-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QDFU+sFXf1w/QUAmu9lt5BZnuX2ui89gJt88BXfbzfmMXG8QSp3UhBhNwpUzceN/ aAoAnXFtb4ZWMJ6TQQp+Mw== 0000062709-03-000071.txt : 20030513 0000062709-03-000071.hdr.sgml : 20030513 20030513172623 ACCESSION NUMBER: 0000062709-03-000071 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARSH & MCLENNAN COMPANIES INC CENTRAL INDEX KEY: 0000062709 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411] IRS NUMBER: 362668272 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05998 FILM NUMBER: 03696424 BUSINESS ADDRESS: STREET 1: 1166 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2123455000 MAIL ADDRESS: STREET 1: 1166 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 FORMER COMPANY: FORMER CONFORMED NAME: MARLENNAN CORP DATE OF NAME CHANGE: 19760505 10-Q 1 sec0513-03.txt FORM 10-Q (3-31-2003) ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended March 31, 2003 Marsh & McLennan Companies, Inc. 1166 Avenue of the Americas New York, New York 10036 (212) 345-5000 Commission file number 1-5998 State of Incorporation: Delaware I.R.S. Employer Identification No. 36-2668272 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . NO ___. As of April 30, 2003, there were outstanding 535,412,029 shares of common stock, par value $1.00 per share, of the registrant. INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS Marsh & McLennan Companies,Inc. and its subsidiaries ("MMC") and their representatives may from time to time make verbal or written statements (including certain statements contained in this report and other MMC filings with the Securities and Exchange Commission and in our reports to stockholders) relating to future results, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, discussions concerning revenues, expenses, earnings, cash flow, capital structure, pension funding, financial losses and expected insurance recoveries resulting from the September 11, 2001 attack on the World Trade Center in New York City, as well as market and industry conditions, premium rates, financial markets, interest rates, foreign exchange rates, contingencies and matters relating to MMC's operations and income taxes. Such forward-looking statements are based on available current market and industry materials, experts' reports and opinions and long-term trends, as well as management's expectations concerning future events impacting MMC. Forward-looking statements by their very nature involve risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by any forward-looking statements contained or incorporated or referred to herein include, in the case of MMC's risk and insurance services and consulting businesses, the amount of actual insurance recoveries and financial losses from the September 11 attack on the World Trade Center, or other adverse consequences from that incident. Other factors that should be considered in the case of MMC's risk and insurance service business are changes in competitive conditions, movements in premium rate levels, the continuation of difficult conditions for the transfer of commercial risk and other changes in the global property and casualty insurance markets, the impact of terrorist attacks, natural catastrophes, and mergers between client organizations, including insurance and reinsurance companies. Factors to be considered in the case of MMC's investment management business include changes in worldwide and national equity and fixed income markets, actual and relative investment performance, the level of sales and redemptions, and the ability to maintain investment management and administrative fees at appropriate levels; and with respect to all of MMC's activities, changes in general worldwide and national economic conditions, changes in the value of investments made in individual companies and investment funds, fluctuations in foreign currencies, actions of competitors or regulators, changes in interest rates or in the ability to access financial markets, developments relating to claims, lawsuits and contingencies, prospective and retrospective changes in the tax or accounting treatment of MMC's operations and the impact of tax and other legislation and regulation in the jurisdictions in which MMC operates. Forward-looking statements speak only as of the date on which they are made, and MMC undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events. MMC is committed to providing timely and materially accurate information to the investing public, consistent with our legal and regulatory obligations. To that end, MMC and its operating companies use their websites to convey meaningful information about their businesses, including the anticipated release of quarterly financial results, and the posting of updates of assets under management at Putnam. Monthly updates of total assets under management at Putnam will be posted to the MMC website on the first business day following the end of each month, except at the end of March, June, September and December, when such information will be released with MMC's quarterly earnings announcement. Putnam posts mutual fund and performance data to its website regularly. Assets for most Putnam retail mutual funds are posted approximately two weeks after each month-end. Mutual fund net asset value (NAV) is posted daily. Historical performance and Lipper rankings are also provided. Investors can link to MMC and its operating company websites through www.mmc.com. PART I, FINANCIAL INFORMATION ----------------------------- MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - ---------------------------------------------------- ------------------------- For the Three Months Ended March 31, (In millions, except per share figures) 2003 2002 - ---------------------------------------------------- ------------------------- Revenue: Service revenue $2,841 $2,603 Investment income (loss) 11 32 - ---------------------------------------------------- ------------------------- Operating revenue 2,852 2,635 - ---------------------------------------------------- ------------------------- Expense: Compensation and benefits 1,378 1,249 Other operating expenses 757 699 - ---------------------------------------------------- ------------------------- Operating expenses 2,135 1,948 - ---------------------------------------------------- ------------------------- Operating income 717 687 Interest income 6 5 Interest expense (43) (37) - ---------------------------------------------------- ------------------------- Income before income taxes and minority interest 680 655 Income taxes 232 232 Minority interest, net of tax 5 5 - ---------------------------------------------------- ------------------------- Net income $443 $ 418 - ---------------------------------------------------- ------------------------- Basic net income per share $ .83 $ .76 - ---------------------------------------------------- ------------------------- Diluted net income per share $ .81 $ .73 - ---------------------------------------------------- ------------------------- Average number of shares outstanding-Basic 536 548 - ---------------------------------------------------- ------------------------- Average number of shares outstanding-Diluted 547 569 - ---------------------------------------------------- ------------------------- The accompanying notes are an integral part of these consolidated statements. MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - ----------------------------------------------------------------------------- Unaudited March 31, December 31, (In millions of dollars) 2003 2002 - ----------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 566 $ 546 - ----------------------------------------------------------------------------- Receivables Commissions and fees 2,251 2,178 Advanced premiums and claims 121 119 Other 304 305 - ----------------------------------------------------------------------------- 2,676 2,602 Less-allowance for doubtful accounts and cancellations (126) (124) - ----------------------------------------------------------------------------- Net receivables 2,550 2,478 - ----------------------------------------------------------------------------- Prepaid dealer commissions - current portion 201 226 Other current assets 289 414 - ----------------------------------------------------------------------------- Total current assets 3,606 3,664 Goodwill and intangible assets 5,412 5,404 Fixed assets, net 1,322 1,308 (net of accumulated depreciation and amortization of $1,299 at March 31, 2003 and $1,275 at December 31, 2002) Long-term investments 517 578 Prepaid dealer commissions 248 292 Other assets 2,752 2,609 - ----------------------------------------------------------------------------- $13,857 $13,855 - ----------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated statements. MARSH & MCLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- Unaudited March 31, December 31, (In millions of dollars) 2003 2002 - -------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 772 $ 543 Accounts payable and accrued liabilities 1,512 1,406 Accrued compensation and employee benefits 974 1,568 Accrued income taxes 282 194 Dividends payable 151 152 - -------------------------------------------------------------------------------- Total current liabilities 3,691 3,863 - -------------------------------------------------------------------------------- Fiduciary liabilities 4,378 4,010 Less - cash and investments held in a fiduciary capacity (4,378) (4,010) - -------------------------------------------------------------------------------- - - Long-term debt 2,881 2,891 - -------------------------------------------------------------------------------- Other liabilities 2,131 2,083 - -------------------------------------------------------------------------------- Commitments and contingencies - -------------------------------------------------------------------------------- Stockholders' equity: Preferred stock, $1 par value, authorized 6,000,000 shares, none issued - - Common stock, $1 par value, authorized 800,000,000 shares, issued 560,641,640 shares at March 31, 2003 and December 31, 2002 561 561 Additional paid-in capital 1,341 1,426 Retained earnings 4,784 4,490 Accumulated other comprehensive loss (453) (452) - -------------------------------------------------------------------------------- 6,233 6,025 Less - treasury shares, at cost, 24,879,846 shares at March 31, 2003 and 22,441,817 shares at December 31, 2002 (1,079) (1,007) - -------------------------------------------------------------------------------- Total stockholders' equity 5,154 5,018 - -------------------------------------------------------------------------------- $13,857 $13,855 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated statements. MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - ------------------------------------------------------------------------------- For Three Months ended March 31, 2003 2002 (In millions of dollars) - ------------------------------------------------------------------------------- Operating cash flows: Net income $ 443 $ 418 Adjustments to reconcile net income to cash generated from (used for) operations: Depreciation of fixed assets, capitalized software and other intangible assets 95 86 Provision for deferred income taxes 45 43 (Gains) losses on investments (11) (32) Changes in assets and liabilities: Net receivables (72) 43 Prepaid dealer commissions 69 79 Other current assets 7 (8) Other assets (30) (89) Accounts payable and accrued liabilities 97 4 Accrued compensation and employee benefits (594) (505) Accrued income taxes 88 (276) Other liabilities 46 44 Effect of exchange rate changes (6) (5) - ------------------------------------------------------------------------------- Net cash generated from (used for) operations 177 (198) - ------------------------------------------------------------------------------- Financing cash flows: Net decrease in commercial paper (236) (213) Proceeds from issuance of debt 501 747 Other repayments of debt (38) (2) Purchase of treasury shares (311) (217) Issuance of common stock 164 162 Dividends paid (151) (145) - ------------------------------------------------------------------------------- Net cash (used for) provided by financing activities (71) 332 - ------------------------------------------------------------------------------- Investing cash flows: Capital expenditures (110) (102) Proceeds from sales related to fixed assets and capitalized software 6 3 Acquisitions - (2) Other, net 8 (22) - ------------------------------------------------------------------------------- Net cash used for investing activities (96) (123) - ------------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents 10 (5) - ------------------------------------------------------------------------------- Increase in cash & cash equivalents 20 6 Cash & cash equivalents at beginning of period 546 537 - ------------------------------------------------------------------------------- Cash & cash equivalents at end of period $ 566 $ 543 - ------------------------------------------------------------------------------- The accompanying notes are an integral part of these consolidated statements. MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Nature of Operations -------------------- MMC, a professional services firm, is organized based on the different services that it offers. Under this organization structure, MMC operates in three principal business segments: risk and insurance services, investment management and consulting. The risk and insurance services segment provides risk management and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations and private clients. It also provides services principally in connection with originating, structuring and managing insurance, financial services and other industry-focused investments. The investment management segment primarily provides securities investment advisory and management services and administrative services for a group of publicly held investment companies and institutional accounts. The consulting segment provides advice and services to the managements of organizations primarily in the areas of retirement services, human capital, health care and group benefit programs, management consulting, organizational change and organizational design, economic consulting and corporate identity. 2. Principles of Consolidation --------------------------- The consolidated financial statements included herein have been prepared by MMC pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been omitted pursuant to such rules and regulations, although MMC believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in MMC's latest Annual Report on Form 10-K. The financial information contained herein reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three-month periods ended March 31, 2003 and 2002. Certain reclassifications have been made to the prior year amounts to conform to the current year presentation. 3. Fiduciary Assets and Liabilities -------------------------------- In its capacity as an insurance broker or agent, MMC collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurance underwriters. MMC also collects claims or refunds from underwriters on behalf of insureds. Unremitted insurance premiums and claims are held in a fiduciary capacity. Interest income on these fiduciary funds, included in service revenue, amounted to $31 million and $27 million for the three-month periods ended March 31, 2003 and 2002, respectively. Since fiduciary assets are not available for corporate use, they are shown in the balance sheet as an offset to fiduciary liabilities. Net uncollected premiums and claims and the related payables amounted to $12.0 billion at March 31, 2003 and $11.7 billion at December 31, 2002, respectively. MMC is not a principal to the contracts under which the right to receive premiums or the right to receive reimbursement of insured losses arises. Net uncollected premiums and claims and the related payables are, therefore, not assets and liabilities of MMC and are not included in the accompanying Consolidated Balance Sheets. 4. Per Share Data -------------- Basic net income per share is calculated by dividing net income by the weighted average number of shares of MMC's common stock outstanding. Diluted net income per share is calculated by reducing net income for the potential minority interest associated with unvested shares granted under the Putnam Equity Partnership Plan and adding back dividend equivalent expense related to common stock equivalents. This result is then divided by the weighted average common shares outstanding, which have been adjusted for the dilutive effect of potentially issuable common shares. The following reconciles net income to net income for diluted earnings per share and basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the three-month periods ended March 31, 2003 and 2002. - -------------------------------------------------------------------------------- (In millions of dollars) 2003 2002 - -------------------------------------------------------------------------------- Net income $443 $418 Less: Potential minority interest associated with the Putnam Class B Common Shares net of dividend equivalent expense related to common stock equivalents - (1) - -------------------------------------------------------------------------------- Net income for diluted earnings per share $443 $417 - -------------------------------------------------------------------------------- Basic weighted average common shares outstanding 536 548 Dilutive effect of potentially issuable common shares 11 21 - -------------------------------------------------------------------------------- Diluted weighted average common shares outstanding 547 569 - -------------------------------------------------------------------------------- 5. Supplemental Disclosure to the Consolidated Statements of Cash Flows -------------------------------------------------------------------- The following schedule provides additional information concerning interest and income taxes paid for the three-month periods ended March 31, 2003 and 2002. - --------------------------------------------------------------- (In millions of dollars) 2003 2002 - --------------------------------------------------------------- Interest paid $ 19 $ 18 Income taxes paid $ 57 $ 399 6. Comprehensive Income -------------------- The components of comprehensive income for the three-month periods ended March 31, 2003 and 2002 are as follows: - -------------------------------------------------------------------------------- (In millions of dollars) 2003 2002 - -------------------------------------------------------------------------------- Foreign currency translation adjustments $ 18 $(31) Unrealized investment holding (losses)gains, net of income taxes (14) 3 Less: Reclassification adjustment for realized gains included in net income, net of income taxes (5) (20) Deferred (loss) on cash flow hedges, net of income taxes - (1) - -------------------------------------------------------------------------------- Other comprehensive loss (1) (49) Net income 443 418 - -------------------------------------------------------------------------------- Comprehensive income $442 $369 - -------------------------------------------------------------------------------- 7. Goodwill and Other Intangibles ------------------------------ Changes in the carrying amount of goodwill for the three-month period ended March 31, 2003, are as follows: - --------------------------------------------------- ---------- (in millions of dollars) 2003 - --------------------------------------------------- ---------- Balance as of January 1, $5,151 Goodwill acquired - Other adjustments (primarily foreign exchange) 12 - --------------------------------------------------- ---------- Balance as of March 31, $5,163 - --------------------------------------------------- ---------- The goodwill balance at March 31, 2003 and December 31, 2002 includes approximately $121 million of equity method goodwill. Amortized intangible assets consist of the cost of client lists and client relationships acquired and the rights to future revenue streams from certain existing private equity funds. MMC has no intangible assets with indefinite lives. The gross carrying amount and accumulated amortization by major intangible asset class is as follows: - ----------------------------------------- -----------------------------------------------------------------------
March 31, 2003 December 31, 2002 ----------------------------------------------------------------------- Net Net Gross Accumulated Carrying Gross Accumulated Carrying (In millions of dollars) Cost Amortization Amount Cost Amortization Amount - ----------------------------------------- ---------- -------------- --------------------- -------------- -------- Client lists and client relationships $153 $ 52 $101 $148 $ 50 $ 98 acquired Future revenue streams related to 216 77 139 216 70 146 existing private equity funds - ----------------------------------------- ---------- -------------- --------------------- -------------- -------- Total amortized intangibles $369 $129 $240 $364 $120 $244 - ----------------------------------------- ---------- -------------- --------------------- -------------- --------
Aggregate amortization expense for the quarter ended March 31, 2003 and 2002 was $9 million and $8 million, respectively and the estimated future aggregate amortization expense is as follows: - ----------------------------------- ---------- -------------------------------- For the Years Ending December 31, Estimated (in millions of dollars) Expense - ----------------------------------- ---------- -------------------------------- 2003 $35 2004 $35 2005 $32 2006 $26 2007 $24 - ----------------------------------- ---------- -------------------------------- 8. Stock Benefit Plans ------------------- MMC has stock-based benefit plans under which employees are awarded grants of restricted stock, stock options and other forms of awards. As provided under SFAS No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123") MMC has elected to continue to account for stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and has provided the required additional pro forma disclosures. Pro Forma Information: In accordance with the intrinsic value method allowed by APB 25, no compensation cost has been recognized in the Consolidated Statements of Income for MMC's stock option and stock purchase plans and the stock options awarded under the Putnam Investments Equity Partnership Plan. If compensation cost for MMC's stock-based compensation plans had been determined consistent with the fair value method prescribed by SFAS No. 123, MMC's net income and net income per share for the three-month periods ended March 31, 2003 and 2002 would have been reduced to the pro forma amounts indicated in the table below. - -------------------------------------------------------------------------------- (In millions of dollars, except per share figures) 2003 2002 - -------------------------------------------------------------------------------- Net Income: As reported $443 $418 Adjustment for fair value method, net of tax (47) (35) - -------------------------------------------------------------------------------- Pro forma net income $396 $383 - -------------------------------------------------------------------------------- Net Income Per Share: Basic: As reported $.83 $.76 Pro forma $.74 $.70 Diluted: As reported $.81 $.73 Pro forma $.72 $.67 - -------------------------------------------------------------------------------- The pro forma information reflected above includes stock options issued under MMC incentive and stock award plans and the Putnam Investments Equity Partnership Plan and stock issued under MMC stock purchase plans. The estimated fair value of options granted was calculated using the Black-Scholes option pricing valuation model. The weighted average assumptions used in the valuation models are evaluated and revised, as necessary, to reflect market conditions and experience. 9. Long-term Debt -------------- In February 2003, MMC issued $250 million of 3.625% Senior Notes due 2008 and $250 million of 4.85% Senior Notes due 2013. The net proceeds from the notes were used to pay down commercial paper borrowings. In January 2003, MMC terminated and settled interest rate swaps that had hedged the fair value of senior notes issued in 2002. The cumulative amount of previously recognized adjustments of the fair value of the hedged notes is being amortized over the remaining life of those notes in accordance with SFAS No. 133. As a result, the effective interest rate over the remaining life of the notes, including the amortization of the fair value adjustments, is 4.0% for the $500 million Senior Notes due in 2007 (5.375% coupon rate) and 5.1% for the $250 million Senior Notes due in 2012 (6.25% coupon rate). Commercial paper borrowings of $250 million and $750 million respectively, at March 31, 2003 and December 31, 2002, have been classified as long-term debt based on MMC's intent and ability to maintain or refinance these obligations on a long-term basis. 10. Integration and Restructuring Costs ----------------------------------- In 1999, as part of the 1998 combination with Sedgwick Group, plc ("Sedgwick") and the integration of Sedgwick, MMC adopted a plan to reduce staff and consolidate duplicative offices. The estimated cost of this plan relating to employees and offices of Sedgwick ("1999 Sedgwick Plan) amounted to $285 million and was included in the cost of the acquisition. Merger-related costs for employees and offices of MMC ("1999 MMC Plan) amounted to $266 million and were recorded as part of a 1999 special charge. In the third quarter of 2001, as a result of weakening business conditions, which were exacerbated by the events of September 11, MMC adopted a plan to provide for staff reductions and office consolidations, primarily in the consulting segment ("2001 Plan"). The charge of $61 million related to this Plan is comprised of $44 million for severance and related benefits affecting 750 people and $17 million for future rent under non-cancelable leases. The utilization of these charges is summarized as follows:
Utilized and 1999 Sedgwick Plan: changes in Utilized in Balance March (In millions of dollars) Initial estimates First Qtr. 2003 31, 2003 Balance through 2002 - ---------------------------------------------- ----------- ---------------- ---------------- ---------------- Termination payments to employees $ 183 $ (181) $ - $ 2 Other employee-related costs 5 (5) - - Future rent under noncancelable leases 48 (33) (1) 14 Leasehold termination and related costs 49 (32) - 17 - ---------------------------------------------- ----------- ---------------- ---------------- ---------------- $ 285 $ (251) $(1) $ 33 - ---------------------------------------------- ----------- ---------------- ---------------- ---------------- Number of employee terminations 2,400 (2,400) - - Number of office consolidations 125 (125) - - - ---------------------------------------------- ----------- ---------------- ---------------- ---------------- Utilized and 1999 MMC Plan: changes in Utilized in Balance March (In millions of dollars) Initial estimates First Qtr. 2003 31, 2003 Balance through 2002 - ---------------------------------------------- ----------- ---------------- ---------------- ---------------- Termination payments to employees $ 194 $ (190) $ - $ 4 Future rent under noncancelable leases 31 (21) - 10 Leasehold termination and related costs 16 (13) - 3 Other integration related costs 25 (25) - - - ---------------------------------------------- ----------- ---------------- ---------------- ---------------- $ 266 $ (249) $ - $ 17 - ---------------------------------------------- ----------- ---------------- ---------------- ---------------- Number of employee terminations 2,100 (2,100) - - Number of office consolidations 50 (50) - - - ---------------------------------------------- ----------- ---------------- ---------------- ----------------
The actions contemplated by the 1999 Sedgwick Plan and the 1999 MMC Plan were substantially complete by year-end 2000. Some accruals, primarily for future rent under noncancelable leases and salary continuance arrangements, are expected to be paid over several years. - -----------------------------------------------------------------------------------------------------
Utilized Utilized in Balance March 2001 Plan Initial through First Qtr. 2003 31, 2003 (In millions of dollars) Balance 2002 - ----------------------------------------------------------------------------------------------------- Termination payments to employees $ 44 $ (39) $ (1) $ 4 Future rent under noncancelable leases 17 (4) (1) 12 - ----------------------------------------------------------------------------------------------------- $ 61 $ (43) $ (2) $ 16 - ----------------------------------------------------------------------------------------------------- Number of employee terminations 750 (750) - - Number of office consolidations 9 (9) - - - -----------------------------------------------------------------------------------------------------
Actions under the 2001 Plan were completed by September 30, 2002. Some accruals primarily for future rent under noncancelable leases and salary continuance arrangements are expected to be paid over several years. 11. Common Stock ------------ In 2003, MMC repurchased shares of its common stock for treasury as well as to meet requirements for issuance of shares for its various stock compensation and benefit programs. During the first three months of 2003, MMC repurchased 7.8 million shares for total consideration of $321 million. MMC repurchases shares subject to market conditions, including from time to time pursuant to the terms of a 10b5-1 plan. A 10b5-1 plan allows a company to purchase shares during a blackout period, provided the company communicates its share purchase instructions to the broker prior to the blackout period, pursuant to a written plan that may not be changed. MMC currently plans to continue to repurchase shares in 2003, subject to market conditions. 12. Claims, Lawsuits and Other Contingencies ---------------------------------------- MMC and its subsidiaries are subject to various claims, lawsuits and proceedings consisting principally of alleged errors and omissions in connection with the placement of insurance or reinsurance and in rendering investment and consulting services. Some of these matters seek damages, including punitive damages, in amounts that could, if assessed, be significant. Insurance coverage applicable to such matters includes elements of both risk retention and risk transfer. As part of the combination with Sedgwick, MMC acquired River Thames Insurance Company Limited ("River Thames"), an insurance underwriting business that was already in run-off, which was sold in 2001. Sedgwick guaranteed payment of claims on certain policies underwritten through the Institute of London Underwriters by River Thames ("ILU Guarantee"). The policies covered by the ILU Guarantee are reinsured up to (pound)40 million by a related party of River Thames. Payment of claims under the reinsurance agreement is collateralized by segregated assets held in a trust. As of March 31, 2003, the reinsurance coverage exceeded the best estimate of the projected liability of the policies covered by the ILU Guarantee. To the extent River Thames or the reinsurer are unable to meet their obligations under those policies, a claimant may seek to recover from MMC under the guarantee. MMC does not expect any material net impact on its consolidated financial position or results of operations related to this guarantee. Although the ultimate outcome of all matters referred to above cannot be ascertained and liabilities in indeterminate amounts may be imposed on MMC and its subsidiaries, on the basis of present information, it is the opinion of MMC's management that the disposition or ultimate determination of these claims, lawsuits, proceedings or guarantees will not have a material adverse effect on MMC's consolidated results of operations or its consolidated financial position. 13. Segment Information ------------------- MMC operates in three principal business segments based on the services provided. Segment performance is evaluated based on operating income, which is after deductions for directly related expenses and minority interest but before special charges. The accounting policies of the segments are the same as those used for the consolidated financial statements. Selected information about MMC's operating segments for the three-month periods ended March 31, 2003 and 2002 follow: - ----------------------------------------------------------------------------- Segment Operating (In millions of dollars) Revenue Income - ----------------------------------------------------------------------------- 2003 Risk and Insurance Services $ 1,773 (a) $ 560 Investment Management 445 103 Consulting 634 83 - ----------------------------------------------------------------------------- $ 2,852 $ 746 - ----------------------------------------------------------------------------- 2002 Risk and Insurance Services $1,476 (a) $ 462 Investment Management 594 175 Consulting 565 74 - ----------------------------------------------------------------------------- $2,635 $ 711 - ----------------------------------------------------------------------------- (a)Includes interest income on fiduciary funds ($31 million in 2003 and $27 million in 2002). A reconciliation of the total segment operating income to income before income taxes and minority interest in the consolidated financial statements is as follows: - -------------------------------------------------------------------------------- (In millions of dollars) 2003 2002 - -------------------------------------------------------------------------------- Total segment operating income $746 $711 Corporate expense (34) (29) Reclassification of minority interest 5 5 - -------------------------------------------------------------------------------- Operating income 717 687 Interest income 6 5 Interest expense (43) (37) - -------------------------------------------------------------------------------- Total income before income taxes and minority interest $680 $655 - -------------------------------------------------------------------------------- Operating segment revenue by product for the three-month periods ended March 31, 2003 and 2002 is as follows: - -------------------------------------------------------------------------------- (In millions of dollars) 2003 2002 - -------------------------------------------------------------------------------- Risk & Insurance Services Risk Management and Insurance Broking $1,323 $1,076 Reinsurance Broking and Services 234 185 Related Insurance Services 216 215 - -------------------------------------------------------------------------------- Total Risk & Insurance Services 1,773 1,476 - -------------------------------------------------------------------------------- Investment Management 445 594 - -------------------------------------------------------------------------------- Consulting Retirement Services 300 270 Health Care & Group Benefits 98 84 Human Capital 86 78 Management and Organizational Change 81 68 Economic 37 33 - -------------------------------------------------------------------------------- 602 533 Reimbursed Expenses 32 32 - -------------------------------------------------------------------------------- Total Consulting 634 565 - -------------------------------------------------------------------------------- Total $2,852 $ 2,635 - -------------------------------------------------------------------------------- 14. New Accounting Pronouncements ----------------------------- In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 interprets Accounting Research Bulletin No. 51, "Consolidated Financial Statements" and addresses consolidation by business enterprises qualifying as variable interest entities ("VIE"). FIN 46 defines a VIE as a corporation, partnership, trust or other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46 applies immediately to VIEs created after January 31, 2003 in which the company obtains an interest after that date. FIN 46 applies to the first fiscal year or interim period beginning after June 15, 2003 for VIEs in which MMC holds a variable interest that it acquired before February 1, 2003. MMC through Putnam, manages $2.3 billion in the form of Collateralized Debt Obligations ("CDO") and Collateralized Bond Obligations ("CBO"). The CDOs and CBOs were created prior to January 31, 2003. Separate limited liability companies were established to issue the notes and to hold the underlying collateral, which consists of high-yield bonds and other securities. Putnam serves as the collateral manager for the CDOs and CBOs. The maximum loss exposure related to the CDOs and CBOs is limited to Putnam's investment totaling $4.0 million, reflected in Long-term investments in the Consolidated Balance Sheets at March 31, 2003. MMC is assessing the overall impact of this pronouncement and does not expect the implementation of FIN 46 to have a significant impact on its consolidated results of operations. Marsh & McLennan Companies, Inc. and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations First Quarter Ended March 31, 2003 General Marsh & McLennan Companies, Inc. and Subsidiaries ("MMC") is a professional services firm. MMC subsidiaries include Marsh, the world's largest risk and insurance services firm; Putnam Investments, one of the largest investment management companies in the United States; and Mercer, a major global provider of consulting services. Approximately 59,000 employees worldwide provide analysis, advice and transactional capabilities to clients in over 100 countries. MMC operates in three principal business segments based on the services provided. Segment performance is evaluated based on operating income, which is after deductions for directly related expenses and minority interest. For a description of critical accounting policies, including those which involve significant management judgment, see Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1 to the consolidated financial statements in MMC's Annual Report on Form 10-K for the year ended December 31, 2002. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains certain statements relating to future results which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. See "Information Concerning Forward-Looking Statements" on page one of this filing. This Form 10-Q should be read in conjunction with MMC's latest Annual Report on Form 10-K. The consolidated results of operations follow: - --------------------------------------------------------------------- (In millions of dollars) 2003 2002 - --------------------------------------------------------------------- Revenue: Service Revenue $2,841 $2,603 Investment Income (Loss) 11 32 - --------------------------------------------------------------------- Operating Revenue 2,852 2,635 - --------------------------------------------------------------------- Expense: Compensation and Benefits 1,378 1,249 Other Operating Expenses 757 699 - --------------------------------------------------------------------- Operating Expenses 2,135 1,948 - --------------------------------------------------------------------- Operating Income $ 717 $ 687 - --------------------------------------------------------------------- Operating Income Margin 25.1% 26.1% - --------------------------------------------------------------------- Revenue, derived mainly from commissions and fees, increased 8% from the first quarter of 2002. Revenue increased 4% on a constant currency basis which measures the change in revenue using consistent current exchange rates, before acquisitions. Revenue increases in the risk and insurance services and consulting segments, were partially offset by a revenue decline in the investment management segment. The impact of foreign currency translation and acquisitions on MMC's reported revenue is as follows: - -------------------------------------------------------------------------------------------
Three Months Ended % Change Currency/ March 31, GAAP Constant Acquisitions 2003 2002 Revenue Currency (b) Impact - ------------------------------------------------------------------------------------------- Risk & Insurance Services Risk Management and Insurance Broking $1,323 $1,076 23% 17% 6% Reinsurance Broking and Services 234 185 26% 23% 3% Related Insurance Services (a) 216 215 - - - - ------------------------------------------------------------------------------------------- Total Risk & Insurance Services 1,773 1,476 20% 15% 5% - ------------------------------------------------------------------------------------------- Investment Management 445 594 (25)% (25)% - - ------------------------------------------------------------------------------------------- Consulting Retirement Services 300 270 11% 4% 7% Health Care & Group Benefits 98 84 17% 13% 4% Human Capital 86 78 10% 5% 5% Management and Organizational Change 81 68 19% (5)% 24% Economic 37 33 12% 11% 1% - ------------------------------------------------------------------------------------------- 602 533 13% 5% 8% Reimbursed Expenses 32 32 - - - - ------------------------------------------------------------------------------------------- Total Consulting 634 565 12% 5% 7% - ------------------------------------------------------------------------------------------- Total $2,852 $2,635 8% 4% 4% - ------------------------------------------------------------------------------------------- (a) Includes affinity, claims management and MMC Capital businesses. (b) Constant currency measures the change in revenue using consistent currency exchange rates, before acquisitions and dispositions.
Revenue growth on a constant currency basis in the risk and insurance services segment was 15%, reflecting strong growth across all geographies in both insurance and reinsurance broking. Consulting revenue on a constant currency basis grew 5% resulting from a higher volume of business in retirement services, health care and group benefits, human capital, economic and organizational change consulting, partially offset by a decline in management consulting. Revenue decreased 25% in the investment management segment as average assets under management declined 21% from the first quarter of 2002. Operating expenses increased 10% in the first quarter of 2003 (5% on a constant currency basis) primarily due to increased compensation and benefit costs in the risk and insurance services and consulting segments partially offset by lower incentive compensation and volume related expenses in the investment management segment. Operating expenses also reflect an increase in costs for office space and insurance. Risk and Insurance Services - -------------------------------------------------------------------------- (In millions of dollars) 2003 2002 - -------------------------------------------------------------------------- Revenue $1,773 $1,476 Expense 1,213 1,014 - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- Operating Income $ 560 $ 462 - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- Operating Income Margin 31.6% 31.3% - -------------------------------------------------------------------------- Revenue Revenue for the risk and insurance services segment grew 20% over the first quarter of 2002 and on a constant currency basis grew 15%. The revenue growth was due to an increase in net new business, higher renewals and the effect of higher premium rates. In the first quarter, constant currency revenues grew 17% in risk management and insurance broking, which accounts for approximately three quarters of the risk and insurance services segment, and grew 23% in reinsurance broking and services. Related insurance services revenues, which includes affinity, claims management and MMC Capital were unchanged, with revenue increases in claims management offset by declines in the affinity business. Within risk management and insurance broking, revenue growth was strong across all geographies with increases of 19% in the United States, 13% in Europe and 25% in other geographies measured in constant currency. Although price increases for certain coverages are beginning to moderate, particularly property, the difficult market continued, with clients facing restricted terms and conditions, coverage exclusions and higher prices for commercial liability coverages. Expense Risk and insurance services expenses increased 20% over 2002, 15% on a constant currency basis, primarily reflecting increased incentive compensation commensurate with the current operating environment along with higher compensation and benefit costs associated with staff growth due to a higher volume of business. Operating expenses also reflect an increase in costs for office space and insurance. Investment Management - ------------------------------------------------------------------------- (In millions of dollars) 2003 2002 - ------------------------------------------------------------------------- Revenue $445 $594 Expense 342 419 - ------------------------------------------------------------------------- Operating Income $103 $175 - ------------------------------------------------------------------------- Operating Income Margin 23.1% 29.5% - ------------------------------------------------------------------------- Revenue Putnam's revenue decreased 25% compared with the first quarter of 2002 reflecting a decline in the level of average assets under management on which fees are earned along with a write-down in value of Putnam's investments, including start-up funds. Assets under management averaged $244 billion in the first quarter of 2003, a 21% decline from the $310 billion managed in the first quarter of 2002. Assets under management aggregated $241 billion at March 31, 2003 compared with $314 billion at March 31, 2002 and $251 billion at December 31, 2002. The change from December 31, 2002 results primarily from a decline in equity market levels. In addition, Putnam experienced net redemptions of $1.3 billion, including reinvested dividends, as positive flows from institutional and international business were more than offset by net outflows in retail mutual funds. Assets under management at April 30, 2003 aggregated $255 billion. Expense Putnam's expenses decreased 18% in the first quarter of 2003 from the same period of 2002 primarily due to lower incentive compensation reflecting the current operating environment, as well as a reduction in volume related expenses. Quarter-end and average assets under management are presented below: - ----------------------------------- ---------------- ---------------- (In billions of dollars) 2003 2002 - ----------------------------------- ---------------- ---------------- Mutual Funds: Growth Equity $ 43 $ 73 Value Equity 36 55 Blend Equity 30 46 Fixed Income 46 43 - ----------------------------------- ---------------- ---------------- 155 217 - ----------------------------------- ---------------- ---------------- Institutional: Equity 64 79 Fixed Income 22 18 - ----------------------------------- ---------------- ---------------- 86 97 - ----------------------------------- ---------------- ---------------- Quarter-end Assets $241 $314 - ----------------------------------- ---------------- ---------------- Assets from Non-US Investors $33 $30 - ----------------------------------- ---------------- ---------------- Average Assets $244 $310 - ----------------------------------- ---------------- ---------------- The categories of mutual fund assets reflect style designations aligned with each fund's prospectus. All prior year amounts have been reclassified to conform with the current investment mandate for each product. Assets under management and revenue levels are particularly affected by fluctuations in domestic and international stock and bond market prices, the composition of assets under management and by the level of investments and withdrawals for current and new fund shareholders and clients. U.S. equity markets declined in 2002 for the third consecutive year after several years of substantial growth prior to 2000 and declined again in the first quarter of 2003. Items affecting revenue also include, but are not limited to, actual and relative investment performance, service to clients, the development and marketing of new investment products, the relative attractiveness of the investment style under prevailing market conditions, changes in the investment patterns of clients and the ability to maintain investment management and administrative fees at appropriate levels. Revenue levels are sensitive to all of the factors above, but in particular, to significant changes in stock and bond market valuations. Putnam provides individual and institutional investors with a broad range of both equity and fixed income investment products and services, invested domestically and globally, designed to meet varying investment objectives and which afford its clients the opportunity to allocate their investment resources among various investment products as changing worldwide economic and market conditions warrant. At the end of the first quarter, assets held in equity securities represented 72% of assets under management, compared with 81% at March 31, 2002, while investments in fixed income products represented 28%, compared with 19% at March 31, 2002. Consulting - ------------------------------------ -------------------- --------------------- (In millions of dollars) 2003 2002 - ------------------------------------ -------------------- --------------------- Revenue $634 $ 565 Expense 551 491 - ------------------------------------ -------------------- --------------------- Operating Income $83 $ 74 - ------------------------------------ -------------------- --------------------- Operating Income Margin 13.1% 13.1% - ------------------------------------ -------------------- --------------------- Revenue Consulting revenue increased 12% over 2002 and on a constant currency basis increased 5% reflecting growth in almost all practices. Retirement services revenue, which represented approximately 50% of the consulting segment, increased 4% on a constant currency basis due to an increased demand for advice on retirement issues. Constant currency revenue increased 13% for health care & group benefits consulting, 5% for human capital consulting, and 11% for economic consulting partially offset by a 13% decline in management consulting. Expense Consulting expenses increased 12% over 2002. Expenses grew 5% on a constant currency basis over 2002 reflecting increased compensation and benefits costs, including an increase in incentive compensation reflecting improved operating results. Interest Interest income earned on corporate funds amounted to $6 million in the first quarter of 2003, an increase of $1 million from the first quarter of 2002. Interest expense of $43 million in 2003 increased from $37 million in the first quarter of 2002 due to an increase in the average outstanding debt and in the average interest rates on outstanding debt in the first quarter of 2003. Over the past twelve months, MMC has improved liquidity and extended the average maturity of its debt through the issuance of long-term senior notes discussed in the Liquidity and Capital Resources section of this MD&A. The net proceeds from the notes were used to pay down outstanding commercial paper balances. The increase in the average interest rate results from the conversion of a significant portion of the company's debt from floating to fixed rates. Income Taxes MMC's consolidated effective tax rate was 34% of income before income taxes and minority interest in the first quarter of 2003 compared with 35.5% in the first quarter of 2002. As a result of the geographic mix of MMC's businesses, the effective tax rate for 2003 should remain at 34%. Liquidity and Capital Resources Operating Cash Flows MMC anticipates that funds generated from operations will be sufficient to meet its foreseeable recurring operating cash requirements as well as to fund dividends, capital expenditures and scheduled repayments of long-term debt. MMC's ability to generate cash flow from operations is subject to the business risks inherent in each operating segment. MMC generated $177 million of cash from operations for the period ended March 31, 2003 compared with a use of cash of $198 million for the same period in 2002. These amounts reflect the net income earned by MMC during those periods adjusted for non-cash charges and working capital changes. In 2003, MMC's tax payments decreased as compared to the first quarter of 2002. MMC's estimated tax payments related to the third quarter of 2001 were paid in the first quarter of 2002 due to the events of September 11, 2001 and the government's subsequent directives. MMC's cash and cash equivalents aggregated $566 million on March 31, 2003, an increase of $20 million from the end of 2002. Financing Cash Flows In February 2003, MMC issued $250 million of 3.625% Senior Notes due in 2008 and $250 million of 4.85% Senior Notes due in 2013 (the "2003 Notes"). The net proceeds from the 2003 Notes were used to pay down commercial paper borrowings. Commercial paper outstanding decreased $236 million during the first quarter of 2003 as a result of these repayments partially offset by seasonal demands related to incentive compensation payments. In January 2003, MMC terminated and settled interest rate swaps that had hedged the fair value of senior notes issued in 2002. The cumulative amount of previously recognized adjustments of the fair value of the hedged notes is being amortized over the remaining life of those notes in accordance with SFAS No. 133. As a result, the effective interest rate over the remaining life of the notes, including the amortization of the fair value adjustments, is 4.0% for the $500 million Senior Notes due in 2007 (5.375% coupon rate) and 5.1% for the $250 million Senior Notes due in 2012 (6.25% coupon rate). During the first quarter of 2003, MMC repurchased 7.8 million shares of its common stock at a cost of $321 million. MMC repurchases shares subject to market conditions, including from time to time pursuant to the terms of a 10b5-1 plan. A 10b5-1 plan allows a company to purchase shares during a blackout period, provided the company communicates its share purchase instructions to the broker prior to the blackout period, pursuant to a written plan that may not be changed. Investing Cash Flows MMC's additions to fixed assets and capitalized software, which amounted to $110 million in the first three months of 2003 and $102 million in the first quarter last year, primarily relate to computer equipment purchases and the refurbishing and modernizing of office facilities and software development costs. MMC has committed to potential future investments of approximately $455 million in connection with various MMC Capital funds and other MMC investments. Approximately $70 million is expected to be invested during the remainder of 2003. MMC expects to fund future commitments, in part, with sales proceeds from existing investments. Market Risk Certain of MMC's revenues, expenses, assets and liabilities are exposed to the impact of interest rate changes and fluctuations in foreign currency exchange rates and equity markets. Interest Rate Risk MMC manages its net exposure to interest rate changes by utilizing a mixture of variable and fixed rate borrowings to finance MMC's asset base. Interest rate swaps are used on a limited basis to manage MMC's exposure to interest rate movements on its cash and investments, as well as interest expense on borrowings, and are only executed with counterparties of high creditworthiness. Foreign Currency Risk The translated values of revenue and expense from MMC's international risk and insurance services and consulting operations are subject to fluctuations due to changes in currency exchange rates. Forward contracts and options are periodically utilized by MMC to limit foreign currency exchange rate exposure on net income and cash flows for specific, clearly defined transactions arising in the ordinary course of its business. Equity Price Risk MMC has investments which are carried at market value under SFAS No. 115 and investments which are accounted for using the equity method under APB Opinion No. 18, "The Equity Method of Accounting for Investments in Common Stock." The investments are subject to risk of changes in market value, which if determined to be other than temporary, could result in realized impairment losses. MMC periodically reviews the carrying value of such investments to determine if any valuation adjustments are appropriate under the applicable accounting pronouncements. MMC utilizes option contracts to hedge the variability of cash flows from forecasted sales of certain available for sale investments. The hedge is achieved through the use of European style put and call options, which mature on the dates of the forecasted sales. The hedges are only executed with counterparties of high creditworthiness. Other The insurance coverage for potential liability resulting from alleged errors and omissions in the professional services provided by MMC includes elements of both risk retention and risk transfer. MMC believes it has adequately reserved for the self-insurance portion of the contingencies. Payments related to the respective self-insured layers are made as legal fees are incurred and claims are resolved and generally extend over a considerable number of years. The amounts paid in that regard vary in relation to the severity of the claims and the number of claims active in any particular year. The long-term portion of this liability is included in Other liabilities in the Consolidated Balance Sheets. New Accounting Pronouncements New accounting pronouncements are discussed in Note 14 to the consolidated financial statements. Part I - Item 4. Controls & Procedures - --------------------------------------- a. Evaluation of Disclosure Controls and Procedures Based on their evaluation, as of a date within 90 days of the filing of this Form 10-Q, the Company's Chief Executive Officer and Chief Financial Officer have concluded the Company's disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934) are effective in timely alerting them to material information relating to the Company required to be included in our reports filed under the Exchange Act. b. Changes in Internal Controls There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II. OTHER INFORMATION -------------------------- MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES INFORMATION REQUIRED FOR FORM 10-Q QUARTERLY REPORT March 31, 2003 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 3. MMC's by-laws 4. Second Supplemental Indenture dated as of February 19, 2003 between MMC and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as trustee 10. Amendment to Marsh & McLennan Companies Supplemental Retirement Plan 12. Statement re: Computation of Ratio of Earnings to Fixed Charges 99. Certification of CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act (b) Reports on Form 8-K A current report on Form 8-K dated January 29, 2003 was filed by the registrant to report its issuance of a press release announcing its unaudited fourth quarter and year-end financial results for the year ended December 31, 2002. MARSH & McLENNAN COMPANIES, INC. AND SUBSIDIARIES SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, MMC has duly caused this report to be signed this 13th day of May, 2003 on its behalf by the undersigned, thereunto duly authorized and in the capacity indicated. MARSH & McLENNAN COMPANIES, INC. /s/ Sandra S. Wijnberg ------------------------------------------------------ Senior Vice President and Chief Financial Officer CERTIFICATIONS I, Jeffrey W. Greenberg, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the "registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 13, 2003 /s/ Jeffrey W. Greenberg ------------------------ Chief Executive Officer CERTIFICATIONS I, Sandra S. Wijnberg, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Marsh & McLennan Companies, Inc. (the "registrant"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 13, 2003 /s/ Sandra W. Wijnberg ---------------------- Senior Vice President & Chief Financial Officer EX-4 2 ex4-3supplmtindtr.txt SECOND SUPPLEMENTAL INDENTURE Exhibit 4.3 ================================================================================ MARSH & McLENNAN COMPANIES, INC., Issuer, and U.S. Bank National Association (as successor to State Street Bank and Trust Company, Trustee -------------------- SECOND SUPPLEMENTAL INDENTURE Dated as of February 19, 2003 -------------------- $250,000,000 principal amount of 3.625% Senior Notes Due 2008 $250,000,000 principal amount of 4.850% Senior Notes Due 2013 ================================================================================ SECOND SUPPLEMENTAL INDENTURE, dated as of February 19, 2003, between MARSH & McLENNAN COMPANIES, INC., a Delaware corporation (the "Company" and hereinafter the "Issuer"), and U.S. BANK NATIONAL ASSOCIATION (as successor to State Street Bank and Trust Company), a national banking association, as Trustee (the "Trustee") W I T N E S S E T H: WHEREAS, the Issuer and the Trustee executed and delivered an Indenture, dated as of June 14, 1999 (as supplemented hereby, the "Indenture"), to provide for the issuance by the Issuer from time to time of senior debt securities evidencing its unsecured indebtedness; WHEREAS, U.S. Bank National Association purchased substantially all of the corporate trust business of the State Street Bank and Trust Company, succeeding as the Trustee pursuant to Section 7.12 of the Indenture; WHEREAS, pursuant to a Board Resolution, the Issuer has authorized the issuance of $250,000,000 principal amount of 3.625% Senior Notes due 2008 (the "3.625% Notes") and $250,000,000 principal amount of 4.850% Senior Notes due 2013 (the "4.850% Notes", together with the 3.625% Notes, the "Offered Securities"); WHEREAS, the entry into this Second Supplemental Indenture by the parties hereto is in all respects authorized by the provisions of the Indenture; and WHEREAS, the Issuer desires to establish the terms of the Offered Securities in accordance with Section 2.01 of the Indenture and to establish the form of the Offered Securities in accordance with Section 2.02 of the Indenture; and WHEREAS, all things necessary to make this Second Supplemental Indenture a valid indenture and agreement according to its terms have been done. NOW, THEREFORE, for and in consideration of the premises, the Issuer and the Trustee mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Offered Securities as follows: Article 1 Section 1.01. Terms of Offered Securities. The following terms relating to the Offered Securities are hereby established: (a) The 3.625% Notes shall constitute a series of securities having the title "3.625% Senior Notes due 2008" and the 4.850% Notes shall constitute a series of securities having the title "4.850% Senior Notes due 2013." (b) The aggregate principal amount of the 3.625% Notes that may be authenticated and delivered under the Indenture (except for Notes authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 2.05, 2.06, 2.07 or 9.01) shall be up to $250,000,000. The aggregate principal amount of the 4.850% Notes that may be authenticated and delivered under the Indenture (except for Notes authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 2.05, 2.06, 2.07 or 9.01) shall be up to $250,000,000. (c) The entire outstanding principal of the 3.625% Notes shall be payable on February 15, 2008 plus any unpaid interest accrued to such date and the entire outstanding principal of the 4.850% Notes shall be payable on February 15, 2013 plus any unpaid interest accrued to such date. (d) The rate at which the 3.625% Notes shall bear interest shall be 3.625% per annum and the rate at which the 4.850% Notes shall bear interest shall be 4.850% per annum; the date from which interest shall accrue on the Offered Securities shall be February 19, 2003; the Interest Payment Dates for the Offered Securities on which interest will be payable shall be February 15 and August 15 in each year, beginning August 15, 2003; the Regular Record Dates for the interest payable on the Offered Securities on any Interest Payment Date shall be the February 1 and August 1 preceding the applicable Interest Payment Date; and the basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months. (e) The Offered Securities shall be issuable in denominations of $1,000 and any integral multiple thereof. (f) The Trustee shall also be the security registrar and paying agent for the Offered Securities. (g) Payments of the principal of and interest on the Offered Securities shall be made in U.S. Dollars, and the Notes shall be denominated in U.S. Dollars. (h) The holders of the Offered Securities shall have no special rights in addition to those provided in the Indenture upon the occurrence of any particular events. (i) The Notes shall not be subordinated to any other debt of the Issuer, and shall constitute senior unsecured obligations of the Issuer. The Offered Securities are issuable in book entry form and are not convertible into shares of common stock or other securities of the Company. Section 1.02. Amendment to Article IV. Article IV of the Indenture is hereby amended to include the following covenant with respect to the Offered Securities only (and not with respect to any other series of securities issuable pursuant to the Indenture unless the supplemental indenture relating thereto expressly so provides), which reads in its entirety as follows: Section 4.06. Limitation on Liens on Stock of Significant Subsidiaries. The Company will not, and it will not permit any Subsidiary of the Company to, at any time directly or indirectly create, assume, incur or permit to exist any Indebtedness secured by a pledge, lien or other encumbrance (any pledge, lien or other encumbrance being hereinafter in this Section referred to as a "lien") on the voting stock of Marsh Inc., Putnam Investments, LLC or Mercer Consulting Group, Inc. (each a "Significant Subsidiary") without making effective provision whereby the Offered Securities then Outstanding (and, if the Company so elects, any other Indebtedness of the Company that is not subordinate to the Offered Securities and with respect to which the governing instruments require, or pursuant to which the Company is otherwise obligated or required, to provide such security) shall be equally and ratably secured with such secured Indebtedness so long as such other Indebtedness shall be so secured. "Indebtedness" of any person means the principal of and premium, if any, and interest due on indebtedness of such Person, whether outstanding on the date of this Indenture or thereafter created, incurred or assumed, which is (a) indebtedness for money borrowed, and (b) any amendments, renewals, extensions, modifications and refundings of any such indebtedness. For the purposes of this definition, "indebtedness for money borrowed" means (i) any obligation of, or any obligation guaranteed by, such Person for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, (ii) any obligation of, or any such obligation guaranteed by, such Person evidenced by bonds, debentures, notes or similar written instruments, including obligations assumed or incurred in connection with the acquisition of properly, assets or businesses (provided, however, that the deferred purchase price of any business or property or assets shall not be considered Indebtedness if the purchase price thereof is payable in full within 90 days from the date on which such indebtedness was created), and (iii) any obligations of such Person as lessee under leases required to be capitalized on the balance sheet of the lessee under generally accepted accounting principles and leases of property or assets made as part of any sale and lease-back transaction to which such Person is a party. For purposes of this covenant only, Indebtedness also includes any obligation of, or any obligation guaranteed by, any Person for the payment of amounts due under a swap agreement or similar instrument or agreement, or under a foreign currency hedge or similar instrument or agreement. If the Company shall hereafter be required to secure the Offered Securities equally and ratably with any other Indebtedness pursuant to this Section, (i) the Company will promptly deliver to the Trustee an Officers' Certificate stating that the foregoing covenant has been complied with, and an Opinion of Counsel stating that in the opinion of such counsel the foregoing covenant has been complied with and (ii) the Trustee is hereby authorized to enter into an indenture or agreement supplemental hereto and to take such action, if any, as it may deem advisable to enable it to enforce the rights of the holders of the Offered Securities so secured. Section 1.03. Amendment of Article Ten. Article Ten of the Indenture is hereby amended and restated in its entirety with respect to the Offered Securities only (and not with respect to any other series of securities issuable pursuant to the Indenture unless the supplemental indenture relating thereto expressly so provides) as follows: Section 10.01. Company May Consolidate, Etc., Only on Certain Terms. (a) Subject to Section 10.01(c) below, the Company shall not consolidate with or merge into any other Person or convey, transfer or lease all or substantially all of its properties and assets to any Person, and the Company shall not permit any Person to consolidate with or merge into the Company, unless: (1) in case the Company shall consolidate with or merge into another Person or convey, transfer or lease all or substantially all of its properties and assets to any Person, the Person formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, all or substantially all of the properties and assets of the Company shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of and any premium and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. Section 10.02. Successor Substitute. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of all or substantially all of the properties and assets of the Company in accordance with Section 10.01 above, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under the Indenture and the Offered Securities. Section 10.03. Evidence of Consolidation, Etc. to Trustee. The Trustee, subject to the provisions of Section 7.01, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article. Section 1.04. Trustee's Obligations with Respect to the Covenants. The Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Issuer's compliance with the covenants contained in this Article One or with respect to reports or other documents filed under the Indenture; provided, however, that nothing herein shall relieve the Trustee of any obligations to monitor the Issuer's timely delivery of all reports and certificates required under Sections 5.01 and 5.03 of the Indenture and to fulfill its obligations under Article Seven of the Indenture. Section 1.05. Form Of Note. The form of the 3.625% Notes and the 4.850% Notes is attached hereto as Exhibit A. Article 2 MISCELLANEOUS Section 2.01. Definitions. Capitalized terms used but not defined in this Second Supplemental Indenture shall have the meanings ascribed thereto in the Indenture. Section 2.02. Confirmation of Indenture. The Indenture, as heretofore supplemented and amended and as further supplemented and amended by this Second Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture, this Second Supplemental Indenture and all indentures supplemental thereto shall be read, taken and construed as one and the same instrument. Section 2.03. Concerning the Trustee. The Trustee assumes no duties, responsibilities or liabilities by reason of this Second Supplemental Indenture other than as set forth in the Indenture and, in carrying out its responsibilities hereunder, shall have all of the rights, protections and immunities which it possesses under the Indenture. Section 2.04. Governing Law. This Second Supplemental Indenture, the Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York. Section 2.05. Separability. In case any provision in this Second Supplemental Indenture shall for any reason be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 2.06. Counterparts. This Second Supplemental Indenture may be executed in any number of counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, this Supplemental Indenture has been duly executed by the Company and the Trustee as of the day and year first written above. MARSH & McLENNAN COMPANIES, INC. By: /s/ Matthew B. Bartley --------------------------------- Name: Matthew B. Bartley Title: Vice President & Treasurer U.S. BANK NATIONAL ASSOCIATION (as successor to State Street Bank and Trust Company), as Trustee By: /s/ James E. Mogavero --------------------------------- Name: James E. Mogavero Title: Vice President Exhibit A UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO, HAS AN INTEREST HEREIN. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE AND THE TERMS OF THE SECURITIES, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. Certificate No. $250,000,000 CUSIP _________ MARSH & McLENNAN COMPANIES, INC. 3.625% Senior Notes due February 15, 2008 MARSH & McLENNAN COMPANIES, INC., a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & Co., or its registered assigns, the principal sum of 250,000,000 Dollars ($250,000,000) on February 15, 2008 and to pay interest on said principal sum from February 19, 2003 or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, semiannually on February 15 and August 15 of each year commencing August 15, 2003 at the rate of 3.625% per annum until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Note (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment which shall be February 1 or August 1 preceding such Interest Payment Date. Any such interest installment not punctually paid or duly provided for (as defined in the Indenture, the "Defaulted Interest") shall forthwith cease to be payable to the registered holders on such regular record date, and may be paid to the person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such Defaulted Interest, which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment or at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of (and premium, if any) and the interest on this Note shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered holder at such address as shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of this Note is Cede & Co., the payment of the principal of (and premium, if any) and interest on this Note will be made at such place and to such account as may be designated by DTC. The indebtedness evidenced by this Note is, to the extent provided in the Indenture, senior and unsecured and will rank in right of payment on parity with all other senior unsecured obligations of the Company. This Note shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Note are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Dated February 19, 2003 MARSH & McLENNAN COMPANIES, INC. By: ----------------------------- Name: Title: Attest: By: ----------------------------- Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Notes of the series of Notes described in the within-mentioned Indenture. U.S. BANK NATIONAL ASSOCIATION, as Trustee By: ----------------------------- Authorized Signatory ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to - -------------------------------------------------------------------------------- (Insert Social Security number or other identifying number of assignee) - -------------------------------------------------------------------------------- (Please print or typewrite name and address, including zip code of assignee) - -------------------------------------------------------------------------------- the within Note of Marsh & McLennan Companies, Inc. and hereby does irrevocably constitute and appoint - -------------------------------------------------------------------------------- Attorney to transfer said Note on the books of the within-named Issuer with full power of substitution in the premises. Dated:___________________ ___________________________________ ___________________________________ Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-1 5. NOTICE: The signature to this assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever. MARSH & McLENNAN COMPANIES, INC. 3.625% Senior Notes due 2008 This Note is one of a duly authorized series of Securities of the Company (herein sometimes referred to as the "Notes"), specified in the Indenture, all issued or to be issued in one or more series under and pursuant to an indenture (the "Base Indenture") dated as of June 14, 1999 among the Company, and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture, dated as of June 14, 1999, and the Second Supplemental Indenture dated as of February 19, 2003 among the Company and the Trustee (the Base Indenture as so supplemented, the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. This series of Notes is limited in aggregate principal amount as specified in said Second Supplemental Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes of each series affected at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Notes; provided, however, that no such supplemental indenture shall, without the consent of the holders of each Note then Outstanding and affected thereby (i) extend the fixed maturity of any Notes of any series, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, or (ii) reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes of any series at the time Outstanding affected thereby, on behalf of all of the Holders of the Notes of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any of the Notes of such series and except as provided in Section 6.06 of the Base Indenture. Any such consent or waiver by the registered Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Note and of any Note issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note at the time and place and at the rate and in the money herein prescribed. The Issuer is subject to certain covenants contained in the Indenture with respect to, and for the benefit of the Holders of, the Notes. The Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Issuer's compliance with the covenants contained in the Indenture or with respect to reports or other certificates filed under the Indenture; provided, however, that nothing herein shall relieve the Trustee of any obligations to monitor the Issuer's timely delivery of all reports and certificates required under Section 5.03 of the Indenture and to fulfill its obligations under Article VII of the Indenture. If an Event of Default as defined in the Indenture with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any interest on or after the respective due dates expressed herein. As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable by the registered holder hereof on the Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company in the borough of Manhattan, the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Note, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Note shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Note Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Notes of this series are issuable only in registered form without coupons in authorized denominations. As provided in the Indenture and subject to certain limitations herein and therein set forth, Notes of this series so issued are exchangeable for a like aggregate principal amount of Notes of this series of a different authorized denomination, as requested by the Holder surrendering the same. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. THE INDENTURE AND THE NOTES INCLUDING THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused "CUSIP" numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purposes. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE PROVISIONS OF THE INDENTURE AND THE TERMS OF THE SECURITIES, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. Certificate No. CUSIP _________ $250,000,000 MARSH & McLENNAN COMPANIES, INC. 4.850% Senior Notes due February 15, 2013 MARSH & McLENNAN COMPANIES, INC., a Delaware corporation (the "Company", which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & Co., or its registered assigns, the principal sum of 250,000,000 Dollars ($250,000,000) on February 15, 2013 and to pay interest on said principal sum from February 19, 2003 or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, semiannually on February 15 and August 15 of each year commencing August 15, 2003 at the rate of 4.850% per annum until the principal hereof shall have become due and payable, and on any overdue principal and premium, if any, and (without duplication and to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Note is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the person in whose name this Note (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Regular Record Date for such interest installment which shall be February 1 or August 1 preceding such Interest Payment Date. Any such interest installment not punctually paid or duly provided for (as defined in the Indenture, the "Defaulted Interest") shall forthwith cease to be payable to the registered holders on such regular record date, and may be paid to the person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such Defaulted Interest, which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment or at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. The principal of (and premium, if any) and the interest on this Note shall be payable at the office or agency of the Trustee maintained for that purpose in any coin or currency of the United States of America which at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the registered holder at such address as shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of this Note is Cede & Co., the payment of the principal of (and premium, if any) and interest on this Note will be made at such place and to such account as may be designated by DTC. The indebtedness evidenced by this Note is, to the extent provided in the Indenture, senior and unsecured and will rank in right of payment on parity with all other senior unsecured obligations of the Company. This Note shall not be entitled to any benefit under the Indenture hereinafter referred to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Note are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Dated February 19, 2003 MARSH & McLENNAN COMPANIES, INC. By: ----------------------------- Name: Title: Attest: By: ----------------------------- Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Notes of the series of Notes described in the within-mentioned Indenture. U.S. BANK NATIONAL ASSOCIATION, as Trustee By: ----------------------------- Authorized Signatory ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to - -------------------------------------------------------------------------------- (Insert Social Security number or other identifying number of assignee) - -------------------------------------------------------------------------------- (Please print or typewrite name and address, including zip code of assignee) - -------------------------------------------------------------------------------- the within Note of Marsh & McLennan Companies, Inc. and hereby does irrevocably constitute and appoint - -------------------------------------------------------------------------------- Attorney to transfer said Note on the books of the within-named Issuer with full power of substitution in the premises. Dated:___________________ ___________________________________ ___________________________________ Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-1 5. NOTICE: The signature to this assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever. MARSH & MCLENNAN COMPANIES, INC. 4.850% Senior Notes due 2013 This Note is one of a duly authorized series of Securities of the Company (herein sometimes referred to as the "Notes"), specified in the Indenture, all issued or to be issued in one or more series under and pursuant to an indenture (the "Base Indenture") dated as of June 14, 1999 among the Company, and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee (the "Trustee"), as supplemented by the First Supplemental Indenture, dated as of June 14, 1999, and the Second Supplemental Indenture dated as of February 19, 2003 among the Company and the Trustee (the Base Indenture as so supplemented, the "Indenture"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the holders of the Notes. This series of Notes is limited in aggregate principal amount as specified in said Second Supplemental Indenture. The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes of each series affected at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Notes; provided, however, that no such supplemental indenture shall, without the consent of the holders of each Note then Outstanding and affected thereby (i) extend the fixed maturity of any Notes of any series, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon the redemption thereof, or (ii) reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Notes of any series at the time Outstanding affected thereby, on behalf of all of the Holders of the Notes of such series, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture with respect to such series, and its consequences, except a default in the payment of the principal of or premium, if any, or interest on any of the Notes of such series and except as provided in Section 6.06 of the Base Indenture. Any such consent or waiver by the registered Holder of this Note (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Note and of any Note issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Note. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and premium, if any, and interest on this Note at the time and place and at the rate and in the money herein prescribed. The Issuer is subject to certain covenants contained in the Indenture with respect to, and for the benefit of the Holders of, the Notes. The Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Issuer's compliance with the covenants contained in the Indenture or with respect to reports or other certificates filed under the Indenture; provided, however, that nothing herein shall relieve the Trustee of any obligations to monitor the Issuer's timely delivery of all reports and certificates required under Section 5.03 of the Indenture and to fulfill its obligations under Article VII of the Indenture. If an Event of Default as defined in the Indenture with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall have failed to institute any such proceeding for 60 days after receipt of such notice, request and offer of indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any interest on or after the respective due dates expressed herein. As provided in the Indenture and subject to certain limitations therein set forth, this Note is transferable by the registered holder hereof on the Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company in the borough of Manhattan, the City and State of New York accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of authorized denominations and for the same aggregate principal amount and series will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Note, the Company, the Trustee, any paying agent and any Security Registrar may deem and treat the registered holder hereof as the absolute owner hereof (whether or not this Note shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Security Registrar) for the purpose of receiving payment of or on account of the principal hereof and premium, if any, and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Note Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Notes of this series are issuable only in registered form without coupons in authorized denominations. As provided in the Indenture and subject to certain limitations herein and therein set forth, Notes of this series so issued are exchangeable for a like aggregate principal amount of Notes of this series of a different authorized denomination, as requested by the Holder surrendering the same. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. THE INDENTURE AND THE NOTES INCLUDING THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused "CUSIP" numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purposes. EX-10 3 exhibit10amendsupretplan.txt AMENDMENT SUPL. RET. PLAN Exhibit 10 Amendments to the Marsh & McLennan Supplemental Retirement Plan - --------------------------------------------------------------- The Marsh & McLennan Supplemental Retirement Plan was amended in two regards effective as of January 1, 2003. First, the early retirement benefit reduction for a participant whose employment with the Corporation or a participating subsidiary terminates prior to the participant qualifying for early retirement (age 55 or later with 5 years of service) was increased. For benefits the participant accrues on or after January 1, 2003, the reduction will be 6% per year for each year between the participant's benefit commencement date and the first of the month on or next following the participant's 65th birthday. Second, the Plan is no longer obligated to fund benefits through the purchase of annuities. Any benefits which are not already funded by annuities purchased for benefits accrued prior to January 1, 2003, will be payable at benefit commencement from the general assets of the Corporation. EX-99 5 cert906-ex99.txt CERT. SECTION 906 EXHIBIT 99 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 May 13, 2003 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Ladies and Gentlemen: The certification set forth below is being submitted to the Securities and Exchange Commission solely for the purpose of complying with Section 1350 of Chapter 63 of Title 18 of the United States Code. This certification is not to be deemed to be filed pursuant to the Securities Exchange Act of 1934 and does not constitute a part of the Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2003 (the "Report") to which this letter is being filed as an exhibit. Jeffrey W. Greenberg, the Chief Executive Officer and Sandra S. Wijnberg, the Chief Financial Officer of Marsh & McLennan Companies, Inc. each certifies that, to the best of my knowledge: 1. such Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Marsh & McLennan Companies, Inc. /s/ Jeffrey W. Greenberg _____________________________________ Name: Jeffrey W. Greenberg Chief Executive Officer /s/ Sandra S. Wijnberg _____________________________________ Name: Sandra S. Wijnberg Chief Financial Officer A signed original of this written statement has been provided to Marsh & McLennan Companies, Inc. ("MMC") and will be retained by MMC and furnished to the Securities and Exchange Commission or its staff upon request. EX-12 6 ratioexhibit12-1.txt RATIO OF EARNINGS Exhibit 12.1 Marsh & McLennan Companies, Inc. and Subsidiaries Ratio of Earnings to Fixed Charges (In millions, except ratios)
Three Months Ended March 31, Years Ended December 31, 2003 ---------------------------------------- (Unaudited) 2002 2001 2000 1999(1) 1998 Earnings - -------- Income before income taxes and minority Interest* $ 443 $2,133 $1,590 $1,955 $1,255 $1,305 Interest expense 43 160 196 247 233 140 Portion of rents representative of the interest factor 35 135 122 120 121 104 Amortization of capitalized interest - - - - 1 1 ------------------------------------------------- $ 521 $2,428 $1,908 $2,322 $1,610 $1,550 ------------------------------------------------- Fixed Charges - ------------- Interest expense $43 $160 $196 $247 $233 $140 Portion of rents representative of the interest factor 35 135 122 120 121 104 ------------------------------------------------ $78 $295 $318 $367 $354 $244 ------------------------------------------------ Ratio of Earnings to Fixed Charges 6.7 8.2 6.0 6.3 4.5 6.4 * Minority interest has been reclassified in the prior years (1998-1999) to conform to the current year presentation.
EX-3 7 bylaws1-2003.txt BY-LAWS (1-16-2003) Exhibit 3 BY-LAWS ------- OF -- MARSH & McLENNAN COMPANIES, INC. -------------------------------- RESTATED AS LAST AMENDED ------------------------ January 16, 2003 ---------------- I N D E X Page Number ARTICLE I Offices...............................................................1 ARTICLE II Meetings of the Stockholders..........................................1 ARTICLE III Directors.............................................................6 ARTICLE IV Officers..............................................................8 ARTICLE V Committees...........................................................11 ARTICLE VI Indemnification......................................................13 ARTICLE VII Checks, Contracts, Other Instruments.................................17 ARTICLE VIII Capital Stock........................................................17 ARTICLE IX Miscellaneous........................................................19 ARTICLE X Amendments...........................................................20 BY-LAWS ------- OF -- MARSH & McLENNAN COMPANIES, INC. -------------------------------- ARTICLE I --------- Offices ------- The principal office of the Corporation in Delaware shall be at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, in the State of Delaware, and The Corporation Trust Company shall be the resident agent of the Corporation in charge thereof. The Corporation may also have such other offices at such other places as the Board of Directors may from time to time designate or the business of the Corporation may require. ARTICLE II ---------- Meetings of the Stockholders ---------------------------- SECTION 1. Place of Meetings. Meetings of the stockholders may be held at such place as the Board of Directors may determine. SECTION 2. Annual Meetings. The annual meeting of the stockholders shall be held on the third Thursday of May in each year, or such other day in May as may be determined from time to time by the Board of Directors, at such time and place as the Board of Directors may designate. At said meeting the stockholders shall elect a Board of Directors and transact any other business authorized or required to be transacted by the stockholders. SECTION 3. Special Meetings. Special meetings of the stockholders, except as otherwise provided by law, shall be called by the Chairman of the Board, or whenever the Board of Directors shall so direct, the Secretary. SECTION 4. Notice of Meetings. Except as otherwise provided by law, written or printed notice stating the place, day and hour of the meeting, and in the case of a special meeting the purpose or purposes for which the meeting is called, shall be delivered personally or mailed, postage prepaid, at least ten (10) days but not more than sixty (60) days before such meeting to each stockholder at such address as appears on the stock books of the Corporation. SECTION 5. Fixing of Record Date. In order to determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, and no more than sixty (60) days prior to any other action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice of the meeting is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and such date for any other purpose shall be the date on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 6. Quorum. The holders of a majority of the stock issued and outstanding present in person or represented by proxy shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by law, by the Restated Certificate of Incorporation or by these by-laws. If, however, such majority shall not be present or represented at any meeting of the stockholders, the stockholders present in person or by proxy shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting until the requisite amount of stock shall be represented. At such adjourned meeting at which the requisite amount of stock shall be represented, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 7. Voting. Each stockholder entitled to vote in accordance with the terms of the Restated Certificate of Incorporation and in accordance with the provisions of these by-laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. The vote for directors and, upon demand of any stockholder, the vote upon any question before the meeting shall be by ballot. All elections of directors shall be decided by plurality vote; all other questions shall be decided by a majority of the shares present in person or represented by proxy at the meeting of stockholders and entitled to vote on the subject matter, except as otherwise provided in the Restated Certificate of Incorporation or by law or regulation. SECTION 8. Inspectors of Election. All elections of directors and all votes where a ballot is required shall be conducted by two inspectors of election who shall be appointed by the Board of Directors; but in the absence of such appointment by the Board of Directors, the Chairman of the meeting shall appoint such inspectors who shall not be directors or candidates for the office of director. SECTION 9. Voting List. The Secretary shall prepare and make, at least ten days before every election of directors, a complete list of the stockholders entitled to vote, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 10. Stockholder Nominations of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors at a meeting of stockholders. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors, by any person appointed by the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 10. Such nominations, other than those made by or at the direction of the Board of Directors or by any person appointed by the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary, Marsh & McLennan Companies, Inc. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation, in the case of an Annual Meeting of Stockholders, not less than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the Stockholder in order to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the 15th day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. Such stockholder's notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. SECTION 11. Advance Notice of Stockholder Proposed Business at Annual Meetings. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, otherwise properly brought before the meeting by or at the direction of the Board of Directors, or otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary, Marsh & McLennan Companies, Inc. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 15th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder, and (iv) any material interest of the stockholder in such business. Notwithstanding anything in these by-laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 11, provided, however, that nothing in this Section 11 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with said procedure. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he should so determine, he shall so declare to the meeting, and any such business not properly brought before the meeting shall not be transacted. ARTICLE III ----------- Directors --------- SECTION 1. Powers, Number, Tenure, Qualifications and Compensation. The business and affairs of the Corporation shall be managed by its Board of Directors which shall consist of the number of members set forth in Article FIFTH of the Restated Certificate of Incorporation, none of whom need be stockholders, and directors must retire at the annual meeting following attaining age 72, unless the person has been a non-executive director for less than 10 years, in which case they would retire at the annual meeting following the earlier of 10 years of service or attaining age 75. In addition to the powers and duties by these by-laws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Restated Certificate of Incorporation or by these by-laws directed or required to be exercised or done by the stockholders. The Board of Directors may provide for compensation of directors who are not otherwise compensated by the Corporation or any subsidiary thereof. SECTION 2. Meetings and Notice. The Board shall, for the purposes of organization, the election and appointment of officers and the transaction of other business, hold a meeting as soon as convenient after the annual meeting of stockholders. Regular meetings of the directors may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Special meetings of the Board may be called by the Chairman of the Board or, if the Chairman of the Board is unable to act, by the Corporation's General Counsel or any member of the Executive Committee of the Board of Directors on at least twenty-four (24) hours notice to each director, personally or by mail, by telecopy, by e-mail or by telephone. Special meetings of the Board shall also be called in like manner on the written request of any three (3) directors delivered to the Corporation's Secretary. In the case of a meeting of the Board of Directors not attended by the Chairman of the Board, a Vice Chairman, determined in the order of their election if two or more Vice Chairmen are present, shall call the meeting to order and the first item of business shall be to appoint a director to preside at the meeting. Notice of a special meeting of the Board may be waived by any director, either before or after the meeting, by written assent, by telecopy or by e-mail; provided that attendance at the meeting by a director shall constitute waiver of such notice by such director. The attendance of a director at any meeting shall dispense with notice to him of the meeting. Members of the Board of Directors may participate in a meeting of the Board by means of conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such meeting. SECTION 3. Offices, Books, Place of Meeting. The Board of Directors may have one or more offices and keep the books of the Corporation outside of Delaware, and may hold its meetings at such places as it may from time to time determine. SECTION 4. Quorum. At all meetings of the Board of Directors one-third (1/3) of the total number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the Restated Certificate of Incorporation or by these by-laws. SECTION 5. Informal Action. The Board of Directors shall, except as otherwise provided by law, have power to act in the following manner: A resolution in writing, signed by all of the members of the Board of Directors shall be deemed to be action by such Board to the effect therein expressed with the same force and effect as if the same had been duly passed at a duly convened meeting, and it shall be the duty of the Secretary of the Corporation to record any such resolution in the minute book of the Corporation, under its proper date. ARTICLE IV ---------- Officers -------- SECTION 1. Election. The Board of Directors shall elect officers of the Corporation, including a Chairman of the Board, one or more Vice Chairmen, one or more Vice Presidents, a Secretary, a Treasurer and a Controller. SECTION 2. Term and Removal. Each officer of the Corporation designated in SECTION 1 of this Article IV shall hold office until such officer's successor is elected and qualified or until such officer's earlier resignation or removal. Any officer may be removed at any time, with or without cause, by the Board of Directors. Any officer who may be elected or appointed by the Executive Committee may also be removed at any time, with or without cause by said Committee. SECTION 3. Chairman of the Board. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation and, subject to the control of the Board of Directors and of the committees exercising functions of the Board of Directors, shall have general supervision over the business and property of the Corporation. The Chairman of the Board shall preside at all meetings of the stockholders and of the Board of Directors. At any meeting of the stockholders not attended by the Chairman of the Board, the Board shall appoint a director to preside at the meeting. The Chairman of the Board shall review and recommend to the Board of Directors both short-term objectives and long-term planning for the business. The Chairman of the Board shall also preside at meetings of any committee of which the Chairman of the Board is a member which is not attended by the chairman of such committee. The Chairman of the Board or an appointed delegate may take any action on behalf of the Corporation with respect to the shares owned by the Corporation in other corporations in such manner as they deem advisable unless otherwise directed by the Board of Directors. The Chairman of the Board shall have full authority to take other action on behalf of the Corporation in respect of shares of stock in other corporations owned by the Corporation, directly or indirectly, including the obtaining of information and reports. SECTION 4. Vice Chairman. A Vice Chairman shall, subject to the control of the Board of Directors and of the committees exercising functions of the Board of Directors, perform such duties as may from time to time be assigned to the Vice Chairman by the Chairman. SECTION 5. Vice Presidents. A Vice President shall have such powers, duties, supplementary titles and other designations as the Board of Directors may from time to time determine. SECTION 6. Secretary. The Secretary shall attend all meetings of the stockholders and the Board of Directors. The Secretary shall, at the invitation of the chair thereof, attend meetings of the committees elected by the Board or established by these by-laws. The Secretary shall record all votes and minutes of all proceedings which the Secretary attends and receive and maintain custody of all votes and minutes of all such proceedings. Votes and minutes of meetings of each committee shall be placed in the custody of the Secretary or as otherwise determined by the committee. The Secretary shall give or cause to be given notice of meetings of the stockholders, Board of Directors, and committees of the Board of Directors as provided by these By-Laws, and shall have such other powers and duties as may be prescribed by appropriate authority. The Secretary shall keep in safe custody the seal of the Corporation and shall affix the seal to any instrument requiring the same. The Assistant Secretaries shall have such powers and perform such duties as may be prescribed by appropriate authority. SECTION 7. Treasurer. The Treasurer shall have such powers and perform such duties as are usually incident to the office of Treasurer or which may be assigned to the Treasurer by the Board of Directors or other appropriate authority. The Assistant Treasurers shall have such powers and perform such duties as may be prescribed by the chief financial officer or the Treasurer. SECTION 8. Controller. The Controller shall be the chief accounting officer of the Corporation. The Controller shall keep or cause to be kept all books of account and accounting records of the Corporation and shall render to the Chairman, the chief financial officer and the Board of Directors whenever they may require it, a report of the financial condition of the Corporation. The Controller shall have such other powers and duties as shall be assigned to him by appropriate authority. The Assistant Controllers shall have such powers and perform such duties as may be prescribed by the chief financial officer or the Controller. SECTION 9. Bond. The Board of Directors may, or the Chairman may, require any officers, agents or employees of the Corporation to furnish bonds conditioned on the faithful performance of their respective duties with a surety company satisfactory to the Board of Directors or the Chairman as surety. The expenses of such bond shall be paid by the Corporation. ARTICLE V --------- Committees ---------- SECTION 1. Executive Committee. An Executive Committee, composed of the Chairman of the Board and such other directors as the Board of Directors may determine from time to time shall be elected by the Board of Directors. Except as provided hereinafter or in resolutions of the Board of Directors, the Executive Committee shall have, and may exercise when the Board of Directors is not in session, all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it. The Executive Committee shall not, however, have power or authority in reference to (a) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the provisions of the General Corporation Law of Delaware to be submitted to stockholders for approval, (b) adopting, amending or repealing any by-laws of the Corporation, (c) electing or appointing the Chairman of the Board of the Corporation, or (d) declaring a dividend. SECTION 2. Compensation Committee. A Compensation Committee, including a chair, having such number of directors as the Board of Directors shall determine from time to time, shall be elected by the Board of Directors. The Compensation Committee shall have such duties as may be set forth in the Corporation's Compensation Committee charter as it may exist from time to time, or as otherwise provided by the Board of Directors. SECTION 3. Audit Committee. An Audit Committee, including a chair, having such number of directors as the Board of Directors may determine from time to time, shall be elected by the Board of Directors. The Audit Committee shall have such duties as may be set forth in the Corporation's Audit Committee charter as it may exist from time to time, or as otherwise provided by the Board of Directors. SECTION 4. Directors and Governance Committee. A Directors and Governance Committee, including a chair, having such number of directors as the Board of Directors may determine from time to time, shall be elected by the Board of Directors. The Directors and Governance Committee shall have such duties as may be set forth in the Corporation's Directors and Governance Committee charter as it may exist from time to time, or as otherwise provided by the Board of Directors. SECTION 5. Reports. The Executive Committee shall report to each regular meeting and, if directed, to each special meeting of the Board of Directors all action taken by such committee subsequent to the date of its last report, and other committees shall report to the Board of Directors on a regular basis. SECTION 6. Other Committees. The Board of Directors may appoint such other committee or committees as it deems desirable. SECTION 7. Election and Term. The Chair and each member of every committee shall be a member of and, except as provided in Section 8 of this Article V, elected by the Board of Directors and shall serve until such person shall cease to be a member of the Board of Directors or such person's membership on the committee shall be terminated by the Board. SECTION 8. Meetings, Quorum and Notice. The Chair of any committee shall be the presiding officer thereof. Any committee may meet at such time or times on notice to all the members thereof by the Chairman of this Corporation, by the committee chair or by a majority of the members or, when instructed to do so by any of the foregoing, by the Secretary of the Corporation or the secretary of such committee, and at such place or places as such notice may specify. At least twenty-four (24) hours' notice of the meeting shall be given but such notice may be waived. Such notice may be given by mail, by telecopy, by e-mail, by telephone or personally. Each committee shall cause minutes to be kept of its meetings which record all actions taken. Such minutes shall be placed in the custody of the Secretary of the Corporation or as otherwise determined by the committee. Any committee may, except as otherwise provided by law, act in its discretion by a resolution or resolutions in writing signed by all the members of such committee with the same force and effect as if duly passed by a duly convened meeting. Any such resolution or resolutions shall be recorded with the minutes of the committee under the proper date thereof. Members of any committee may also participate in a meeting of such committee by means of conference telephone or similar communications equipment, by means of which all persons participating in the meeting can hear each other and participation in the meeting pursuant to this provision shall constitute presence in person at such meeting. A majority of the members of each committee shall constitute a quorum. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the Board of Directors who is qualified to serve under the rules of the New York Stock Exchange to act at the meeting in the place of any such absent or disqualified member. The vote of the majority of the members present at a committee meeting at which a quorum is present shall be the act of the committee. ARTICLE VI ---------- Indemnification --------------- SECTION 1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter, a "proceeding"), by reason of the fact that, on or after May 21, 1987, he or she is serving or had served as a director, officer or employee of the Corporation or, while serving as such director, officer or employee, is serving or had served at the request of the Corporation as a director, officer, employee or agent of, or in any other capacity with respect to, another corporation or a partnership, joint venture, trust or other entity or enterprise, including service with respect to employee benefit plans (hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer or employee of the Corporation, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by Delaware law, as the same exists or may hereafter be changed or amended (but, in the case of any such change or amendment, only to the extent that such change or amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts to be paid in settlement) reasonably incurred or suffered by an indemnitee in connection therewith and such indemnification shall continue as to an indemnitee who has ceased to be a director, officer or employee of the Corporation and shall inure to the benefit of the indemnitee's heirs, executors and administrators; provided, however, that except as provided in Section 3 of this Article with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify an indemnitee in connection with a proceeding (or part thereof) initiated by the indemnitee only if such proceeding (or part thereof) was authorized by the board of directors of the Corporation. The right to indemnification conferred in this Article shall be a contract right. SECTION 2. Advancement of Expenses. An indemnitee who is a director or officer of the Corporation, and any other indemnitee to the extent authorized from time to time by the board of directors of the Corporation, shall have the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition (hereinafter, an "advancement of expenses"); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter, a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Article or otherwise. SECTION 3. Right of Indemnitee to Bring Suit. If a claim under Section 1 or Section 2 of this Article is not paid in full by the Corporation within sixty days in the case of Section 1 and twenty days in the case of Section 2 after a written claim has been received by the Corporation, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (other than a suit brought by the indemnitee to enforce a right to an advancement of expenses), it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its board of directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to the action. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article or otherwise shall be on the Corporation. SECTION 4. Indemnification of Agents of the Corporation. The Corporation may, to the extent authorized from time to time by its board of directors, grant rights to indemnification, and to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification of directors, officers and employees of the Corporation and advancement of expenses of directors and officers of the Corporation. SECTION 5. Non-Exclusivity of Rights. The right to indemnification and to the advancement of expenses conferred in this Article shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation's Restated Certificate of Incorporation, these by-laws, any agreement, vote of stockholders or disinterested directors, or otherwise. SECTION 6. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. SECTION 7. Survival of Prior Indemnification Provisions; Effect of Subsequent Change on Existing Rights. Nothing contained in this Article shall be construed as altering or eliminating the rights to indemnification existing, or based upon service by an indemnitee, prior to May 21, 1987. Any repeal or modification of this Article shall not adversely affect any right or protection of a director, officer or employee of the Corporation existing at the time of such repeal or modification. ARTICLE VII ----------- Checks, Contracts, Other Instruments ------------------------------------ SECTION 1. Documents, Instruments Not Requiring Seal. All checks, notes, drafts, acceptances, bills of exchange, orders for the payment of money, and all written contracts and instruments of every kind which do not require a seal shall be signed by such officer or officers, or person or persons as these by-laws, or the Board of Directors or Executive Committee by resolution, may from time to time prescribe. SECTION 2. Documents, Instruments Requiring Seal. All bonds, deeds, mortgages, leases, written contracts and instruments of every kind which require the corporate seal of the Corporation to be affixed thereto, shall be signed and attested by such officer or officers as these by-laws, or the Board of Directors or Executive Committee, by resolution, may from time to time prescribe. ARTICLE VIII ------------ Capital Stock ------------- SECTION 1. Stock Certificates. The certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with the Restated Certificate of Incorporation, as shall be approved by the Board of Directors. Each certificate shall be signed by the Chairman of the Board of Directors or a Vice President and also by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer, provided, however, that any such signature of an officer of the Corporation or of the Transfer Agent, Assistant Transfer Agent, Registrar or Assistant Registrar, or any of them, may be a facsimile. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued by the Corporation and be used and delivered as though the officer or officers who signed the said certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be said officer or officers of the Corporation. All certificates shall be consecutively numbered, shall bear the corporate seal and the names and addresses of all persons owning shares of capital stock of the Corporation with the number of shares owned by each; and, the date or dates of issue of the shares of stock held by each shall be entered in books kept for that purpose by the proper officers or agents of the Corporation. SECTION 2. Recognition of Holders of Record. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it has actual or other notice thereof, save as expressly provided by the laws of the State of Delaware. SECTION 3. Lost Certificates. Except in cases of lost or destroyed certificates, and in that case only after conforming to the requirements hereinafter provided, no new certificates shall be issued until the former certificate for the shares represented thereby shall have been surrendered and cancelled. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate or certificates to be lost or destroyed; and the Board of Directors may, in its discretion and as a condition precedent to the issuance of any such new certificate or certificates, require (i) that the owner of such lost or destroyed certificate or certificates, or his legal representative give the Corporation and its transfer agent or agents, registrar or registrars a bond in such form and amount as the Board of Directors may direct as indemnity against any claim that may be made against the Corporation and its transfer agent or agents, registrar or registrars, or (ii) that the person requesting such new certificate or certificates obtain a final order or decree of a court of competent jurisdiction as to his right to receive such new certificate or certificates. SECTION 4. Transfer of Shares. Shares of stock shall be transferred on the books of the Corporation by the holder thereof or by his attorney thereunto duly authorized upon the surrender and cancellation of certificates for a like number of shares. SECTION 5. Regulations Governing Transfer of Shares. The Board of Directors may make such regulations as it may deem expedient concerning the issue, transfer and registration of stock. SECTION 6. Appointment of Transfer Agent, Registrar. The Board may appoint a Transfer Agent or Transfer Agents and Registrar or Registrars for transfers and may require all certificates to bear the signature of either or both. ARTICLE IX ---------- Miscellaneous ------------- SECTION 1. Inspection of Books. The Board of Directors or the Executive Committee shall determine from time to time whether and, if allowed, when and under what conditions and regulations the accounts and books of the Corporation (except such as may by statute be specifically open to inspection), or any of them shall be open to the inspection of the stockholders, and the stockholders' rights in this respect are and shall be restricted and limited accordingly. SECTION 2. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization, and the words "Corporate Seal, Delaware". SECTION 3. Fiscal Year. The fiscal year shall begin on the first day of January of each year. SECTION 4. Waiver of Notice. Whenever by statute, the provisions of the Restated Certificate of Incorporation, or these by-laws, the stockholders, the Board of Directors or any committee established by the Board of Directors in accordance with these by-laws are authorized to take any action after notice, such notice may be waived, in writing, before or after the holding of the meeting at which such action is to be taken, by the person or persons entitled to such notice or, in the case of a stockholder, by his attorney thereunto authorized. ARTICLE X --------- Amendments ---------- SECTION 1. By Stockholders. These by-laws, or any of them, may be amended, altered, changed, added to or repealed at any regular or special meeting of the stockholders, by the affirmative vote of a majority of the shares of stock then issued and outstanding. SECTION 2. By the Board of Directors. The Board of Directors, by affirmative vote of a majority of its members, may, at any regular or special meeting, amend, alter, change, add to or repeal these by-laws, or any of them, but any by-laws made by the Directors may be amended, altered, changed, added to or repealed by the stockholders. -----END PRIVACY-ENHANCED MESSAGE-----