Employment Agreement - Marsh & McLennan Risk Capital Corp., Marsh & McLennan Risk Capital Holdings Ltd. and Robert Clements
AGREEMENT made as of March 29, 1996 between MARSH & McLENNAN RISK CAPITAL
CORP., a Delaware corporation (the "Company"), MARSH & McLENNAN RISK CAPITAL
HOLDINGS, LTD., a Delaware corporation ("MMRCH"), and ROBERT CLEMENTS (the
"Executive").
WHEREAS, the Executive is employed by the Company as its Chairman of the
Board and Chief Executive Officer pursuant to the Amended and Restated
Employment Agreement effective as of December 31, 1993 (the "Employment
Agreement");
WHEREAS, pursuant to an Investment Advisory Agreement dated September 19,
1995, between Risk Capital Holdings, Inc. ("Risk Capital Holdings") and the
Company, and an Investment Advisory Agreement dated September 19, 1995, between
Risk Capital Reinsurance Company ("Risk Capital RE") and the Company
(collectively, "Advisory Agreements"), Risk Capital Holdings and Risk Capital RE
will pay the Company certain fees as compensation for services rendered pursuant
to the Advisory Agreements;
WHEREAS, MMRCH has acquired certain Class A and Class B warrants to
acquired shares of common stock, $.01 par value per share, of Risk Capital
Holdings; and
WHEREAS, the parties desire to enter into an Agreement on the terms set
forth below.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby
agree as follows:
1. Certain Warrants. As additional compensation for the Executive's
services to the Company and subject to the provisions of Paragraph 2 hereof,
MMRCH shall transfer to the Executive Class A Warrants to acquire an aggregate
of 200,000 shares of common stock, $.01 par value per share (the "Risk Capital
Holdings Shares"), of Risk Capital Holdings, as soon as practicable following
the date the consent described in Paragraph 2 hereof is obtained. In addition,
as soon as practicable following the date the consent described in paragraph 2
hereof is obtained, MMRCH shall deliver to an escrow agent (the "Escrow Agent")
(which Escrow Agent shall be selected by mutual agreement of the Executive and
MMRCH), Class B Warrants to acquire an additional 150,000 Risk Capital Holdings
Shares, to be held by the Escrow Agent in accordance with the provisions of an
escrow agreement, substantially in the form attached as Exhibit A (including,
however, such changes thereto as may be proposed by
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the Escrow Agent and are agreed to by the parties, which agreement shall not be
unreasonably withheld). Such Class B Warrants shall be transferred to the
Executive or exercised as provided in such escrow agreement, a condition to such
transfer being that the "Market Price" of Risk Capital Holdings Shares has
equaled or exceeded $35, subject to the provisions of such escrow agreement
dealing with a "Change of Control," all as more fully described in such escrow
agreement.
2. Certain Conditions. The transfer of Class A and B Warrants described
herein shall at all times comply with, and be subject to the conditions set
forth in, Section 5(a) of the Amended and Restated Subscription Agreement, dated
June 28, 1995, between Risk Capital Holdings and MMRCH ("Subscription
Agreement"). The Company and the Executive shall each use best efforts to obtain
the consent to the transfer described in Paragraph 1 hereof, in accordance with
Section 5(a)(y) of the Subscription Agreement. If such consent is not obtained,
the Company and the Executive shall in good faith negotiate an amendment hereto
which, insofar as is reasonably practicable, confers upon the Executive
substantially equivalent benefits (by means of transfer of phantom equity units,
stock appreciation rights or similar mechanisms).
3. Notice. Upon each exercise by the Executive of any Class A or B
Warrants described herein, the Executive shall give notice of such exercise and
the number of Class A or B Warrants being exercised to the Company at
Marsh & McLennan Risk Capital Corp.
80 Field Point Road
Greenwich, Connecticut 06830
Attention: Chief Executive Officer
with a copy to:
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036
Attention: General Counsel
4. Risk Capital Holdings Performance Payment. As additional compensation
for the Executive's services to the Company, the Company shall pay to the
Executive a contingent deferred bonus (the "Risk Capital Holdings Performance
Payment"),
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determined by reference to Revenue (as hereinafter defined) with respect to each
of the calendar years 1998 and 2000. The Risk Capital Holdings Performance
Payment shall be paid in a lump sum (less any applicable withholding of taxes)
as soon as practicable after the date that the Revenue actually received with
respect to the applicable calendar year has been determined. For purposes of
this paragraph, Revenue shall mean the aggregate fees actually received by the
Company pursuant to Section 4(b) of the Advisory Agreements. The amount of such
Risk Capital Holdings Performance Payment shall be determined as follows:
with respect to 1998:
Risk Capital Holdings
Revenue Performance Payment
------- -------------------
$4MM $250,000
more than $ 4MM but less than $250,000 plus 20% of the excess of the
$6.5MM Revenue over $ 4MM
$6.5 MM or more $750,000
with respect to 2000:
Risk Capital Holdings
Revenue Performance Payment
------- -------------------
$7MM $500,000
more than $7MM but less than $500,000 plus 20% of the excess of the
$12MM Revenue over $7MM
$12MM or more $1,500,00
5. Survival of Certain Rights. Anything in this Agreement to the contrary
notwithstanding, the Executive's rights hereunder shall survive the termination
of the Employment Agreement and the termination of the Executive's employment
with the Company for any reason.
6. Assignment. The Executive may sell, assign or otherwise transfer his
rights to (a) the Class B Warrants, including his rights under the escrow
agreement referred to in Paragraph 1 hereof (subject to receipt of consent to
such
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transfer in accordance with Section 5(a)(y) of the Subscription Agreement) and
(b) the Risk Capital Holdings Performance Payment. In the event of the
Executive's death or incompetence, the Executive's executor, heirs, guardian or
other personal representative shall be entitled to exercise the Executive's
rights under this Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, heirs (in the case
of the Executive) and assigns.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals as of the day and year first above written.
MARSH & McLENNAN RISK CAPITAL CORP.
By: /s/Jeffrey W. Greenberg
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Chairman
MARSH & McLENNAN RISK CAPITAL
HOLDINGS, LTD.
By: /s/Frank J. Borelli
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Chairman
/s/Robert Clements
-------------------------------
Robert Clements
Guaranty
Marsh & McLennan Companies, Inc., a Delaware corporation, hereby guarantees to
the Executive the performance of any and all of the obligations and duties of
the Company and MMRCH under this Agreement (including any obligations and duties
under the escrow agreement that may be entered into pursuant to Paragraph 1
hereof.).
MARSH & McLENNAN COMPANIES, INC.
By: /s/A. J. C. Smith
-------------------------------
Chairman
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