeds of a substantially contemporaneous sale of other shares of junior stock;

•purchases, redemptions or other acquisitions of shares of the junior stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants;

•purchases of shares of junior stock pursuant to a contractually binding requirement to buy junior stock existing prior to the preceding dividend period, including under a contractually binding stock repurchase plan; or

•the purchase of fractional interests in shares of junior stock pursuant to the conversion or exchange provisions of such stock or the security being converted or exchanged; and

•no shares of parity stock shall be repurchased, redeemed or otherwise acquired for consideration by CSC otherwise than pursuant to pro rata offers to purchase all, or a pro rata portion, of the Preferred Stock and such parity stock, unless such parity stock is repurchased, redeemed or acquired for consideration by CSC in connection with any of the following:

•as a result of a reclassification of parity stock for or into other parity stock or junior stock;

•the exchange or conversion of one share of parity stock for or into another share of parity stock or junior stock; or
 
•through the use of the proceeds of a substantially contemporaneous sale of other shares of parity stock or junior stock. 

When dividends are not paid in full upon the shares of Preferred Stock and any parity stock, all dividends declared upon shares of Preferred Stock and any parity stock will be declared on a proportional basis so that the amount of dividends declared per share will bear to each other the same ratio that accrued dividends for the then-current dividend period per share on Preferred Stock, and accrued dividends, including any accumulations, on any parity stock, bear to each other.

Subject to the restrictions described above, dividends (payable in cash, stock or otherwise), as may be determined by our board of directors or a duly authorized committee of our board of directors, may be declared and paid on our common stock, nonvoting common stock, and any other stock ranking equally with or junior to the Preferred Stock from time to time out of any assets legally available for such payment, and the holder of Preferred Stock shall not be entitled to participate in any such dividend.

Redemption

The Preferred Stock is not subject to any mandatory redemption, sinking fund or other similar provisions. Neither the holder of Preferred Stock nor holders of depositary shares have the right to require the redemption or repurchase of the Preferred Stock.

Optional Redemption

We may redeem the Preferred Stock at our option, in whole or in part, from time to time, on any dividend payment date for the Series D Preferred Stock, and on any dividend payment date on or after June 1, 2026 for the Series J Preferred Stock, at a redemption price equal to $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

Redemption Following a Regulatory Capital Treatment Event

We may redeem shares of the Preferred Stock at any time within 90 days following a regulatory capital treatment event (defined below), in whole but not part, at a redemption price equal to $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends.

A “regulatory capital treatment event” means the good faith determination by CSC that, as a result of:

•any amendment to, or change in, the laws or regulations of the United States or any political subdivision of or in the United States that is enacted or becomes effective after the initial issuance of the Preferred Stock;

•any proposed change in those laws or regulations that is announced after the initial issuance of any share of Preferred Stock; or

•any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced after the initial issuance of any share of Preferred Stock,
 
there is more than an insubstantial risk that CSC will not be entitled to treat the full liquidation preference of the shares of Preferred Stock then outstanding as “additional Tier 1 Capital” (or its equivalent) for purposes of the capital adequacy guidelines or regulations of the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency), as then in effect and applicable, for as long as any share of Preferred Stock is outstanding.

Redemption Procedures
    
If shares of the Preferred Stock are to be redeemed pursuant to the terms described above under “–Optional Redemption” or “– Redemption Following a Regulatory Capital Treatment Event,” the notice of redemption shall be given by first class mail to the holder of record of the Preferred Stock to be redeemed, mailed not less than 30 days nor more than 60 days prior to the date fixed for redemption thereof (provided that, if the holder of record is DTC, notice may be given in any manner permitted by DTC). Each notice of redemption will include a statement setting forth:

•the redemption date;

•the number of shares of each series of Preferred Stock to be redeemed and, if less than all the shares held by the holder are to be redeemed, the number of shares of each series of Preferred Stock to be redeemed from the holder;

•the redemption price;

•the place or places where the certificates evidencing shares of Preferred Stock are to be surrendered for payment of the redemption price; and

•that dividends on the shares to be redeemed will cease to accrue on the redemption date.
 
         If notice of redemption of any shares of Preferred Stock has been duly given and if the funds necessary for such redemption have been set aside by us for the benefit of the holders of any shares of a series of Preferred Stock so called for redemption, then, on and after the redemption date, dividends will cease to accrue on such shares of that series of Preferred Stock, such shares of that series of Preferred Stock shall no longer be deemed outstanding, and all rights of the holders of such shares will terminate, except the right to receive the redemption price, plus any declared and unpaid dividends, without accumulation of any undeclared dividends. See “Description of Depositary Shares — Redemption of Depositary Shares” for information about redemption of the depositary shares representing the Preferred Stock.

In case of any redemption of only part of the shares of a series of Preferred Stock at the time outstanding, the shares to be redeemed shall be selected either pro rata or by lot. Subject to the provisions hereof, our board of directors shall have full power and authority to prescribe the terms and conditions upon which shares of Preferred Stock shall be redeemed from time to time.

Any redemption of Preferred Stock will be subject to our receipt of required prior approval by the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency), if any, and to the satisfaction of conditions set forth in the capital adequacy guidelines or regulations of the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency) applicable to redemption of the Preferred Stock, if any.

Liquidation Rights

In the event we liquidate, dissolve or wind-up our business and affairs, either voluntarily or involuntarily, holders of the Preferred Stock are entitled to receive a liquidation distribution of $1,000 per share (equivalent to $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends, before we make any distribution of assets to the holders of our common stock, nonvoting common stock, or any other class or series of stock ranking junior to the Preferred Stock as to that distribution. The holder of the Preferred Stock will not be entitled to any other amounts from us after it has received its full liquidation distribution.

In any such distribution, if the assets of CSC are not sufficient to pay the liquidation distribution described above in full to the holder of the Preferred Stock and all holders of any class or series of stock ranking on parity with the Preferred Stock as to such distribution, the amounts paid to the holder of Preferred Stock and all holders of such parity stock will be paid pro rata in accordance with the respective aggregate liquidation distribution owed to those holders. If the liquidation distribution described above has been paid in full to the holder of Preferred Stock and the holders of such parity stock, the holders of any other class or series of stock ranking junior to the Preferred Stock as to such distribution shall be entitled to receive all remaining assets of CSC according to their respective rights and preferences.
 
For purposes of this section, the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property and assets of CSC shall not be deemed a voluntary or involuntary dissolution, liquidation or winding up of the affairs of CSC, nor shall the merger, consolidation or any other business combination of any other corporation or person into or with CSC be deemed to be a voluntary or involuntary dissolution, liquidation or winding up of the affairs of CSC.

Because we are a holding company, our rights and the rights of our creditors and our stockholders, including the holder of the Preferred Stock, to participate in the assets of any of our subsidiaries upon that subsidiary’s liquidation or recapitalization may be subject to the prior claims of that subsidiary’s creditors, except to the extent that we are a creditor with recognized claims against that subsidiary.

Voting Rights

The holder of the Preferred Stock will have no voting rights, except as provided below or as required by law.

Right to Elect Two Directors upon Nonpayment

Whenever dividends payable on the shares of Preferred Stock have not been paid for six quarterly dividend periods, whether or not consecutive, then the holder of the Preferred Stock will have the right, with holders of any other equally ranked series of preferred stock that have similar voting rights and on which dividends likewise have not been paid (the “Voting Parity Securities”), voting together as a class, at a special meeting called at the request of the holders of at least 20% of the voting power of Preferred Stock and any Voting Parity Securities (unless such request for a special meeting is received less than 90 calendar days before the date fixed for the next annual or special meeting of our stockholders, in which event such election shall be held only at such next annual or special meeting of our stockholders) or at our next annual or special meeting of our stockholders, to elect two additional directors to our board of directors; provided, that the election of any such director does not cause us to violate the applicable corporate governance requirements of the exchange or trading market where our common stock is then listed or quoted, as the case may be. At any meeting held for the purpose of electing such directors, the presence in person or by proxy of the holders of shares representing at least a majority of the voting power of the Preferred Stock and any Voting Parity Securities, voting together as a class, shall be required to constitute a quorum of such shares. The affirmative vote of the holders of the Preferred Stock and the holders of any Voting Parity Securities, voting together as a class, representing a majority of the voting power of such shares present at such meeting, in person or by proxy, shall be sufficient to elect any such director.

Immediately prior to the election of any such directors, the number of directors that comprise our board of directors shall be increased by two. Such voting rights and the term of the additional directors so elected will continue until:

•continuous non-cumulative dividends for at least four consecutive quarterly dividend periods; and

•cumulative dividends, if any, payable for all past dividend periods,
  
shall have been paid, or declared and set aside for payment, in full, on all outstanding shares of Preferred Stock or the Voting Parity Securities entitled thereto. At that point, the right to elect additional directors terminates and the terms of office of the two additional directors so elected will terminate immediately, and the number of directors shall be reduced by two and such voting rights of the holders of the Preferred Stock and any Voting Parity Securities will cease, subject to any increase in the number of directors as described above due to the revesting of such voting rights in the event of each and every additional failure in the payment of dividends for six quarterly dividend periods, whether or not consecutive, as described above.

The holder of Preferred Stock, together with holders of any Voting Parity Securities, voting together as a class, may remove any director they elected. Any vacancy created by the removal of any such director may be filled only by the vote of the holders of the Preferred Stock and any Voting Parity Securities, voting together as a class. If the office of either such director becomes vacant for any reason other than removal, the remaining director may choose a successor who will hold office for the unexpired term of the vacant office. In the event that both offices are vacant, the holder of Preferred Stock and the holders of any Voting Parity Securities may, as set forth above, call a special meeting and elect such directors at such special meeting, or elect such directors at our next annual or special meeting of our stockholders.

The number of votes that each share of Preferred Stock and any stock ranking equally with the Preferred Stock participating in the votes described above will be in proportion to the liquidation preference of such share.

Under regulations adopted by the Federal Reserve, if the holders of any series of preferred stock are or become entitled to vote for the election of directors, such series will be deemed a “class of voting securities” and a company holding 25% or more of the series, or 10% or more if it otherwise exercises a “controlling influence” over us, may then be subject to regulation as a savings and loan holding company in accordance with the Home Owners’ Loan Act of 1933, as amended. In addition, at the time the series is deemed a class of voting securities,
 
•any other savings and loan holding company may be required to obtain the approval of the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency) to acquire or retain more than 5% of that series; and

•any other persons other than a savings and loan holding company may be required to obtain the non-objection of the Federal Reserve (or any successor bank regulatory authority that may become our applicable federal banking agency) to acquire or retain 10% or more of that series.
 

Other Voting Rights
So long as any shares of a series of Preferred Stock remain outstanding, the affirmative vote or consent of the holders of at least two-thirds of all outstanding shares of the series of Preferred Stock voting separately as a class, shall be required to:

•amend, alter or repeal the provisions of CSC’s certificate of incorporation (including the certificate of designation creating that series of Preferred Stock), or CSC’s bylaws, whether by merger, consolidation or otherwise, so as to adversely affect the powers, preferences, privileges or special rights of the series of Preferred Stock; provided, that any of the following will not be deemed to adversely affect such powers, preferences, privileges or special rights:
 
•increases in the amount of the authorized common stock, nonvoting common stock, or, except as provided below, preferred stock;

•increases or decreases in the number of shares of any series of preferred stock ranking equally with or junior to the Preferred Stock; or

•the authorization, creation and issuance of other classes or series of capital stock (or securities convertible or exchangeable into such capital stock) ranking equally with or junior to the Preferred Stock;

•amend or alter CSC’s certificate of incorporation to authorize or increase the authorized amount of or issue shares of any class or series of senior stock, or reclassify any of our authorized capital stock into any such shares of senior stock or issue any obligation or security convertible into or evidencing the right to purchase any such shares of senior stock; or
 
•consummate a binding share exchange, a reclassification involving the series of Preferred Stock or a merger or consolidation of us with or into another entity; provided, however, that the holder of Preferred Stock will have no right to vote under this provision or otherwise under Delaware law if in each case:

• the series of Preferred Stock remains outstanding or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity, is converted into or exchanged for preferred securities of the surviving or resulting entity (or its ultimate parent) that is an entity organized and existing under the laws of the United States, any state thereof or the District of Columbia; and

• the series of Preferred Stock remaining outstanding or the new preferred securities, as the case may be, have such powers, preferences and special rights as are not materially less favorable to the holders thereof than the powers, preferences and special rights of the series of Preferred Stock.

As used above under “Description of Preferred Stock — Voting Rights”, “senior stock” means any other class or series of stock of CSC ranking senior to the Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of CSC. As of December 31, 2021, there was no existing senior stock.

The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of the series of Preferred Stock shall have been redeemed or called for redemption in accordance with the provisions described above upon proper notice and sufficient funds shall have been set aside by us for the benefit of the holder of the series of Preferred Stock to effect such redemption.

See “Description of Depositary Shares – Voting the Preferred Stock” for information about voting of the depositary shares representing the Preferred Stock.

 
DESCRIPTION OF DEPOSITARY SHARES

In this description, references to “holders” of depositary shares mean those who own depositary shares registered in their own names, on the books that we or the depositary maintain for this purpose, and not indirect holders who own beneficial interests in depositary shares registered in street name or issued in book-entry form through DTC. 

We have issued fractional interests in shares of the Preferred Stock in the form of depositary shares. Each such depositary share represents a 1/40th ownership interest in a share of the Series D Preferred Stock or Series J Preferred Stock, and is evidenced by a depositary receipt. The shares of Series D Preferred Stock and Series J Preferred Stock represented by depositary shares were each deposited under a separate deposit agreement among CSC, Equiniti Trust Company, and the holders from time to time of the depositary receipts evidencing the depositary shares. Subject to the terms of the deposit agreements, each holder of a depositary share is entitled, through the depositary, in proportion to the applicable fraction of a share of Preferred Stock represented by such depositary share, to all the rights and preferences of the Preferred Stock represented thereby (including dividend, redemption, liquidation and voting rights).

Dividends and Other Distributions

The depositary will distribute any cash dividends or other cash distributions received in respect of the deposited Preferred Stock to the record holders of depositary shares representing the Preferred Stock represented thereby in proportion to the number of depositary shares held by the holders. The depositary will distribute any property received by it other than cash to the record holders of depositary shares entitled to those distributions, unless it determines that the distribution cannot be made proportionally among those holders or that it is not feasible to make a distribution (including any requirement that CSC or the depositary withhold an amount on account of taxes). In that event, the depositary may, with CSC’s approval, adopt a method as it deems equitable and practicable for purposes of effecting the distribution, including selling the property (at a public or private sale) and distributing the net proceeds from the sale to the holders of the depositary shares in proportion to the number of depositary shares they hold.

Record dates for the payment of dividends and other matters relating to the depositary shares will be the same as the corresponding record dates for the Preferred Stock.

The amounts distributed to holders of depositary shares will be reduced by any amounts required to be withheld by the depositary or by CSC on account of taxes or other governmental charges.

Redemption of Depositary Shares

If we redeem the Preferred Stock represented by the depositary shares, the depositary shares will be redeemed from the proceeds received by the depositary resulting from the redemption of the Preferred Stock held by the depositary. The redemption price per depositary share will be equal to 1/40th of the redemption price per share payable with respect to the Preferred Stock (or $25 per depositary share), plus any declared and unpaid dividends, without accumulation of any undeclared dividends. Whenever we redeem shares of Preferred Stock held by the depositary, the depositary will redeem, as of the same redemption date, the number of depositary shares representing shares of Preferred Stock so redeemed.
 
In case of any redemption of less than all of the outstanding depositary shares, the depositary shares to be redeemed will be selected by the depositary pro rata or by lot. In any such case, the depositary will redeem depositary shares only in increments of 40 shares and any multiple thereof.

Liquidation Preference

In the event that we liquidate, dissolve or wind-up our business and affairs, either voluntarily or involuntarily, each holder of a depositary share will be entitled to receive a liquidation distribution of $25 per depositary share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, before we make any distribution of assets to the holders of our common stock, nonvoting common stock, or any other class or series of stock ranking junior to the Preferred Stock as to that distribution.

Voting the Preferred Stock

When the depositary receives notice of any meeting at which the holders of the Preferred Stock are entitled to vote, the depositary will mail (or otherwise transmit by an authorized method) the information contained in the notice to the record holders of the depositary shares representing the Preferred Stock. Each record holder of the depositary shares on the record date, which will be the same date as the record date for the Preferred Stock, may instruct the depositary to vote the amount of the Preferred Stock represented by the holder’s depositary shares. To the extent possible, the depositary will vote the amount of the Preferred Stock represented by depositary shares in accordance with the instructions it receives. CSC will agree to take all reasonable actions that the depositary determines are necessary to enable the depositary to vote as instructed. If the depositary does not receive specific instructions from the holders of any depositary shares representing the Preferred Stock, it will vote all depositary shares of that series held by it proportionately with instructions received.

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