Exhibit
10.2


 


EMPLOYMENT AGREEMENT


 


This Employment Agreement (this “Agreement”) is dated
as of May 2, 2005, between Aon Corporation, a Delaware corporation (the “Company”),
and Ted T. Devine (the “Executive”).


 


WHEREAS, the Company seeks to employ Executive as
Executive Vice President – Corporate Strategy of the Company; 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 May 2, 2005 (the “Effective Date”) and shall end on May 1,
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 its Executive Vice President – Corporate
Strategy.  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 strategic planning for the Company.  The Executive shall also perform such other
duties (not inconsistent with the position of Executive Vice President) 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 $700,000 per annum (“Base
Salary”), payable semi-monthly in accordance with the Company’s executive
payroll policy.


 





















 


Such Base Salary shall be reviewed annually on the Company’s regular
executive salary review schedule, and shall be subject to 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 an restricted stock unit award of 100,000 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.  In the
event of termination of the Executive’s employment by the Company without Cause
pursuant to Section 4(d) hereof such award shall continue to vest in accordance
with its full original vesting schedule.


 


(d)  Stock
Option.  (i)  On the Effective Date, the Executive shall be
granted non-qualified option of 150,000 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. 
In the event of termination of the Executive’s employment by the Company
without Cause pursuant to Section 4(d) hereof such option shall continue to
vest in accordance with its full original vesting schedules.


 


(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.


 


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


 


2





















 


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 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;


 


3





















 


(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:


 


(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); and


 


4





















 


(ii)  The
Company shall continue to pay the Executive, until the end of the Employment
Period, his Base Salary at the rate in effect at the date of such termination
of employment; and


 


(iii) The Executive shall continue to be eligible for
bonus payments, as provided by Section 3(b) hereinabove, through the date of
such termination only, the final such bonus to be calculated on a pro rata
calendar year basis as applicable, payable by the Company at such time that the
Company generally pays bonuses to similarly-situated executives.


 


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).


 


 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.


 


5





















 


(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.  Nothing in this Section 6 shall 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 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.


 


(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


 


6





















 


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 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


 


7





















 


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.


 


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.


 


8





















 


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.


 


9





















 


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


 


	
   

  	
  AON CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeremy G.O. Farmer

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  SVP, Head H.R.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/  Ted T.
  Devine

  	
   

  
	
   

  	
  Ted T. Devine

  
					



 


10