Exhibit 10.1
TRANSITION
AGREEMENT
This Transition
Agreement (the “ Agreement ”) is made by and
between AON CORPORATION, a Delaware Corporation (“ Aon
” or the “ Company ”), and DAVID P.
BOLGER ( Mr. Bolger or the “ Executive
”), concerning the Executive’s continued employment and
separation from employment with the Company. The effective
date of this Agreement is October 12, 2007 (the “
Effective Date ”).
WHEREAS , Mr.
Bolger commenced employment with Aon in 2003 pursuant to an
Employment Agreement with Aon effective January 1, 2003 (the
“ Employment Agreement ”);
WHEREAS , Mr.
Bolger was employed as Aon’s Executive Vice President —
Chief Financial Officer and Chief Administrative Officer through
September 30, 2007 and has been employed as Aon’s
Executive Vice President—Chief Financial Officer since such
date;
WHEREAS , Mr.
Bolger and Aon now desire to enter into an agreement setting forth
the terms of Mr. Bolger’s continued employment with the
Company, his separation from employment with the Company, and the
rights and duties of the parties after they enter into this
Agreement.
NOW, THEREFORE , in
consideration of the mutual promises and agreements set forth
herein, and other good and valuable consideration, Aon and Mr.
Bolger hereby agree as follows:
1.
Duties .
(a)
During the period beginning on the Effective Date and continuing
through the earlier of: (i) a date determined by mutual
agreement of the Executive and the Company (whether or not such
date is the date the Company’s successor chief financial
officer has assumed, or will assume, the duties and
responsibilities of such role), (ii) a date determined by the
Company and communicated to the Executive with no less than seven
(7) days advance written notice, or (iii) June 30, 2008 (such
period referred to as the “ Initial Period ”),
the Executive will continue to have the title Executive Vice
President—Chief Financial Officer and shall have such
senior-executive level duties and responsibilities as reasonably
assigned to him by the Company, which shall be consistent with the
level of duties and responsibilities typically assigned to the
chief financial officer of a public company similar in size to the
Company. To allow the Company to comply with its financial
reporting obligations, the Executive agrees that he will relinquish
the role, responsibilities and duties as the Company’s
principal financial officer on the last day of the Initial
Period.
(b)
During the period beginning on the first day after the Initial
Period and continuing through July 1, 2008 (the “
Transition Period ”), the Executive shall have such
senior-executive level duties and responsibilities with the Company
as reasonably assigned to the Executive by the Organization and
Compensation Committee of the Company’s Board of Directors
(the “ Committee ”) or the Company’s Chief
Executive Officer.
(c)
During the period beginning on the Effective Date and continuing
through December 31, 2009 (the “ Continuation Period
”) (which includes and continues beyond the Initial and
Transition Periods), the Executive shall at all times (i) have the
duties and responsibilities as described in Sections 10, 11 and
12 below, (ii) remain an employee of the Company and (iii) take
reasonable and appropriate actions to cooperatively and smoothly
transition the duties and responsibilities of the position of
Executive Vice President — Chief Financial Officer and Chief
Administrative Officer to his successor or successors.
Pursuant to this duty, the Executive shall make himself reasonably
available for meetings and consultation with Company personnel and
shall organize his records in an orderly fashion.
(d)
On and after the Effective Date, the Executive may engage in
outside activities, including membership on boards of for-profit
entities, not-for-profit entities and trade associations, and
employment or consulting with for-profit and not-for-profit
entities; provided, however, that such activities may not
significantly interfere with the Executive’s performance of
his duties hereunder and may not violate the terms of Section 6
(Noncompetition; Nonsolicitation) and Section 7 (Confidentiality)
of the Employment Agreement.
2.
Salary . During the
Continuation Period, the Executive will receive his base salary at
a rate no less than as in effect on the Effective Date.
3.
Benefits . During the
Continuation Period, the Executive will (i) remain eligible for
participation in and benefits under all welfare benefit plans
offered to executives of the Company during such period (including
health, life and disability insurance) on the same terms as offered
to executives of the Company generally, with COBRA continuation
thereafter as applicable, and (ii) remain a participant in the
qualified and non-qualified retirement plans and arrangements of
the Company in which the Executive participates as of the Effective
Date.
4.
2007 Bonus .
(a)
At the time annual bonuses for the 2007 performance year are paid
to executives generally pursuant to the Company’s Senior
Officer Incentive Compensation Plan, the Executive shall be paid a
bonus (the “ 2007 Bonus ”), which shall be paid
fully in cash, not subject to the Company’s Incentive Stock
Program (the “ ISP ”), and which shall be
determined by the Committee pursuant to the terms of this
Agreement. The maximum amount for the 2007 Bonus shall be
$1,500,000 and the guaranteed minimum shall be $1,000,000,
provided, however, that nothing herein shall prevent the Company
from awarding a 2007 Bonus amount that is greater than the
maximum.
(b)
The Committee’s determination of a 2007 Bonus above the
guaranteed minimum shall be based upon (i) achievement of
Company-wide financial objectives for the 2007 performance year, as
determined in the sole discretion of the Committee based upon
the
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Company’s annual
certificate of corporate performance for 2007, and (ii) the
Executive’s performance of his duties during 2007, as
described in Section 1 above.
5.
2008 Bonus .
(a)
At the time annual bonuses for the 2008 performance year are paid
to executives generally pursuant to the Company’s Senior
Officer Incentive Compensation Plan, the Executive may be paid a
bonus (the “ 2008 Bonus ”), which shall be paid
fully in cash, not subject to the ISP, and which shall be
determined by the Committee in its sole discretion. The
target amount for the 2008 Bonus shall be the product of (i) the
number of full or partial months in 2008 in which the Executive
holds the title of Chief Financial Officer, multiplied by
(ii) $112,500 (the “ 2008 Target Amount ”);
provided, however, that nothing herein shall prevent the Company
from awarding a 2008 Bonus amount that is greater than the 2008
Target Amount.
(b)
The Committee’s determination of the amount of the 2008 Bonus
may be based upon (i) achievement of Company-wide financial
objectives for the 2008 performance year, as determined in the sole
discretion of the Committee based upon the Company’s annual
certificate of corporate performance for 2008, and (ii) the
Executive’s reasonable performance of his duties during 2008,
as described in Section 1 above. The Committee shall
review the Executive’s performance of his duties during 2008
at the Committee’s first regularly scheduled meeting
occurring at least seven (7) days after the end of the Initial
Period. The Committee’s determination of the
Executive’s performance during 2008 shall be provided to the
Executive via written notice within seven (7) days of the
Committee’s meeting.
6.
Outstanding Equity Awards
.
(a)
As of the Effective Date, all shares of the Company’s Common
Stock awarded to the Executive pursuant to the January 8, 2003
Award Agreement under the Aon 2001 Stock Incentive Plan (the
“ 2001 Stock Plan ”) are fully vested to the
Executive. On January 8, 2008, the Company or its
transfer agent shall issue in book entry in the Executive’s
name 10,000 shares, or, such net number of shares if the Executive
elects to satisfy the withholding obligation on the 10,000 shares
by the Company withholding shares of common stock, which election
shall be provided to the Company’s designated stock plan
administrator (E*Trade Financial) electronically in accordance with
the rules of the 2001 Stock Plan. In addition, as of the last
day of the Transition Period, the Company or its transfer agent
shall issue in book entry in the Executive’s name any shares
under such January 8, 2003 Award Agreement for which the Executive
had not previously received a stock certificate or that have not
previously been issued in book entry in the Executive’s name,
or, such net number of shares if the Executive elects to satisfy
the withholding obligation by the Company withholding shares of
common stock, which election shall be provided in the manner set
forth above.
(b)
For purposes of all outstanding equity awards of the Executive as
of the last day of the Continuation Period, the Executive shall be
deemed to have an involuntary termination (other than for cause) as
of December 31, 2009.
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7.
Non-Qualified Plans
.
(a)
Notwithstanding any arrangement to the contrary, the
Executive’s full account balance under the Company’s
Deferred Compensation Plan, as amended and restated effective as of
November 1, 2002, and as thereafter amended, shall be paid to the
Executive in a lump sum on July 1, 2010.
(b)
The Executive shall receive a benefit calculated pursuant to the
provisions of Section 3(f) of the Employment Agreement, which
shall be paid to the Executive in five substantially equal annual
installments with the first installment paid on September 1,
2012. The calculation of this benefit will be provided in
writing by the Company to the Executive in connection with the
execution of this Agreement.
8.
Change in Control
Provisions .
(a)
On the date of a Change in Control (as defined below) of the
Company during the Continuation Period: (i) either (A) the
December 2009 Equity (as defined below) shall immediately be fully
vested and nonforfeitable or (B) if such Change in Control occurs
during the Initial Period, all of the Executive’s outstanding
equity-based awards (stock option, restricted stock unit and other
equity-based awards) shall immediately be fully vested and
nonforfeitable, and, in the event of either (A) or (B) all stock
certificates underlying restricted stock or restricted stock unit
awards shall be delivered to the Executive, and (ii) to the
extent any cash payment pursuant to Section 2, 4, 5 or
7 above has not yet been paid to the Executive, such cash
payment shall be made to the Executive in a lump-sum on the date of
the Change in Control.
(b)
For purposes of this Agreement, “ Change in Control
” shall have the same meaning as in the Severance Agreement
between the parties dated as of February 8, 2005 (the “
Change in Control Severance Agreement ”) except
that: (i) clause (1) of such definition shall be satisfied
only if the acquisition of “30% or more” (per such
clause) occurs within the twelve (12)-month period ending on the
date of the most recent acquisition by such person or persons;
(ii) clause (2) of such definition shall be satisfied only if
the applicable change in board membership occurred during a twelve
(12)-month period; (iii) clause (3) of such definition shall be
amended by replacing “60%” with “50%”; and
(iv) clause (4) of such definition is not applicable.
(c)
“ December 2009 Equity ” shall mean the
Executive’s outstanding equity-based awards (stock option,
restricted stock unit and other equity-based awards) that otherwise
would vest to the Executive on December 31, 2009 due to either (i)
the vesting schedule set forth in the applicable award agreement if
the Executive were employed by the Company on December 31, 2009, or
(ii) the terms of the applicable award agreement if Executive had
an involuntary termination (other than for cause) as of December
31, 2009.
(d)
Subject to Section 8(e) below, the Change in Control
Severance Agreement shall be terminated on the Effective
Date.
(e)
Notwithstanding Section 8(d) above, the provisions of
Section 5 of the Change in Control Severance Agreement (relating to
protection from excise tax pursuant to Section 4999 of the Internal
Revenue Code) shall continue to fully apply to the
Executive,
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notwithstanding the
fact that the Executive is no longer entitled to receive payments,
benefits or vesting of equity awards pursuant to the Change in
Control Severance Agreement.
9.
Release of Claims .
The payments and benefits to the Executive pursuant to this
Agreement are contingent upon (i) the Executive executing and
delivering to the Company a release of claims in the form attached
to this Agreement as Attachment A (the “
Release ”), with such execution and delivery occurring
during the twenty-one (21)-day period beginning on the last day of
the Transition Period, and (ii) the Executive not revoking the
Release during the applicable seven (7)-day revocation
period.
10.
Return of Property .
The Executive agrees that on or before the last day of the
Transition Period, or, if earlier, the date set by the Company and
communicated to the Executive in writing with at least seven (7)
days’ written notice, he shall return to the Company all
property of the Company in his possession, custody or control,
including but not limited to the originals and copies of any
information provided to or acquired by the Executive in connection
with the performance of his duties for the Company, including but
not limited to files and documents (including paper files and
documents, as well as all electronic, digital, or magnetic files or
documents, and files or documents stored in any other format), no
matter how produced or reproduced, all computer equipment, programs
and files, and all office keys and access cards, it being hereby
acknowledged that all of said items are the sole and exclusive
property of the Company.
11.
Restrictive Covenants
. The Executive acknowledges that the provisions of Sections
6, 7, 8 and 9 of the Employment Agreement remain in effect during
the Continuation Period.
12.
Cooperation . The
Executive agrees
