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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