Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is dated December 7, 2010, between
Aon Corporation, a Delaware corporation (the “Company”), and Stephen P. McGill
(the “Executive”).

 

WHEREAS, the Executive is currently employed as Chairman and Chief Executive
Officer of Aon Risk Solutions pursuant to an employment agreement between the
Executive and Aon Limited (a U.K. subsidiary of the Company) dated April 22,
2005, as amended from time to time (the “UK Agreement”); and

 

WHEREAS, pursuant to the UK Agreement, the Executive has been serving as an
expatriate to the Company’s U.S. operations since 2006; and

 

WHEREAS, the parties desire to make certain changes to the Executive’s
employment arrangement, including the Executive’s permanent move to the U.S.,
the direct employment of the Executive by the Company, and an extension of the
term of the Executive’s employment, as set forth herein.

 

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

 

1.  Employment Term; Title; Responsibilities; Outside Activities.

 

(a)           Employment Term; Title.  The Company will employ the Executive as
Chairman and Chief Executive Officer, Aon Risk Solutions, which position is
currently directly below that of the Company’s Chief Executive Officer (“CEO”),
and the Executive will be employed, upon the terms and subject to the conditions
contained in this Agreement.  The extended term of Employment of the Executive
pursuant to this Agreement (the “Term of Employment”) will begin effective as of
November 18, 2010 (the “Effective Date”) and will end on the fifth anniversary
thereof, unless renewed pursuant to Section 3 hereof, or terminated during the
Term of Employment as fully set forth in Section 3.  It will not be a breach of
this Agreement if the Executive’s title is changed by the Company so long as the
new title is a Level 1A senior executive role for the Company (or comparable
level if levels are changed).

 

(b)           Responsibilities.  The Executive will report to the CEO.  The
Executive will have the authority and responsibility consistent with the
position in which he will serve.  The Executive will also perform such other
duties (not inconsistent with the Executive’s title) on behalf of the Company
and its subsidiaries as may from time to time be authorized or directed by the
CEO.

 

(c)           Outside Activities.  The Executive may engage in charitable, civic
or community activities and, with the prior approval of the Company’s Chief
Executive Officer

 

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(the “CEO”), may serve as a director of any other business corporation, provided
that (i) such activities or service do not interfere with the Executive’s duties
hereunder or violate the terms of any of the covenants contained in Sections 4
or 6 hereof and (ii) such other business corporation provides the Executive with
director and officer insurance coverage which, in the opinion of the CEO, is
adequate under the circumstances.

 

2.  Compensation during Term of Employment.

 

(a)           Base Salary.  During the Term of Employment, the Company will pay
to the Executive a base salary at the rate of $1,100,000 per year (“Base
Salary”), payable semi-monthly in accordance with the Company’s executive
payroll policy.  Such Base Salary will be reviewed annually on the Company’s
regular executive salary review schedule, and will be subject to increase (but
not decrease) at the discretion of the CEO and the Organization and Compensation
Committee of the Company’s Board of Directors (the “Compensation Committee”),
which increased amount will be thereafter the Executive’s “Base Salary” for all
purposes hereunder.

 

(b)       Annual Incentive Compensation.  The Executive will be eligible to
participate in the annual incentive compensation program for the Company’s
senior executives in accordance with the provisions of such program, as amended
from time to time.  For calendar years 2010 and 2011, the Executive’s target
bonus will be 175% of the Executive’s Base Salary, and his maximum bonus will be
three times target (unless a lesser maximum is established pursuant to the
Company’s incentive compensation program); provided, however, that for the
remainder of the Term of Employment the Executive’s target, maximum and actual
bonus opportunity will be established in accordance with the provisions of the
Company’s annual incentive compensation program, as amended from time to time. 
The Executive acknowledges and agrees that the annual incentive compensation
awards earned hereunder will be subject to payment pursuant to and in accordance
with the Aon Incentive Stock Program, payable in a combination of cash and
restricted stock units of Aon Corporation common stock (“RSUs”), if applicable.

 

(c)     Leadership Performance Program Award.  Subject to the approval of the
Compensation Committee on or before March 31, 2011, the Executive shall receive
an additional award pursuant to the Company’s Leadership Performance Program, a
sub-plan of the 2001 Aon Stock Incentive Plan, or any successor plan, for the
performance period beginning January 1, 2011 and ending December 31, 2013.  Such
additional award shall have a grant date target value of $6 million.  It is
intended that such award value will reflect the Executive’s exceptional
performance to date and his commitment to the extended Term of Employment set
forth herein.  The $6 million value will be in addition to the value to be
otherwise granted pursuant to the Company’s regular annual long-term incentive
award process, and will be earned based on the same performance criteria and
weightings as the regular award, which will also be the same for other corporate
participants for the performance period.

 

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(d)        One-Time Transfer Payment.  In connection with the Executive’s
willingness to enter into this Agreement, he will forfeit participation in
expatriate allowances and certain valuable UK employee benefits that are not
available hereunder and incur certain relocation costs to permanently relocate
from the UK to the US.  The relocation costs include additional taxes to be
incurred on the sale of his residence as a result of his move outside the
European Union. In recognition of those factors, the Company will pay to the
Executive a lump sum transfer payment of $2,500,000, less authorized
deductions.  The payment will be made as soon as practicable, but in no event
later than 30 days, after the execution date of the Agreement.   If the
Executive voluntarily terminates his employment with the Company pursuant to
Section 3(b) hereof prior to fifth anniversary of the Effective Date, the
Executive agrees and acknowledges that the Executive will re-pay promptly to the
Company a pro-rata portion of such transfer payment, and the portion to be
repaid will be calculated according to the following formula: (number of months
remaining before the fifth anniversary of the Effective Date divided by 60) x
$2,500,000.

 

(e)         Employee Benefits.  During the course of employment, the Executive
will be entitled to participate in the Company’s employee benefit plans
generally available to senior executives of the Company.  Nothing in this
Agreement will require the Company to establish, maintain or continue any of the
benefits already in existence or hereafter adopted for executives of the Company
and nothing in this Agreement will restrict the right of the Company to amend,
modify or terminate such programs.

 

(f)         Vacation Time.  The Executive will be entitled to paid vacation time
in accordance with usual Company policies and procedures. The Company will not
pay the Executive any additional compensation for any vacation time not used by
the Executive except as required by law.

 

(g)        Expense Reimbursement.  In accordance with Company policies and
procedures and on prescribed Company forms, the Company will reimburse the
Executive for all proper expenses incurred by the Executive in the performance
of his duties hereunder.

 

3.  Renewal; Termination.

 

(a)         Renewal.  This Agreement may be renewed upon (i) the issuance by the
Company of a notice of renewal (“Notice of Renewal”) to the Executive at least
six (6) months prior to the end date of the Term of Employment or any renewal
period thereof and (ii) the written acceptance of the Notice of Renewal by the
Executive within (60) days thereafter.

 

(b)        Termination.

 

(i)  Death or Disability.  The Executive’s employment under this Agreement and
the Term of Employment will be terminated immediately upon the death of the
Executive or upon written notice given by the Company to the Executive in the
event that the Executive  has, because of any illness, injury, accident or
condition

 

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of either a physical or psychological nature, been unable to perform
substantially all of the Executive’s duties and responsibilities for one hundred
eight (180) consecutive calendar days (a “Disability Termination”); provided,
that the Executive is still “disabled” (in accordance with the definition
herein) on the date such notice is given; and provided, further, however, if
prior to such notice, the Executive incurs a “separation from service” within
the meaning of Treas. Reg. 1-409A-1(h) (“Separation from Service”) as a result
of illness, injury, accident or condition, such date shall be the date of the
Disability Termination.  In addition to the other amounts expressly provided
herein, (A) in the event of the Executive’s death during the Term of Employment
the Company will pay to the Executive’s estate an amount equal to the Base
Salary for the remainder of the full Term of Employment and the amount of any
benefit payable under any individual or group life insurance policy maintained
by the Company for the benefit of the Executive, with such amount being paid in
a lump sum sixty (60) days after the date of the Executive’s death, and (B) in
the event of a Disability Termination an amount equal to the difference between
the Base Salary for the remainder of the full Term of Employment and the
projected amount of any benefit payable under any disability insurance policy
maintained by the Company for the benefit of the Executive assuming that the
Executive remained disabled for the remainder of the full Term of Employment,
with such amount being paid in a lump sum sixty (60) days after the date of the
Disability Termination, plus (C) in the case of both (A) and (B), a pro rata
bonus for the year in which such termination of employment occurs equal to the
total value of the bonus (i.e. cash portion plus equity portion) paid or payable
to the Executive for the year prior to the year of termination multiplied by the
ratio of the number of days the Executive was employed during the year of
termination divided by 365 and paid in cash at the same time such annual bonus
would have been paid if the Executive continued to be employed by the Company
(or if applicable, as provided under any deferred compensation plan).

 

(ii)       Without Cause or for Good Reason.   This Agreement may be terminated
by the Company without cause on no less than three hundred sixty-five (365)
days’ advance notice by the Company or by the Executive without cause on no less
than ninety (90) days’, but no more than 365 days’, advance notice to the
Company or by the Executive for Good Reason.  The notice from either party will
specify the effective date of the Executive’s employment termination (the
“Termination Date”).  If terminated without cause by the Company or for Good
Reason by the Executive, the Company will pay to the Executive all accrued but
unpaid Base Salary and benefits as of the date such notice of termination is
delivered (the “Notice Date”).  On the Termination Date, the Company will
provide the Executive with a cash payment equal to the Executive’s annual Base
Salary as of the Notice Date.  In addition, if this Agreement is terminated
without cause by the Company or for Good Reason by the Executive, so long as the
Executive continues to abide by the provisions of Sections 4(b), 4(c) and 6
herein

 

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notwithstanding any expiration of the period specified therein, the Company will
continue to pay to the Executive an amount equal to the Base Salary as and when
it would be paid to its executives generally through the Termination Date.

 

As used herein, “Good Reason” will mean any of the following which remains
uncured by the Company for twenty (20) days after the Notice Date: (a) a
substantial adverse alteration in the then-current responsibilities of the
Executive; (b) any material breach of this Agreement by the Company, including
any purported termination of the Executive’s employment which breaches this
Agreement; or (c) a change by the Company in the location at which the Executive
is required to perform his principal duties hereunder to offices that are not
located in the Chicago or New York greater metropolitan areas.

 

Notwithstanding anything to the contrary in this Section 3(b)(ii), the Company
may require the Executive to leave Company premises immediately on the Notice
Date. Such a requirement will not relieve the Company of its obligations herein,
including its obligation to continue Base Salary and benefits through the
Termination Date.

 

In the event the Executive terminates this Agreement without cause or Good
Reason, the Company will only be required to pay or provide to the Executive all
accrued but unpaid Base Salary and benefits as of the date of such termination.

 

(iii)        For Cause.  The Company may at any time during the initial Term of
Employment and during any renewals thereof, terminate this Agreement for
“cause”, effective immediately by written notice of termination given to the
Executive setting forth the basis for such termination.  For the purposes of
this Agreement, “cause” will mean the Executive’s: (A) willful failure to
substantially perform his duties with the Company (other than any such failure
resulting from the Executive’s physical or mental incapacity), after a written
demand for substantial performance is delivered to the Executive that
specifically identifies the manner in which the CEO believes that the Executive
has willfully and not substantially performed his duties, and the Executive has
failed to remedy the situation within fifteen (15) business days of such written
notice from the Company; (B) gross negligence with regard to material matters in
the performance of the Executive’s duties; (C) willful engagement in misconduct
with regard to the Company or his duties that is, or is reasonably anticipated
by the Company to be, materially injurious to the Company, monetarily or
otherwise; (D) deliberate, voluntary or intentional material violation of the
Company’s written policies and procedures, (E) willful material violation of the
Aon Code of Business Conduct or the Aon Code of Ethics, (F) willful material non
compliance with the terms of this Agreement, including but not limited to
Sections 4 and 6, which is not promptly cured after written notice (with
specificity as to the noncompliance) is given to the

 

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Executive thereof, or (G) conviction of, or a plea of guilty or nolo contendere
to, any felony whatsoever or any other crime involving the personal enrichment
of the Executive at the expense of the Company.  No act or failure to act on the
Executive’s part shall be considered “willful” if conducted by the Executive in
good faith and with a reasonable belief that the Executive’s act or omission was
in, and not opposed to, the best interests of the Company.

 

In the event of a termination for “cause,” the Company will only be required to
pay or provide to the Executive all accrued but unpaid Base Salary and benefits
as of the date of such termination.

 

(iv)  As of the effective date of termination, the Executive agrees that the
Secretary of the Company may, as an irrevocable proxy and in the Executive’s
name and stead, execute all documents and things which the Company deems
necessary and desirable to effect the Executive’s resignation as an officer or
director of the Company and its subsidiaries and affiliates.

 

(v)  Upon the effective date of termination, or other expiration of this
Agreement, the obligations of the parties under this Agreement, other than the
Executive’s obligations under Sections 3(c), 4, 6, and 9(e), and the Company’s
obligations under Sections 3(b) will cease; provided further that any other
provision which contemplates performance or observance by either or both parties
subsequent to any termination of this Agreement will survive any termination of
this Agreement and continue in full force and effect.

 

(vi)  Any agreement herein by the Company to continue to pay Base Salary or any
other benefits after the termination of employment will be reduced by any
benefits provided by the Aon Severance Plan.

 

(vii)  For purposes of this Agreement, the terms “retirement,” “termination of
employment,” “terminated,” “termination,” “this Agreement will be terminated”
and variations thereof, as used in this Agreement, are intended to mean a
termination of employment that constitutes a “separation from service” under
Section 409A of the Internal Revenue Code of 1986, as amended (“Code
Section 409A”).

 

(c)         The Executive agrees that, prior to the commencement of any new
employment in the insurance business, the Executive will furnish the prospective
new employer with a copy of this Agreement.  The Executive also agrees that the
Company may advise any prospective new employer of the Executive of the
existence and terms of this Agreement and furnish the prospective new employer
with a copy of this Agreement.

 

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4.    Noncompetition; Nonsolicitation.

 

(a)             General.  The Executive acknowledges that in the course of his
employment with the Company, and any predecessor company or affiliated company,
the Executive has and will become familiar with trade secrets and other
confidential information concerning the Company and its subsidiaries and that
the Executive’s services will be of special, unique and extraordinary value to
the Company and its affiliates.

 

(b)              Noncompetition.  The Executive agrees that during the Term of
Employment  and for a period of two years beginning on the effective date of the
Executive’s termination of employment (the “Noncompetition Period”) the
Executive will not in any manner, directly or indirectly, through any person,
firm or corporation, alone or as a member of a partnership or as an officer,
director, stockholder, investor or employee of or consultant to any other
corporation or enterprise or otherwise, engage or be engaged, or assist any
other person, firm, corporation or enterprise in engaging or being engaged, in
any business, in which the Executive was involved or had knowledge, being
conducted by, or contemplated by, the Company or any of its subsidiaries as of
the termination of the Executive’s employment in any geographic area in which
the Company or any of its subsidiaries is then conducting such business.

 

(c)           Nonsolicitation.  The Executive further agrees that during the
Noncompetition Period the Executive will not in any manner, directly or
indirectly, induce or attempt to induce any employee of the Company or any of
its subsidiaries to terminate or abandon his or her employment with the Company
for any purpose whatsoever.

 

(d)              Exceptions.  Nothing in this Section 4 will prohibit the
Executive from being (i) a stockholder in a mutual fund or a diversified
investment company or (ii) a passive owner of not more than two percent of the
outstanding stock of any class of a corporation, any securities of which are
publicly traded, so long as the Executive has no active participation in the
business of such corporation.

 

(e)              Reformation.  If, at any time of enforcement of this Section 4,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area and that the court will be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.  This Agreement will not authorize a court to
increase or broaden any of the restrictions in this Section 4.

 

(f)               Consideration; Breach.  The Company and the Executive agree
that the payments to be made, and the benefits to be provided, by the Company to
the Executive pursuant to Section 3 hereof will be made and provided in
consideration of the Executive’s agreements contained in Section 4 hereof.  In
the event that the Company determines that the Executive has committed a
material breach of any provision of Section 4 hereof, on written

 

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notice to the Executive setting forth the basis for such determination, the
Company will be entitled immediately to terminate making all remaining payments
and providing all remaining benefits pursuant to Section 3 hereof and upon such
termination the Company will have no further liability to the Executive under
this Agreement; provided, however, that if a court of law determines that no
such material breach occurred, the Company will be obligated to make such
payments in a timely manner.

 

5.  Company’s Right to Injunctive Relief.

 

The Executive acknowledges that the Executive’s services to the Company are of a
unique character which gives them a special value to the Company, the loss of
which cannot reasonably or adequately be compensated in damages in an action at
law, and that a breach of Section 4 or 6 of this Agreement will result in
irreparable and continuing harm to the Company and that therefore, in addition
to any other remedy which the Company may have at law or in equity, the Company
will be entitled to injunctive relief for a breach of this Agreement by the
Executive.

 

6.  Trade Secrets and Confidential Information; Inventions.

 

(a)         Trade Secrets and Confidential Information.  The Executive
acknowledges that the Company’s business depends to a significant degree upon
the possession of information which is not generally known to others, and that
the profitability of the business of the Company requires that this information
remain proprietary to the Company.

 

The Executive will not, except as required in the course of employment by the
Company, disclose or use during or subsequent to the course of employment, any
trade secrets or confidential or proprietary information relating to the
business of the Company of which the Executive becomes aware by reason of being
employed by the Company or to which the Executive gains access during his
employment by the Company and which has not been publicly disclosed (other than
by the Executive in breach of this provision).  Such information includes client
and customer lists, data, records, computer programs, manuals, processes,
methods and intangible rights which are either developed by the Executive during
the course of employment or to which the Executive has access.  All records and
equipment and other materials relating in any way to any confidential
information relating to clients or to the business of the Company or Aon Group
will be and remain the sole property of the Company during and after the end of
employment.

 

Upon termination of employment, the Executive will promptly return to the
Company all materials and all copies or tangible embodiments of materials
involving any confidential information in the Executive’s possession or control.

 

(b)        Inventions.  The Executive hereby assigns to the Company his or her
entire right, title and interest in and to all discoveries and improvements,
patentable or otherwise, trade

 

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secrets and ideas writings and copyrightable material, which may be conceived by
the Executive or developed or acquired by the Executive during the Term of
Employment, which may pertain directly or indirectly to the business of the
Company or any of its affiliates, parent companies, or subsidiaries. The
Executive agrees to disclose fully all such developments to the Company upon its
request, which disclosure will be made in writing promptly following any such
request. The Executive will upon the Company’s request, execute, acknowledge and
deliver to the Company all instruments and do all other acts which are necessary
or desirable to enable the Company or any of its affiliates, parent companies,
or subsidiaries to file and prosecute applications for, and to acquire, maintain
and enforce, all patents, trademarks, and copyrights in all countries.

 

7.  Change in Control Protection.  Beginning on the Effective Date and extending
through the Term of Employment, the Executive will be entitled to “Tier 1”
Change in Control severance protection pursuant to the Company’s standard form
of change-in-control agreement (“CIC Agreement”) in effect at such time, which
agreement does not provide for gross-up protection for excise tax incurred by
the Executive under Section 4999 of the Internal Revenue Code of 1986, as
amended.  The parties agree and acknowledge that such CIC Agreement will
supersede the Change in Control Agreement entered into by the parties on
September 19, 2008, and any other prior or contemporaneous agreement providing
severance protection in the event of a change in control of the Company.

 

8.  Mergers and Consolidations; Assignability.

 

The rights and obligations under this Agreement will inure to the benefit of and
be binding upon the Company and its successors and assigns.  By way of
explanation, and without limiting the generality of the foregoing sentence, if
the Company or any entity resulting from any merger or consolidation referred to
in this Section 8 is merged with or consolidated into any other entity or
entities, or if substantially all of the assets of the Company or any such
entity are sold or otherwise transferred to another entity, the provisions of
this Agreement will be binding upon and will inure to the benefit of the
continuing entity in or the entity resulting from such merger or consolidation
or the entity to which such assets are sold or transferred.  This Agreement will
not be assignable by the Executive, but in the event of the Executive’s death it
will be binding upon and inure to the benefit of the Executive’s legal
representatives to the extent required to effectuate its terms.

 

9.  Miscellaneous.

 

(a)         Integration; Amendment; Counterparts.  Except as is otherwise
provided herein, this Agreement contains all of the terms and conditions agreed
upon by the parties relating to the subject matter of this Agreement and
supersedes all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, whether oral or
written, respecting the subject matter of this Agreement.

 

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This Agreement may not be amended, altered or modified without the prior written
consent of both parties and such instrument must acknowledge that it is an
amendment or modification of this Agreement.

 

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

 

(b)        Waiver.  Waiver of any term or condition of this Agreement by any
party will not be construed as a waiver of a subsequent breach or failure of the
same term or condition, or a waiver of any other term or condition of this
Agreement.  Any waiver must be in writing.

 

(c)         Captions.  The captions in this Agreement are not part of its
provisions, are merely for reference and have no force or effect.  If any
caption is inconsistent with any provision of this Agreement, such provision
will govern.

 

(d)        Governing Law. The validity, interpretation, construction,
performance, enforcement and remedies of, or relating to, this Agreement, and
the rights and obligations of the parties hereunder, will be governed by and
construed in accordance with the substantive laws of the State of Illinois,
without regard to the conflict of law principles, rules or statutes of any
jurisdiction.

 

(e)           Agreement To Be Available In Future Proceedings.  During the Term
of Employment, and after employment termination, the Executive agrees, subject
to the advice of legal counsel, to voluntarily make himself available to the
Company and its legal counsel, at the Company’s request, without the necessity
of obtaining a subpoena or court order, in the Company’s investigation,
preparation, prosecution and/or defense of any actual or potential legal
proceeding, regulatory action, or internal matter.  Subject to the advice of
legal counsel, the Executive agrees to provide any information reasonably within
the Executive’s recollection.  The Company will reimburse the Executive for
reasonable out-of-pocket expenses actually incurred as a result of such
requests, or, at Company’s option, will arrange to advance the Executive’s
expenses or incur such expenses directly.  Payment or reimbursement of the
Executive’s expenses will 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, or
in-kind benefits provided, in any year will not affect the amount of such
expenses eligible for payment or reimbursement, or in-kind benefits to be
provided, in any other year.  Additionally, any right to expense reimbursement
or in-kind benefits will not be subject to liquidation or exchange for another
benefit.

 

(f)         Severability.  To the extent that the terms set forth in this
Agreement or any word, phrase, clause or sentence is found to be illegal or
unenforceable for any reason, such word, phrase, clause or sentence will be
modified or deleted in such manner so as to afford the Company the fullest
protection commensurate with making this Agreement, as modified, legal

 

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and enforceable under applicable laws, and the balance of this Agreement will
not be affected thereby, the balance being construed as severable and
independent.

 

(g)        Notice.  All notices given hereunder will be in writing and will be
sent by registered or certified mail or delivered by hand and, if intended for
the Company, will be addressed to it or delivered to it at its principal office
for the attention of the Secretary of the Company.  If intended for the
Executive, notices will be delivered personally or will be addressed (if sent by
mail) to the Executive’s then current residence address as shown on the
Company’s records, or to such other address as the Executive directs in a notice
to the Company.  All notices will be deemed to be given on the date received at
the address of the addressee or, if delivered personally, on the date delivered.

 

(h)        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,
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 described under Code Section 409A), may not be accelerated except
as otherwise permitted under Code Section 409A and the guidance and Treasury
regulations issued thereunder.

 

(i)          Code Section 409A.  The parties intend that this Agreement and the
benefits provided hereunder be interpreted and construed to comply with Code
Section 409A to the extent applicable thereto. The time and form of payment of
incentive compensation, disability benefits, severance payments, expense
reimbursements and payments of in-kind benefits described herein will be made in
accordance with the applicable sections of this Agreement, provided that with
respect to termination of employment for reasons other than death, the payment
at such time can be characterized as a “short-term deferral” for purposes of
Code Section 409A or as otherwise exempt from the provisions of Code
Section 409A, or if any portion of the payment cannot be so characterized, and
the Executive is a “specified employee” under Code Section 409A, such portion of
the payment will 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 (the “Delay Period”).  Upon the expiration of the Delay Period,
all payments and benefits delayed pursuant to this section will be paid or
reimbursed to the Executive in a lump sum, and any remaining payments due under
this Agreement will be payable at the same time and in the same form as such
amounts would have been paid.  Further, if the Executive is a “specified
employee” and if any equity-based awards granted to the Executive by the
Company, pursuant to this Agreement or otherwise, continue to vest upon the
Executive’s termination of employment, and are deemed a “deferral of
compensation” (as such term is described under Code Section 409A), the
equity-based awards will not be settled or released until the expiration of the
Delay Period.  For purposes of applying the provisions of Code Section 409A,
each separately identifiable amount to which the Executive is entitled will be
treated as a separate payment.  In addition, the disability benefits and
severance payments will be treated as a series of separate payments.

 

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Although the Company intends to administer the Agreement so that it will comply
with the requirements of Code Section 409A, the Company does not represent or
warrant that the Agreement will comply with Code Section 409A or any other
provision of federal, state, local, or non-United States law.  Provided that the
Company administers this Agreement in a manner consistent with the terms of this
Agreement, neither the Company, its subsidiaries, nor their respective
directors, officers, employees or advisers will 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 will have no
obligation to indemnify or otherwise protect the Executive from the obligation
to pay any taxes pursuant to Code Section 409A.

 

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

 

 

 

AON CORPORATION

 

 

 

 

 

By:

/s/ Greg Case

 

 

 

Its:

President and CEO

 

I have read the above Agreement and understand and agree to be bound by its
terms.

 

 

 

/s/ Stephen P. McGill

 

Stephen P. McGill

 

12

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