Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

 

This Employment Agreement (this “Agreement”) is dated as of July15, 2005,
between Aon Corporation, a Delaware corporation (the “Company”), and Andrew M.
Appel (the “Executive”).

 

WHEREAS, the Company seeks to employ Executive as Chief Executive Officer — Aon
Consulting Worldwide, Inc.; and

 

WHEREAS, Executive desires to serve and to be employed upon the terms and
subject to the conditions set forth herein.

 

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

 

1.             Employment.  The Company hereby agrees to employ the Executive
and the Executive hereby agrees to be employed upon the terms and subject to the
conditions contained in this Agreement.  The term of employment of the Executive
pursuant to this Agreement (the “Employment Period”) shall commence effective as
of July15, 2005 (the “Effective Date”) and shall end on July16, 2010, unless
earlier terminated pursuant to Section 4 hereof.

 

2.             Position and Duties; Responsibilities; Board Service. 
(a)  Position and Duties.  The Company shall employ the Executive during the
Employment Period as Chief Executive Officer — Aon Consulting Worldwide, Inc. 
During the Employment Period, the Executive shall perform faithfully and loyally
and to the best of his abilities the duties assigned to him hereunder and shall
devote his full business time, attention and effort to the affairs of the
Company and its subsidiaries and shall use his best efforts to promote the
interests of the Company and its subsidiaries.  The Executive may engage in
charitable, civic or community activities and, with the prior approval of the
Chief Executive Officer of the Company (the “CEO”), may serve as a director of
any other business corporation, provided that (i) such activities or service do
not interfere with his duties hereunder or violate the terms of any of the
covenants contained in Sections 6, 7, or 8 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.

 

(b)  Responsibilities.  The Executive shall have the authority and
responsibility for the Company’s global consulting business.  The Executive
shall also perform such other duties (not inconsistent with the position of
Chief Executive Officer) on behalf of the Company and its subsidiaries as may
from time to time be authorized or directed by the CEO.  The Executive shall
report to the CEO.

 

3.             Compensation.  (a)  Base Salary.  During the Employment Period,
the Company shall pay to the Executive a base salary at the rate of $675,000 per
annum (“Base Salary”), payable semi-monthly in accordance with the Company’s
executive payroll policy.

 

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Such Base Salary shall be reviewed annually on the Company’s regular executive
salary review schedule, and shall be subject to upward but not lower adjustment
at the discretion of the CEO and Organization and Compensation Committee of the
Board of Directors.

 

(b)  Annual Bonus.  During the Employment Period, commencing in calendar year
2005, the Executive shall be eligible for a target annual incentive bonus of
100% of the Executive’s Base Salary as in effect at the end of the Bonus Year
determined pursuant to the terms of the senior management incentive plan as in
effect from time to time; provided, however, that (i) Executive’s maximum bonus
for the 2005 Bonus Year shall be 150% of his Base Salary in effect at the end of
such year and the actual incentive bonus paid for the 2005 Bonus Year shall not
be less than $700,000; (ii) Executive’s maximum bonus for Bonus Years after 2005
shall be established in accordance with the Company’s shareholder-approved
Senior Officer Incentive Compensation Plan as it may be amended from time to
time; and (iii) the Executive’s annual incentive bonus for each of Bonus Years
shall be subject to the terms and conditions of the Aon Incentive Stock Program.

 

(c)  Stock Award.  On the Effective Date, the Executive shall receive a
restricted stock unit award of 125,000 shares of common stock of the Company,
which restricted stock units shall be subject to terms and conditions generally
applicable to restricted stock unit grants under the Aon Stock Incentive Plan;
provided, however, such stock shall vest in installments of 12,500 shares at the
end of each of the first four years beginning on the Effective Date and in a
final installment of 75,000 shares at the end of the fifth year beginning on the
Effective Date.  In the event of termination of the Executive’s employment by
the Company without Cause pursuant to Sections 4(d) and 4(f) hereof such award
shall fully vest as of the date of termination.

 

(d)  Stock Option.  (i)  On the Effective Date, the Executive shall be granted 
non-qualified option of 175,000 shares of the common stock of the Company.  The
non-qualified stock option shall be granted pursuant to the terms of the Aon
Stock Incentive Plan. Such options shall vest in accordance with the terms
generally applicable to option grants under the Aon Stock Incentive Plan;
provided, however, such option shall vest 33% at the end of the second year
beginning on the Effective Date and 33% and 34% respectively, on the end of each
of the third and fourth years beginning on the Effective Date.  In the event of
termination of the Executive’s employment by the Company without Cause pursuant
to Sections 4(d) and 4(f) hereof such option shall fully vest as of the date of
termination.

 

(e)  Other Benefits.  During the Employment Period, the Executive shall be
entitled to participate in the Company’s employee benefit plans generally
available to executives of the Company (such benefits being hereinafter referred
to as the “Employee Benefits”). The Executive also shall be entitled to vacation
(not less than 4 weeks per year) or illness in accordance with the Company’s
policy for executives and to receive all other fringe benefits as are from time
to time made generally available to executives of the Company.

 

(f)  Expense Reimbursement.  During the Employment Period the Company shall
reimburse the Executive in accordance with the Company’s policies and
procedures, for all proper expenses incurred by him in the performance of his
duties hereunder.

 

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4.             Termination.  (a)  Death.  Upon the death of the Executive, this
Agreement shall automatically terminate and the Executive’s executor,
administrator or designated beneficiary shall be entitled to receive the
Executive’s Base Salary which shall have accrued to the date of such death.  The
Company shall pay to the Executive’s executor or administrator of Executive’s
estate a lump sum cash amount equal to the Executive’s  Base Salary, at the rate
in effect at the date of such death, to which the Executive would have been
entitled from the date of such death until the end of the Employment Period,
reduced by the amount of any benefit paid under any individual or group  life
insurance policy maintained by the Company for the benefit of the Executive.

 

 (b)  Disability.  The Company may, at its option, terminate this Agreement upon
written notice to the Executive if the Executive, because of physical or mental
incapacity or disability, fails to perform the essential functions of his
position, with reasonable accommodation, if relevant, required of him hereunder
for a continuous period of 120 days or any 180 days within any 12-month period. 
Upon such termination, the Executive or his legal representative shall be
entitled to receive the Base Salary which shall have accrued to the date of
termination, plus continuation of Base Salary, at the rate in effect at the date
of such termination of employment, until the end of the Employment Period;
provided, however, that the amount of any benefit payable under any disability
insurance policy maintained by the Company for the benefit of the Executive
shall be deducted from the payments of such Base Salary.  In the event of any
dispute regarding the existence of the Executive’s incapacity or disability
hereunder, the matter shall be resolved by the determination of an independent
physician agreed to between the Executive and the Company specializing in the
claimed area of incapacity or disability.  The Executive shall submit to
appropriate medical examinations for purposes of such determination.

 

(c)  Cause.  (i)  The Company may at any time, at its option, terminate the
Executive’s employment under this Agreement immediately for Cause (as
hereinafter defined).  The Company’s decision in this regard shall be taken by
the  Governance Committee of the Board (“Governance Committee”).  The Executive
shall be given at least seven days advanced written notice of any meeting at
which the Governance Committee proposes to put forward for a vote a decision on
whether or not to terminate the Executive for Cause and the written notice shall
describe in reasonable detail the basis on which the Governance Committee may
conclude that Cause exists.  The Executive shall have the opportunity to appear
in person and to make such written and/or oral presentation to such meeting of
the Governance Committee as the Executive thinks fit.  If a majority of the
Governance Committee authorizes by affirmative vote a termination for Cause at
such meeting (whether or not the Executive makes any oral or written
presentations at such meeting) such determination shall be final and binding
upon the Company and the Executive once such decision is confirmed in writing
and communicated to the Executive.

 

(ii)  As used in this Agreement, the term “Cause” shall mean any one or more of
the following:

 

(A)  any failure or inability (other than by reason of physical or mental
disability determined in accordance with Section 4(b)) of the Executive to
perform his material duties under this Agreement to the satisfaction of at least
a majority of the members of the Governance Committee, including, without
limitation, any refusal by the

 

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Executive to perform such duties or to perform such specific directives of the
CEO which are consistent with the scope and nature of the Executive’s duties and
responsibilities under this Agreement;

 

(B)  any intentional act of fraud, embezzlement or theft by the Executive in
connection with his duties hereunder or in the course of his employment
hereunder or the Executive’s admission or conviction of, or plea of nolo
contendere to, a felony or of any crime involving moral turpitude, fraud,
embezzlement, theft or misrepresentation;

 

(C)  any gross negligence or willful misconduct of the Executive resulting in a
loss to the Company or any of its subsidiaries, or damage to the reputation of
the Company or any of its subsidiaries;

 

(D)  any breach by the Executive of any one or more of the covenants contained
in Section 6, 7 or 8 hereof; or

 

(E)  any violation of any statutory or common law duty of loyalty to the Company
or any of its subsidiaries.

 

(iii)  The exercise of the right of the Company to terminate this Agreement
pursuant to this Section 4(c) shall not abrogate the rights or remedies of the
Company in respect of the breach giving rise to such termination.

 

(iv)  If the Company terminates the Executive’s employment for Cause, as defined
in Section 4(c)(ii)(B), (C), (D) or (E), he shall be entitled to:

 

(A)  accrued Base Salary through the date of the termination of his employment;
and

 

(B)  other Employee Benefits to which the Executive is entitled upon his
termination of employment with the Company, including regular and supplemental
retirement and disability benefits, in accordance with the terms of the plans
and programs of the Company.

 

(v)  if the Company terminates the Executive’s employment for Cause, as defined
in Section 4(c)(ii)(A), he shall be entitled to:

 

(A)        the payments specified by Sections 4(c)(iv)(A) and (B); and

 

(B)           the continuation of the Base Salary, at the rate in effect at the
date of such termination of employment, for a period of two years from the date
of such termination of employment.

 

 (d)  Termination Without Cause.  If, during the Employment Period, the Company
terminates the employment of the Executive hereunder for any reason other than a
reason set forth in Section 4(a), (b) or (c), the Company shall give the
Executive 12 months prior written notice of such termination, and:

 

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(i)  Concurrent with such termination, the Executive shall be entitled to
receive the payments and benefits specified by Sections 4(c)(iv)(A) and (B);

 

(ii) a lump sum cash payment equal to the product of (x) two, and (y) the sum of
the Base Salary and the Executive’s target annual incentive bonus under the
Senior Executive Plan for the Bonus Year in which the Executive’s employment
terminates; provided that for this purpose the Executive’s Base Salary and
target annual bonus shall be no less than his initial Base Salary and initial
target bonus.

 

Notwithstanding the foregoing provisions of this Section 4(d), if any payment
specified by this Section 4(d) would not be deductible by the Company for
federal income tax purposes by reason of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the “Code”), or any similar or successor statute
(excluding Section 280G of the Code), such payment shall be deferred and the
amount thereof (plus earnings thereon in accordance with the terms of such
deferral) shall be paid to the Executive at the earliest time that such payment
shall be deductible by the Company.

 

(e)  Voluntary Termination.  The Executive may voluntarily terminate his
employment with the Company prior to the end of the Employment Period for any
reason.  If the Executive voluntarily terminates his employment pursuant to this
Section 4(e), the Executive shall give the Company 12 months prior written
notice and shall be entitled to the payments specified by Sections 4(c)(iv)(A)
and (B).

 

(f) Termination for Good Reason.  (i) Upon 30 days prior written notice to the
Company, the Executive may voluntarily terminate the Executive’s employment with
Good Reason (as hereinafter defined). If the Executive voluntarily terminates
employment pursuant to this Section 4(f), the Executive’s entitlement to
compensation and benefits shall cease immediately, except that the Executive
shall be entitled to the payments and benefits specified in Section 4(d);

 

(ii) As used in this Agreement, the term “Good Reason” shall mean during the
Employment Period, without the written consent of the Executive, the following,
provided that an isolated, insubstantial or inadvertent action not taken in bad
faith or failure not occurring in bad faith which is remedied by the Company
promptly after receipt of notice thereof given by the Executive shall not
constitute Good Reason:

 

(A)      the assignment to the Executive of duties materially inconsistent in
any respect with the Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by this Agreement;

 

(B) any failure by the Company to comply with the provisions of Section 3
hereof;

 

(C) any requirement by the Company that the Executive’s principal office be
located more than 50 miles outside of the greater Chicago metropolitan area; or

 

(D)        any other material breach by the Company of this Agreement.

 

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5.             Federal and State Withholding.  The Company shall deduct from the
amounts payable to the Executive pursuant to this Agreement the amount of all
required federal, state and local withholding taxes in accordance with the
Executive’s Form W-4 on file with the Company, and all applicable federal
employment taxes.

 

6.             Noncompetition; Nonsolicitation.  (a)  General.  The Executive
acknowledges that in the course of his employment with the Company he has and
will become familiar with trade secrets and other confidential information
concerning the Company and its subsidiaries and that his services will be of
special, unique and extraordinary value to the Company and its affiliates.

 

(b)  Noncompetition.  The Executive agrees that during the period of his
employment with the Company and for a period of two years thereafter (the
“Noncompetition Period”) he shall 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 he shall 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 for any purpose whatsoever.

 

(d)  Exceptions.  (i) Section 6 (b) shall not apply if the employment of the
Executive is terminated pursuant to Sections 4(d) or 4(f); (ii) Section 6(b)
shall not apply if, after termination of employment, Executive is employed by
McKinsey & Company or substantially similar strategic consulting firm, however,
Section 6(b) shall apply if Executive is employed by Mercer Consulting or one of
its affiliates or any other consulting firm which is predominately in the
business of employee benefits consulting or human resources outsourcing; (iii)
nothing in this Section 6 shall prohibit the Executive from being (A) a
stockholder in a mutual fund or a diversified investment company or (B) 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
Executive has no active participation in the business of such corporation.

 

(e)  Reformation.  If, at any time of enforcement of this Section 6, 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 shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area
permitted by law.  This Agreement shall not authorize a court to increase or
broaden any of the restrictions in this Section 6.

 

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(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 shall be made and provided in
consideration of the Executive’s agreements contained in Section 6 hereof.  In
the event that the Executive shall commit a material breach of any provision of
Section 6 hereof, the Company shall 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 shall have no further liability
to the Executive under this Agreement.

 

7.             Confidentiality.  The Executive shall not, at any time during the
Employment Period or thereafter, make use of or disclose, directly or
indirectly, any (i) trade secret or other confidential or secret information of
the Company or of any of its subsidiaries or (ii) other technical, business,
proprietary or financial information of the Company or of any of its
subsidiaries not available to the public generally or to the competitors of the
Company or to the competitors of any of its subsidiaries (“Confidential
Information”), except to the extent that such Confidential Information (a)
becomes a matter of public record or is published in a newspaper, magazine or
other periodical available to the general public, other than as a result of any
act or omission of the Executive, (b) is required to be disclosed by any law,
regulation or order of any court or regulatory commission, department or agency,
provided that the Executive gives prompt notice of such requirement to the
Company to enable the Company to seek an appropriate protective order, or (c) is
necessary to perform properly the Executive’s duties under this Agreement. 
Promptly following the termination of the Employment Period, the Executive shall
surrender to the Company all records, memoranda, notes, plans, reports, computer
tapes and software and other documents and data which constitute Confidential
Information which he may then possess or have under his control (together with
all copies thereof).

 

8.             Inventions.  The Executive hereby assigns to the Company his
entire right, title and interest in and to all discoveries and improvements,
patentable or otherwise, trade secrets and ideas, writings and copyrightable
material, which may be conceived by the Executive or developed or acquired by
him during the Employment Period, which may pertain directly or indirectly to
the business of the Company or any of its subsidiaries.  The Executive agrees to
disclose fully all such developments to the Company upon its request, which
disclosure shall be made in writing promptly following any such request.  The
Executive shall, 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 subsidiaries to file and prosecute
applications for, and to acquire, maintain and enforce, all patents, trademarks
and copyrights in all countries.

 

9.             Enforcement.  The parties hereto agree that the Company and its
subsidiaries would be damaged irreparably in the event that any provision of
Section 6, 7, or 8 of this Agreement were not performed in accordance with its
terms or were otherwise breached and that money damages would be an inadequate
remedy for any such nonperformance or breach.  Accordingly, the Company and its
successors and permitted assigns shall be entitled, in addition to other rights
and remedies existing in their favor, to an injunction or injunctions to prevent
any breach or threatened breach of any of such provisions and to enforce such
provisions specifically (without posting a bond or other security).  The
Executive agrees that he will submit himself to

 

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the personal jurisdiction of the courts of the State of Illinois in any action
by the Company to enforce any provision of Section 7, 8 or 9 of this Agreement.

 

10.          Survival.  Sections 3, 4, 6, 7, 8, 9 and 10 of this Agreement shall
survive and continue in full force and effect in accordance with their
respective terms, notwithstanding any termination of the Employment Period.

 

11.          Notices.  All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given when (i)
delivered personally or by overnight courier to the following address of the
other party hereto (or such other address for such party as shall be specified
by notice given pursuant to this Section 12) or (ii) sent by facsimile to the
following facsimile number of the other party hereto (or such other facsimile
number for such party as shall be specified by notice given pursuant to this
Section 12), with the confirmatory copy delivered by overnight courier to the
address of such party pursuant to this Section 12:

 

If to the Company, to:

 

Aon Corporation

200 East Randolph

Chicago, Illinois 60601

Attention: President and Chief Executive Officer

 

with copies to:

 

Aon Corporation

200 East Randolph

Chicago, Illinois 60601

Attention: General Counsel

 

If to the Executive, to the Executive’s home address as shown on the Company’s
records.

 

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

 

14.          Entire Agreement.  This Agreement constitutes the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes and preempts any prior understandings, agreements or
representations by or between the parties, written or oral, which may have
related in any manner to the subject matter hereof.

 

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15.          No Mitigation.  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 such amounts shall not be reduced whether or not the Executive obtains other
employment.

 

16.          Successors and Assigns.  This Agreement shall be enforceable by the
Executive and his heirs, executors, administrators and legal representatives,
and by the Company  and its successors and assigns, and shall be binding on such
successors and assigns.

 

17.          Headings; Inconsistency.  Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.  In the event of any inconsistency
between the terms of this Agreement and any form, award (including the award
agreements attached hereto as Exhibits A, B and C), plan or policy of the
Company or any other agreement between the Executive and the Company, the terms
of this Agreement shall control.

 

18.          Governing Law.  This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Illinois
without regard to principles of conflict of laws.

 

19.          Amendment and Waiver.  The provisions of this Agreement may be
amended or waived only by the written agreement of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

 

20.          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.

 

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

 

AON CORPORATION

 

 

By:

/s/ Jeremy Farmer

 

Title:

Senior Vice President

 

 

EXECUTIVE:

 

 

/s/ Andrew M. Appel

Andrew M. Appel

 

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