Exhibit 10.1

 

SEVERANCE AGREEMENT

 

This Agreement is entered into as of September 19, 2008, between Aon
Corporation, a Delaware corporation, and
                                                             (the “Executive”).

 

WHEREAS, the Executive currently serves as a key employee of the Company (as
defined in Section 1) and the Executive’s services and knowledge are valuable to
the Company in connection with the management of one or more of the Company’s
principal operating facilities, divisions, departments or subsidiaries; and

 

WHEREAS, the Board (as defined in Section 1) has determined that it is in the
best interests of the Company and its stockholders to secure the Executive’s
continued services and to ensure the Executive’s continued dedication and
objectivity in the event of any threat or occurrence of, or negotiation or other
action that could lead to, or create the possibility of, a Change in Control (as
defined in Section 1) of the Company, without concern as to whether the
Executive might be hindered or distracted by personal uncertainties and risks
created by any such possible Change in Control, and to encourage the Executive’s
full attention and dedication to the Company, the Board has authorized the
Company to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the Company and the Executive hereby agree as
follows:

 

1.             Definitions.  As used in this Agreement, the following terms
shall have the respective meanings set forth below:

 

(a)           “Board” means the Board of Directors of the Company.

 

(b)           “Cause” means:

 

(1)           a material breach by the Executive of those duties and
responsibilities of the Executive which do not differ in any material respect
from the duties and responsibilities of the Executive during the 90-day period
immediately prior to a Change in Control (other than as a result of incapacity
due to physical or mental illness) which is demonstrably willful and deliberate
on the Executive’s part, which is committed in bad faith or without reasonable
belief that such breach is in the best interests of the Company and which is not
remedied in a reasonable period of time after receipt of written notice from the
Company specifying such breach;

 

(2)           Gross misconduct, theft, fraud, breach of trust or any act of
dishonesty by the Executive which results in material harm to the Company; or

 

(3)           the commission by the Executive of a felony involving moral
turpitude.

 

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(c)           “Change in Control” means:

 

(1)           the acquisition by any individual, entity or group (a “Person”),
including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 30% or more of either (i) the then outstanding shares of common stock of the
Company (the “Outstanding Common Stock”) or (ii) the combined voting power of
the then outstanding securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Voting Securities”); excluding, however,
the following: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was
acquired directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or
(D) any acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (3) of this Section 1(c);
provided further, that for purposes of clause (B), if any Person (other than the
Company or any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company) shall become the
beneficial owner of 30% or more of the Outstanding Common Stock or 30% or more
of the Outstanding Voting Securities by reason of an acquisition by the Company,
and such Person shall, after such acquisition by the Company, become the
beneficial owner of any additional shares of the Outstanding Common Stock or any
additional Outstanding Voting Securities and such beneficial ownership is
publicly announced, such additional beneficial ownership shall constitute a
Change in Control;

 

(2)           individuals who, as of the date hereof, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
such Board; provided that any individual who becomes a director of the Company
subsequent to the date hereof whose election, or nomination for election by the
Company’s stockholders, was approved by the vote of at least a majority of the
directors then comprising the Incumbent Board shall be deemed a member of the
Incumbent Board; and provided further, that any individual who was initially
elected as a director of the Company as a result of an actual or threatened
solicitation by a Person other than the Board for the purpose of opposing a
solicitation by any other Person with respect to the election or removal of
directors, or any other actual or threatened solicitation of proxies or consents
by or on behalf of any Person other than the Board shall not be deemed a member
of the Incumbent Board;

 

(3)           the consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals or entities
who are the beneficial owners, respectively, of the Outstanding Common Stock and
the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, the outstanding shares of common

 

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stock, and the combined voting power of the outstanding securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Common Stock and the Outstanding Voting Securities, as the case may
be, (ii) no Person (other than:  the Company; any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such Corporate
Transaction; and any Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 30% or more of the Outstanding
Common Stock or the Outstanding Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 30% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding securities
of such corporation entitled to vote generally in the election of directors and
(iii) individuals who were members of the Incumbent Board will constitute at
least a majority of the members of the board of directors of the corporation
resulting from such Corporate Transaction; or

 

(4)           the consummation of a plan of complete liquidation or dissolution
of the Company.

 

(d)           “Code” means the Internal Revenue Code of 1986, as amended.

 

(e)           “Company” means Aon Corporation, a Delaware corporation.

 

(f)            “Good Reason” means, without the Executive’s express written
consent, the occurrence of any of the following events after a Change in
Control:

 

(1)           a material adverse change in the nature or scope of the
Executive’s authority, powers, functions, duties or responsibilities as in
effect immediately prior to such Change in Control;

 

(2)           a material reduction by the Company in the Executive’s rate of
annual base salary or bonus opportunity as in effect immediately prior to such
Change in Control or as the same may be increased from time to time thereafter;

 

(3)           the failure of the Company to continue in effect any material
employee benefit plan or compensation plan in which the Executive is
participating immediately prior to such Change in Control, unless the Executive
is permitted to participate in other plans providing the Executive with
substantially comparable benefits, or the taking of any action by the Company
which would adversely affect the Executive’s participation in or materially
reduce the Executive’s benefits under any such plan;

 

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(4)           a change in the Executive’s primary employment location to a
location that is more than 50 miles from the primary location of the Executive’s
employment at the time of such Change in Control; or

 

(5)           the failure of the Company to obtain from any successor or
transferee of the Company an express written and unconditional assumption of the
Company’s obligations under this Agreement, as further described in
Section 12(b) of this Agreement.

 

For purposes of this Agreement, any good faith determination of Good Reason made
by the Executive shall be conclusive; provided, however, that an isolated,
insubstantial and inadvertent action taken in good faith and which is remedied
by the Company promptly after receipt of notice thereof given by the Executive
shall not constitute Good Reason.

 

The Executive’s employment may be terminated by the Executive for Good Reason if
(x) an event or circumstance set forth in this Section 1(f) shall have occurred
and the Executive provides the Company with written notice thereof within 90
days after the Executive has knowledge of the occurrence or existence of such
event or circumstance, which notice shall specifically identify the event or
circumstance that the Executive believes constitutes Good Reason, (y) the
Company fails to correct the circumstance or event so identified within 30 days
after the receipt of such notice, and (z) the Executive resigns during the
Termination Period and after the date of delivery of the notice referred to in
clause (x) above.

 

(g)           “Nonqualifying Termination” means a termination of the Executive’s
employment (1) by the Company for Cause, (2) by the Executive for any reason
other than a Good Reason, (3) as a result of the Executive’s death or (4) by the
Company due to the Executive’s absence from the Executive’s duties with the
Company on a full-time basis for at least 180 consecutive days as a result of
the Executive’s incapacity due to physical or mental illness.

 

(h)           “Termination Date” means the date during the Termination Period on
which the Executive’s employment is terminated other than by reason of a
Nonqualifying Termination.

 

(i)            “Termination Period” means the period of time beginning with a
Change in Control and ending on the earlier to occur of (1) the date which is
two (2) years following such Change in Control and (2) the Executive’s death;
provided, however, that, anything in this Agreement to the contrary
notwithstanding, if a Change in Control occurs and if the Executive’s employment
with the Company was terminated prior to the date on which the Change in Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (a) was at the request of a third party who was taking
steps reasonably calculated to effect a Change in Control or (b) otherwise arose
in connection with or in anticipation of a Change in Control, then for purposes
of this Agreement, “Termination Period” means the period of time commencing upon
the date immediately prior to the date of such termination of employment and
ending on the earlier to occur of (x) two (2) years following such Change in
Control and (y) the Executive’s death.

 

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2.             Obligations of the Executive.  The Executive agrees that in the
event any person or group attempts a Change in Control, he shall not voluntarily
leave the employ of the Company without Good Reason (a) until such attempted
Change in Control terminates or (b) if a Change in Control shall occur, until 90
days following such Change in Control.

 

3.             Payments and Benefits Upon Termination of Employment.  If during
the Termination Period the employment of the Executive shall terminate, other
than by reason of a Nonqualifying Termination, and the Executive (or the
Executive’s executor or other legal representative in the case of the
Executive’s death or disability following such termination) executes a
noncompetition, nonsolicitation and confidentiality agreement and release of
claims substantially in the form of Exhibit A hereto (the “Noncompetition
Agreement and Release”) within 60 days following the Termination Date, the
Company shall provide to the Executive, as compensation for services rendered to
the Company, and in consideration of the covenants set forth in the
Noncompetition Agreement and Release, the payments and benefits described in
this Section 3.  For purposes of this Agreement, the Executive shall be
considered to have a termination of employment with the Company and its
subsidiaries on the date the Executive has a “separation from service” as
described under Section 409A of the Code and the guidance and Treasury
Regulations issued thereunder with the Company and its subsidiaries. 
Notwithstanding the foregoing provisions of this Section 3, if as a result of
the Executive’s termination of employment on the Termination Date the Executive
is entitled to severance payments and benefits, which benefits may, without
limitation, include enhanced supplemental pension benefits conferred or equity
awards granted as a result of termination of employment, from the Company or any
of its subsidiaries which are not payable pursuant to this Agreement, but are
payable pursuant to an employment agreement or other compensation arrangement
entered into between the Executive and the Company or any of its subsidiaries
(“Alternative Severance Payments and Benefits”), the Executive shall have no
right to any payments or benefits pursuant to this Section 3 unless (i) the
Executive (or the Executive’s executor or other legal representative in the case
of the Executive’s death or disability following such termination) executes the
Noncompetition Agreement and Release and a waiver in the form of Exhibit B
hereto (the “Waiver of Severance Payments and Benefits”) within 60 days
following the Termination Date waiving all rights to the Alternative Severance
Payments and Benefits, other than rights to Alternative Equity Vesting (as
defined in Section 4 hereof), and has not revoked the Noncompetition Agreement
and Release and (ii) the payments and benefits to be received by the Executive
pursuant to this Section 3 are reduced by the amount of the Alternative
Severance Payments and Benefits, if any, previously received by the Executive.

 

(a)           Except as otherwise provided in Section 6, the Company shall pay
to the Executive (or the Executive’s beneficiary or estate, as the case may be)
within 30 days following the date of execution of the Noncompetition Agreement
and Release and, if applicable, the Waiver of Severance Payments and Benefits:

 

(1)           a cash amount (subject to any applicable payroll or other taxes
required to be withheld pursuant to Section 7 and any deductions authorized by
the Executive) equal to the sum of (i) the Executive’s full annual base salary
from the Company and its affiliated companies through the Termination Date, to
the extent not theretofore paid, (ii) the average of the Executive’s annual cash
incentive for each of the three fiscal years immediately preceding the fiscal
year in which the Termination Date

 

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occurs, multiplied by a fraction, the numerator of which is the number of days
in the fiscal year in which the Termination Date occurs and the denominator of
which is 365 or 366, as applicable, and (iii) any accrued vacation pay, in each
case to the extent not theretofore paid; plus

 

(2)           a lump sum cash amount (subject to any applicable payroll or other
taxes required to be withheld pursuant to Section 7 and any deductions
authorized by the Executive) in an amount equal to two (2) times the sum of
(a) Executive’s annual base salary from the Company and its affiliated companies
in effect on the Termination Date and (b) the average incentive compensation
paid to the Executive by the Company over the previous two years; plus

 

(3)           a lump sum cash amount (subject to any applicable payroll or other
taxes required to be withheld pursuant to Section 7 and any deductions
authorized by the Executive) in an amount equal to the amount forfeited by the
Executive under any qualified defined contribution plan maintained by the
Company or any of its subsidiaries as a result of the Executive’s termination of
employment.

 

(b)           The Executive shall become fully (100%) vested in the Executive’s
accrued benefits under the Aon Corporation Excess Benefit Plan, the Aon
Corporation Supplemental Savings Plan and the Aon Corporation Supplemental
Employee Stock Ownership Plan, or successor plans in effect on the date of the
Executive’s termination of employment (the “Nonqualified Plans”).  The
Executive’s accrued benefits under the Aon Corporation Excess Benefit Plan or
the Aon Corporation Supplemental Savings Plan, whichever plan is applicable to
the Executive on the date of the Executive’s termination of employment, shall be
determined by crediting the Executive with two (2) additional years of age and
service credits and, in the case of the Aon Corporation Supplemental Savings
Plan, two (2) additional years of Retirement Plan Contributions.

 

(c)           For the period commencing on the Termination Date and ending on
the earlier of (i) the date which is two(2) years following the Termination Date
and (ii) the date on which the Executive becomes eligible to participate in and
receive medical, dental and life insurance benefits under a plan or arrangement
sponsored by another employer having benefits substantially equivalent to the
benefits provided pursuant to this Section 3(c), the Company shall continue the
Executive’s medical, dental and life insurance coverage, under the
Company-sponsored plans or otherwise, upon the same terms and otherwise to the
same extent as such coverage shall have been in effect immediately prior to the
Executive’s Termination Date, and the Company and the Executive shall share the
costs of the continuation of such medical, dental and life insurance coverage in
the same proportion as such costs were shared immediately prior to the
Termination Date.  Such continuation of medical and dental coverage shall be in
satisfaction of the Company’s obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA).  Payment or reimbursement of expenses
incurred by the Executive pursuant to this Section 3(c) shall be made promptly
and in no event later than December 31 of the year following the year in which
such expenses were incurred, and the amount of expenses eligible for
reimbursement, or in-kind benefits provided, in any year shall not affect the
amount of expenses eligible for reimbursement, or in-kind benefits to be
provided,

 

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in any other year, except for any limit on the amount of expenses that may be
reimbursed under an arrangement described in Section 105(b) of the Code. 
Additionally, such right to payment or reimbursement, or in-kind benefits to be
provided, shall not be subject to liquidation or exchange for another benefit. 
If the Executive is a “specified employee” under Section 409A of the Code, the
full cost of the continuation or provision of employee benefits described under
this Section 3(c) (other than any cost of medical or dental benefit plans or
programs or the cost of any other plan or program that is exempt from
Section 409A of the Code) shall be paid by the Executive until the earlier to
occur of the Executive’s death or the date that is six months and one day
following the Executive’s termination of employment, and such cost shall be
reimbursed by the Company or the applicable subsidiary to, or on behalf of, the
Executive in a lump sum cash payment on the earlier to occur of the Executive’s
death or the date that is six months and one day following the Executive’s
termination of employment.

 

4.             Vesting of Equity Awards Upon Termination Date; Exercise Period. 
Immediately upon the Executive’s Termination Date, all stock options and other
equity awards, if any, granted by the Company to the Executive (or stock options
and other equity awards granted in substitution therefor by an acquiror of, or
successor to, the Company) that are not otherwise exercisable or vested shall
become exercisable and vested in full.  Notwithstanding the foregoing, the time
or schedule of any payment or amount scheduled to be paid pursuant to the terms
of this Section 4, including but not limited to any restricted stock unit or
other equity-based award, payment or amount that provides for the “deferral of
compensation” (as such term is defined under Section 409A of the Code), may not
be accelerated except as otherwise permitted under Section 409A of the Code and
the guidance and Treasury regulations issued thereunder.  With respect to any
and all outstanding stock options granted by the Company to the Executive, each
such option shall remain exercisable following the Executive’s termination of
employment until and including the expiration date of the term of the option (as
set forth in the written agreement relating to such option).  Notwithstanding
the foregoing provisions of this Section 4, if as a result of the Executive’s
termination of employment on the Termination Date the Executive is entitled to
the acceleration of exercisability of stock options or the vesting of other
equity awards granted by the Company to the Executive (or stock options or other
equity awards granted in substitution therefor by an acquiror of, or successor
to, the Company), which acceleration or vesting is not pursuant to this
Agreement, but is pursuant to an employment agreement or other compensation
arrangement entered into between the Executive and the Company or any of its
subsidiaries (“Alternative Equity Vesting”), the Executive shall have no rights
pursuant to this Section 4 unless the Executive (or the Executive’s executor or
other legal representative in the case of the Executive’s death or disability
following such termination) executes the Noncompetition Agreement and Release
and a waiver in the form of Exhibit C hereto (the “Waiver of Exercisability and
Vesting”) within 60 days following the Termination Date waiving all rights to
the Alternative Equity Vesting, and has not revoked the Noncompetition Agreement
and Release.

 

5.             Certain Additional Payments by the Company.  (a) If the Executive
is entitled to receive payments and benefits under Section 3 hereof or vesting
of equity awards under Section 4 hereof, anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by the Company or its affiliated companies to or for the benefit
of the Executive (whether paid or payable or distributed or

 

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distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 5) (a “Payment”) would be subject to the excise tax imposed by
Section 4999 of the Code, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

 

(b)           Subject to the provisions of Section 5(c), all determinations
required to be made under this Section 5, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by the Company’s
public accounting firm (the “Accounting Firm”) which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company.  In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change in Control, the Executive shall appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne
solely by the Company.  Any Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by the Company to the Executive within five days of the
receipt of the Accounting Firm’s determination.  If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive’s applicable federal income tax return would not result in the
imposition of a negligence or similar penalty.  Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.  As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder.  In the event that the Company exhausts its
remedies pursuant to Section 5(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

 

(c)           The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment.  Such notification shall be given as soon
as practicable but no later than 10 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid.  The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due).  If the Company notifies

 

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the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:

 

(1)           give the Company any information reasonably requested by the
Company relating to such claim;

 

(2)           take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company;

 

(3)           cooperate with the Company in good faith in order effectively to
contest such claim; and

 

(4)           permit the Company to participate in any proceedings relating to
such claim;

 

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.  Without limitation on the foregoing provisions
of this Section 5(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided further, that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

 

(d)           If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(c), the Executive becomes entitled to receive,
and receives, any refund with respect to such claim, the Executive shall
(subject to the Company’s complying with

 

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the requirements of Section 5(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

 

(e)           The Gross-Up Payment and any other payment or reimbursement of
expenses described in this Section 5 shall be made promptly and in no event
later than December 31 of the year following the year in which such expenses
were incurred, and the amount of such expenses eligible for payment or
reimbursement in any year shall not affect the amount of such expenses eligible
for payment or reimbursement in any other year nor shall such right to payment
or reimbursement be subject to liquidation or exchange for another benefit.

 

6.             Delay of Payments.  In the event that any payment or distribution
or portion of any payment or distribution to be made to the Executive hereunder
cannot be characterized as a “short term deferral” for purposes of Section 409A
of the Code or is not otherwise exempt from the provisions of Section 409A of
the Code, and the Executive is determined to be a “specified employee” under
Section 409A of the Code, such portion of the payment shall be delayed until the
earlier to occur of the Executive’s death or the date that is six months and one
day following the Executive’s termination of employment with the Company and its
subsidiaries (the “Delay Period”).  Upon the expiration of the Delay Period, the
payments delayed pursuant to this Section 6 shall be paid to the Executive or
his beneficiary in a lump sum, and any remaining payments due under this
Agreement shall be payable in accordance with their original payment schedule.

 

7.             Withholding Taxes.  The Company may withhold from all payments
due to the Executive (or the Executive’s beneficiary or estate) hereunder all
taxes which, by applicable federal, state, local or other law, the Company is
required to withhold therefrom.

 

8.             Reimbursement of Expenses.  If any contest or dispute shall arise
under this Agreement involving termination of the Executive’s employment with
the Company or involving the failure or refusal of the Company to perform fully
in accordance with the terms hereof, the Company shall reimburse the Executive,
on a current basis, for all legal fees and expenses, if any, incurred by the
Executive in connection with such contest or dispute; provided, however, that in
the event the resolution of any such contest or dispute includes a finding
denying, in total, the Executive’s claims in such contest or dispute, the
Executive shall be required to reimburse the Company, over a period of 12 months
from the date of such resolution, for all sums advanced to the Executive
pursuant to this Section 8.  Payment or reimbursement of expenses described in
this Section 8 shall be made promptly and in no event later than December 31 of
the year following the year in which such expenses were incurred, and the amount
of such expenses eligible for payment or reimbursement in any year shall not
affect the amount of such expenses eligible for payment or reimbursement in any
other year nor shall the right to payment or reimbursement be subject to
liquidation or exchange for another benefit.

 

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9.             Operative Event.  No amounts shall be payable hereunder unless
and until there is a Change in Control.

 

10.           Termination of Agreement.  (a)  This Agreement shall be effective
on the date hereof and shall continue until terminated by the Company as
provided in Section 10(b); provided, however, that this Agreement shall
terminate in any event upon the earlier to occur of (1) termination of the
Executive’s employment with the Company prior to a Change in Control and (2) the
Executive’s death.

 

(b)  The Company shall have the right prior to a Change in Control, in its sole
discretion, pursuant to action by the Board, to approve the termination of this
Agreement, which termination shall not become effective until the date fixed by
the Board for such termination, which date shall be at least 120 days after
notice thereof is given by the Company to the Executive in accordance with
Section 13; provided, however, that no such action shall be taken by the Board
during any period of time when the Board has knowledge that any person has taken
steps reasonably calculated to effect a Change in Control until, in the opinion
of the Board, such person has abandoned or terminated its efforts to effect a
Change in Control; and provided further, that in no event shall this Agreement
be terminated in the event of a Change in Control.

 

11.           Scope of Agreement.  This Agreement supersedes any and all
change-in-control agreements entered into between the Executive and the Company,
its subsidiaries or affiliates (including, if applicable, the Severance
Agreement substantially in the form set forth as Exhibit 10(z) to the Company’s
Form 10-K for the fiscal year 2004).  Nothing in this Agreement shall be deemed
to entitle the Executive to continued employment with the Company or its
subsidiaries and, subject to Section 2 hereof, if the Executive’s employment
with the Company shall terminate prior to a Change in Control, then the
Executive shall have no further rights under this Agreement; provided, however,
that any termination of the Executive’s employment following a Change in Control
shall be subject to all of the provisions of this Agreement.

 

12.           Successors; Binding Agreement.

 

(a)  This Agreement shall not be terminated by any merger or consolidation of
the Company whereby the Company is or is not the surviving or resulting
corporation or as a result of any transfer of all or substantially all of the
assets of the Company.  In the event of any such merger, consolidation or
transfer of assets, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or the person or entity to which such assets
are transferred.

 

(b)  The Company agrees that concurrently with any merger, consolidation or
transfer of assets referred to in Section 12(a), it will cause any successor or
transferee unconditionally to assume, by written instrument delivered to the
Executive (or the Executive’s beneficiary or estate), all of the obligations of
the Company hereunder.  Failure of the Company to obtain such assumption prior
to the effectiveness of any such merger, consolidation or transfer of assets
shall be a breach of this Agreement and shall entitle the Executive to
compensation and other benefits from the Company in the same amount and on the
same terms as the Executive

 

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would be entitled hereunder if the Executive’s employment were terminated
following a Change in Control other than by reason of a Nonqualifying
Termination during the Termination Period.  For purposes of implementing the
foregoing, the date on which any such merger, consolidation or transfer becomes
effective shall be deemed the Date of Termination.

 

(c)  This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If the Executive shall
die while any amounts would be payable to the Executive hereunder had the
Executive continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to such person or
persons appointed in writing by the Executive to receive such amounts or, if no
person is so appointed, to the Executive’s estate.

 

13.           Notices.  (a)  For purposes of this Agreement, all notices and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given when delivered or five days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed (1) if to the Executive, to the last known
residential address on file for the Executive with the Company, and if to the
Company, to Aon Corporation, 200 East Randolph Drive, Chicago, Illinois 60602,
3d Floor, attention General Counsel, with a copy to the Secretary, or (2) to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.

 

(b)           A written notice of the Executive’s Termination Date by the
Company or the Executive, as the case may be, to the other, shall (1) indicate
the specific termination provision in this Agreement relied upon, (2) to the
extent applicable, set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s employment under
the provision so indicated and (3) specify the termination date (which date
shall be not less than 15 days after the giving of such notice).  The failure by
the Executive or the Company to set forth in such notice any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights hereunder.

 

14.           Full Settlement; Resolution of Disputes.  (a) The Company’s
obligation to make any payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others.  In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, subject to Section 3(c) hereof, such amounts
shall not be reduced whether or not the Executive obtains other employment.

 

(b)           If there shall be any dispute between the Company and the
Executive in the event of any termination of the Executive’s employment, then,
unless and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause, that the
determination by the Executive of the existence of Good

 

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Reason was not made in good faith, or that the Company is not otherwise
obligated to pay any amount or provide any benefit to the Executive and the
Executive’s dependents or other beneficiaries, as the case may be, under
Sections 3 and 4 hereof, the Company shall pay all amounts, and provide all
benefits, to the Executive and the Executive’s dependents or other
beneficiaries, as the case may be, that the Company would be required to pay or
provide pursuant to Sections 3 and 4 hereof as though such termination were by
the Company without Cause or by the Executive with Good Reason; provided,
however, that the Company shall not be required to pay any disputed amounts
pursuant to this Section 14(b) except upon receipt of an undertaking by or on
behalf of the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.

 

15.           Employment with, and Action by, Subsidiaries.  For purposes of
this Agreement, employment with the Company or actions taken by the Company with
respect to the Executive shall include employment with or actions taken by any
corporation or other entity in which the Company has a direct or indirect
ownership interest of 50% or more of the total combined voting power of the then
outstanding securities of such corporation or other entity entitled to vote
generally in the election of directors.

 

16.           Governing Law; Validity.  The interpretation, construction and
performance of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois without regard to the
principle of conflicts of laws.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which other provisions shall remain in
full force and effect.

 

17.           Counterparts.  This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.

 

18.           Miscellaneous.  No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
the Executive and by a duly authorized officer of the Company.  No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  Failure by the
Executive or the Company to insist upon strict compliance with any provision of
this Agreement or to assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

 

19.           Prohibition on Acceleration of Payments.  The time or schedule of
any payment or amount scheduled to be paid pursuant to the terms of this
Agreement may not be accelerated except as otherwise permitted under
Section 409A of the Code and the guidance and Treasury Regulations issued
thereunder.

 

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20.           Code Section 409A.  The parties intend that this Agreement and the
benefits provided hereunder be interpreted and construed to comply with
Section 409A of the Code to the extent applicable thereto.  Notwithstanding any
provision of the Agreement to the contrary, the Agreement shall be interpreted
and construed consistent with this intent, provided that the Company shall not
be required to assume any increased economic burden in connection therewith. 
Although the Company intends to administer the Agreement so that it will comply
with the requirements of Section 409A of the Code, the Company does not
represent or warrant that the Agreement will comply with Section 409A of the
Code or any other provision of federal, state, local or non-United States law. 
Neither the Company, its subsidiaries, nor their respective directors, officers,
employees or advisers shall be liable to the Executive (or any other individual
claiming a benefit through the Executive) for any tax, interest, or penalties
the Executive may owe as a result of compensation paid under the Agreement, and
the Company and its subsidiaries shall have no obligation to indemnify or
otherwise protect the Executive from the obligation to pay any taxes pursuant to
Section 409A of the Code.

 

21.           Entire Agreement.  This Agreement supersedes the Severance
Agreement between the parties entered into, or approved by the Board for
execution by the parties, on or after January 21, 2005.  This Agreement
constitutes the entire understanding between the parties with respect to the
Executive’s severance pay in the event of a termination of the Executive’s
employment with the Company in connection with a Change in Control; provided,
however, that except as otherwise expressly set forth in this Agreement, the
rights of, and benefits payable to, the Executive, the Executive’s estate or the
Executive’s beneficiaries pursuant to this Agreement are in addition to any
rights of, or benefits payable to, the Executive, the Executive’s estate or the
Executive’s beneficiaries under any other employee benefit plan or broad-based
compensation program of the Company.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a
duly authorized officer of the Company and the Executive has executed this
Agreement as of the day and year first above written.

 

 

AON CORPORATION

 

 

 

 

 

By:

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

[Executive’s Name]

 

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