Exhibit 10
AON 1998 EMPLOYEE STOCK PURCHASE PLAN
Aon Corporation, a Delaware corporation, hereby adopts this Aon 1998
Employee Stock Purchase Plan (the "Plan") as of the Effective Date. The purposes
of this Plan are as follows:
(1) To assist eligible employees of the Company and its
Participating Subsidiaries in acquiring a stock ownership
interest in the Company pursuant to a plan which is intended to
qualify as an "employee stock purchase plan" under Section 423
of the Internal Revenue Code of 1986, as amended.
(2) To help eligible employees provide for their future security and
to encourage them to remain in the employment of the Company and
its Participating Subsidiaries.
Definitions.
Whenever any of the following terms is used in the Plan with the first
letter or letters capitalized, it shall have the following meaning unless the
context clearly indicates to the contrary (such definitions to be equally
applicable to both the singular and plural forms of the terms defined):
(a) "Code" means the Internal Revenue Code of 1986, as amended.
(b) "Committee" means the Organization and Compensation Committee of
the Board of Directors of the Company.
(c) "Company" means Aon Corporation, a Delaware corporation.
(d) "Dates of Exercise" means the dates as of which an Option is
exercised and the Stock subject to that Option is purchased.
With respect to any Option, the Dates of Exercise are the last
day of June and December on which Stock is traded on the New
York Stock Exchange during the Option Period in which that
Option was granted.
(e) "Date of Grant" means the date as of which an Option is granted,
as set forth in paragraph 3(a).
(f) "EligibleCompensation" means the following types of earnings
paid to an Eligible Employee for his service on behalf of the
Company:
(i) salary and fixed-based compensation including
compensation for overtime;
(ii) bonuses paid pursuant to periodic individual performance
appraisals and formal contractual bonus programs, but
excluding other bonus and miscellaneous income; and
(iii) net commission, renewal and override compensation (but
excluding deferred commission payments).
(g) "Effective Date" means July 1,1998.
(h) "EligibleEmployee" means any employee of the Company or a
Participating Subsidiary who meets the following criteria:
(i) the employee does not, immediately after the Option is
granted, own (within the meaning of Section 423(b)(3)
and 424(d) of the Code) stock possessing five percent or
more of the total combined voting power or value of all
classes of stock of the Company or of a Subsidiary;
(ii) the employee has completed one year of employment for
the Company or a Subsidiary; and
(iii) the employee's customary employment is 20 hours or more
a week.
(i) "Option" means an option granted under the Plan to an Eligible
Employee to purchase shares of Stock.
(j) "Option Period" means with respect to any Option the period
beginning upon the Date of Grant and ending on the last day of
June or December immediately following the Date of Grant,
whichever is earlier, or ending on such other date as the
Committee shall determine. No Option Period may exceed 27 months
from the Date of Grant.
(k) "Option Price" with respect to any Option has the meaning set
forth in paragraph 4(b).
(l) "Participant" means an Eligible Employee who has complied with
the provisions of paragraph 3(b).
(m) "Participating Subsidiary" means any present or future
Subsidiary that the Committee designates to be eligible to
participate in the Plan, and that elects to participate in the
Plan.
(n) "Periodic Deposit Account" means the account established and
maintained by the Company to which shall be credited pursuant to
Section 3(c) amounts received from Participants for the purchase
of Stock under the Plan.
(o) "Plan" means this Aon 1998 Employee Stock Purchase Plan.
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(p) "Plan Year" means the calendar year.
(q) "Stock" means shares of common stock, par value $1.00 per share,
of the Company.
(r) "Stock Purchase Account"means the account established and
maintained by the Company to which shall be credited pursuant to
Section 4(c) Stock purchased upon exercise of an Option under
the Plan.
(s) "Subsidiary" means any corporation, other than the Company, in
an unbroken chain of corporations beginning with the Company, if
at the time of the granting of the Option, each of the
corporations, other than the last corporation, in the unbroken
chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
2. Stock Subject to Plan.
Subject to the provisions of paragraph 8 (relating to adjustment upon
changes in the Stock), the Stock which may be sold pursuant to Options granted
under the Plan shall not exceed in the aggregate five million (5,000,000)
shares, and may be newly issued shares or treasury shares or shares bought in
the market, or otherwise, for purposes of the Plan.
3. Grant of Options.
(a) General Statement. The Company may grant Options under the Plan
to all Eligible Employees on January 1 and/or July 1 of each
Plan Year or on such other date as the Committee shall
designate. The term of each Option shall end on the last day of
the Option Period with respect to which the Option is granted.
With respect to each Option Period, each Eligible Employee shall
be granted an Option, on the Date of Grant, for as many full and
fractional shares of Stock as the Eligible Employee may purchase
with up to 15% of the Eligible Compensation he or she receives
during the Option Period (or during any portion of the Option
Period as the Eligible Employee may elect to participate).
(b) Election to Participate. Each Eligible Employee who elects to
participate in the Plan shall communicate to the Company, in
accordance with procedures established by the Committee, an
election to participate in the Plan whereby the Eligible
Employee designates a stated whole percentage equaling at least
1%, but no more than 15%, of his or her Eligible Compensation
during the Option Period to be deposited periodically in his or
her Periodic Deposit Account under subparagraph (c). The
cumulative amount deposited in the Periodic Deposit Account
during a Plan Year with respect to any Eligible Employee may not
exceed the limitation stated in subparagraph (d).
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A Participant's election to participate in the Plan shall
continue in effect during the current and subsequent Option
Periods until changed pursuant to subparagraph 3(c).
(c) Periodic Deposit Accounts. The Company shall maintain a Periodic
Deposit Account for each Participant and shall credit to that
account in U.S. dollars all amounts received under the Plan from
the Participant. No interest will be paid to any Participant or
credited to his or her Periodic Deposit Account under the Plan
with respect to such funds. All amounts credited to a
Participant's Periodic Deposit Account shall be used to purchase
Stock under subparagraph 4(c); provided, however, a
Participant's Periodic Deposit Account shall be refunded to him
or her on receipt by the Company prior to a Date of Exercise in
accordance with procedures established by the Company, of a
Participant's request for such a refund.
Credits to an Eligible Employee's Periodic Deposit Account shall
be made by payroll deduction or by other alternate payment
arrangements, in accordance with rules and procedures
established by the Committee. An Eligible Employee may eliminate
the periodic credits to his or her Periodic Deposit Account for
future periods by filing a new election amount at any time
during an Option Period. The change shall become effective in
accordance with the Committee's rules and procedures as soon as
practicable after the Company receives the election, but the
change will not affect the amounts deposited with respect to
Eligible Compensation sooner than the Eligible Compensation
payable with respect to the next pay period after the Company
receives the authorization.
(d) Purchase Limitation. No Eligible Employee shall be permitted to
purchase Stock under the Plan or under any other employee stock
purchase plan of the Company or of any Subsidiary which is
intended to qualify under Section 423 of the Code, at a rate
which exceeds $12,500 in fair market value of Stock (determined
by reference to the average of the high and low price of a share
of Stock as quoted on the New York Stock Exchange on the Date of
Grant) for each Option Period in which any such Option granted
to such Participant is outstanding at any time. In the event the
Committee determines to make an Option Period shorter or longer
than six months, the foregoing $12,500 limitation shall be
ratably adjusted but in no event shall the limit be greater than
$25,000 in any one calendar year. The Committee shall have the
discretion to impose a reduced limitation on appropriate notice
in advance of any Option Period.
4. Exercise of Options.
(a) General Statement. On each Date of Exercise, the entire Periodic
Deposit Account of each Participant shall be used to purchase at
the Option Price whole and/or fractional shares of Stock subject
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to the Option. Each Participant automatically and without any
act on his or her part will be deemed to have exercised his or
her Option on each such Date of Exercise to the extent that the
amounts then credited to the Participant's Periodic Deposit
Account under the Plan are used to purchase Stock.
(b) Option Price Defined. The Option Price per share of Stock to be
paid by each Participant on each exercise of his or her Option
shall be an amount in U.S. dollars equal to the lower of 85% of
the fair market value of a share of Stock as of the Date of
Grant or the applicable Date of Exercise. The fair market value
of a share of Stock as of an applicable Date of Grant or Date of
Exercise shall be the average of the high and low price of a
share of Stock as quoted on the New York Stock Exchange on such
date.
(c) Stock Purchase Accounts; Stock Certificates. The Company shall
cause to be maintained a Stock Purchase Account for each
Participant to reflect the Stock purchased under the Plan by the
Participant. Upon exercise of an Option by a Participant
pursuant to subparagraph 4(a), the Company shall cause whole
shares of Stock purchased at that time to be issued to the
Participant's Stock Purchase Account. Any fractional shares of
Stock resulting from the exercise of an Option shall be credited
to an Eligible Employee's Periodic Deposit Account to be used
for the purchase of Stock in the next following Option Period
unless the Company has received prior notice from an Eligible
Employee of the elimination of periodic credits in accordance
with subparagraph 4 (c) of this Plan.
(d) Except as provided in paragraph 5, certificates with respect to
Stock held in a Participant's Stock Purchase Account shall be
issued only on request by the Participant for a distribution of
whole shares or when necessary to comply with the transaction
requirements outside the United States. Upon issuance of such a
Stock certificate to a Participant, the Participant's Stock
Purchase Account shall be adjusted to reflect the number of
shares of Stock distributed to the Participant.
5. Rights on Retirement, Death, Termination of Employment.
If a Participant retires, dies, or otherwise terminates employment, or
if the corporation that employs a participant ceases to be a Participating
Subsidiary, then to the extent practicable, no further amounts shall be credited
to the Participant's Periodic Deposit Account from any pay due and owing with
respect to the participant after such retirement, death, or other termination of
employment. All amounts credited to such a Participant's Periodic Deposit
Account shall be returned to the Participant or used on the next Date of
Exercise in that Option Period to purchase Stock under paragraph 4, based upon
the election by the Participant or his or her personal representative. Such a
Participant's Stock Purchase Account shall be terminated, and Stock certificates
with respect to whole shares of Stock and cash with respect to fractional shares
of Stock shall be distributed as soon as practicable after such Date of
Exercise.
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Notwithstanding anything in this Plan to the contrary, a Participant's
Option shall not be exercisable more than three months after the Participant
retires or otherwise ceases to be employed by the Company or a Participating
Subsidiary, including as a result of the corporation ceasing to be a
Participating Subsidiary, except to the extent permitted under Section 423(a) of
the Code.
6. Restriction Upon Assignment of Options.
An Option granted under the Plan shall not be transferrable otherwise
than by will or the laws of descent and distribution, and is exercisable during
the Participant's lifetime only by the Participant. The Company will not
recognize and shall be under no duty to recognize any assignment or purported
assignment by a Participant, other than by will or the laws of descent and
distribution, of the Participant's interest in the Plan or of his or her Option
or of any rights under his or her Option.
7. No Rights of Stockholder Until Exercise of Option.
A Participant shall not be deemed to be a stockholder of the Company,
nor have any rights or privileges of a stockholder, with respect to the number
of shares of Stock subject to an Option. A Participant shall have the rights and
privileges of a stockholder of the Company when, but not until, the
Participant's Option is exercised pursuant to subparagraph 4(a) and the Stock
purchased by the Participant at that time has been credited to the Participant's
Stock Purchase Account.
8. Changes in the Stock; Adjustments of an Option.
If, while any Options are outstanding, the outstanding shares of Stock
have increased, decreased, changed into, or been exchanged for a different
number or kind of shares or securities of the Company, or there has been any
other change in the capitalization of the Company, through reorganization,
merger, recapitalization, reclassification, stock split, reverse stock split,
spinoff or similar transaction, appropriate or proportionate adjustments may be
made by the Committee in the number and/or kind of shares which are subject to
purchase under outstanding Options and to the Option Exercise Price or prices
applicable to such outstanding Options, including, if the Committee deems
appropriate, the substitution of similar options to purchase shares of another
Company (with such other company's consent). In addition, in any such event, the
number and/or kind of shares which may be offered in the Options shall also be
proportionately adjusted. No adjustments to outstanding Options shall be made
for dividends paid in the form of stock.
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9. Use of Funds; Repurchase of Stock.
All funds received or held by the Company under the Plan will be
included in the general funds of the Company free of any trust or other
restriction and may be used for any corporate purpose. The Company shall not be
required to repurchase from any Eligible Employee shares of Stock which such
Eligible Employee acquires under the Plan.
10. Administration by Committee.
(a) Duties and Powers of The Committee. It shall be the duty of the
Committee to conduct the general administration of the Plan in
accordance with its provisions. The Committee shall have the
power to:
(1) determine when the initial and subsequent Options
Periods will commence;
(2) interpret the Plan and the Options;
(3) adopt such rules for the administration, interpretation,
and application of the Plan as are consistent with the
Plan and Section 423 of the Code; and
(4) interpret, amend, or revoke any such rules.
In its absolute discretion, the Board of Directors of the Company may at
any time and from time to time exercise any and all rights and duties of the
Committee under the Plan. The Committee may delegate any of its responsibilities
under the Plan by designating in writing other persons who carry out any or all
of such responsibilities.
(b) Majority Rules. The Committee shall act by a majority of its
members in office. The Committee may act either by vote at a
meeting or by a memorandum or other written instrument signed by
a majority of the Committee.
(c) Compensation; Professional Assistance; Good Faith Actions. All
expenses and liabilities incurred by members of the Committee in
connection with the administration of the Plan shall be borne by
the Company. The Committee may employ attorneys, consultants,
accountants, appraisers, brokers, or other persons. The
Committee, the Company, and its officers and directors shall be
entitled to rely upon the advice, opinions, or valuations of any
such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be
final and binding upon all Participants, the Company and all
other interested persons. No member of the Committee shall be
personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or
the Options, and all members of the Committee shall be
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fully protected by the Company in respect to any such action,
determination or interpretation.
11. No Rights as an Employee.
Nothing in the Plan nor any Option shall be construed to give any person
(including any Eligible Employee or Participant) the right to remain in the
employ of the Company or a Subsidiary or to affect the right of the Company and
Subsidiaries to terminate the employment of any person (including any Eligible
Employee or Participant) at any time with or without cause, to the extent
otherwise permitted under law.
12. Amendment of the Plan.
The Board of Directors of the Company, or its delegate, may amend,
suspend, or terminate the Plan at any time; provided that approval by the vote
of the holders of more than 50% of the outstanding shares of the Stock entitled
to vote shall be required to amend the Plan to reduce the Exercise Price or
increase the number of shares of Stock reserved for the Options under the Plan.
13. Effect Upon Other Plans.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any Subsidiary, except to the
extent required by law. Nothing in this Plan shall be construed to limit the
right of the Company or any Subsidiary (a) to establish any other forms of
incentives or compensation for employees of the Company or any Subsidiary or (b)
to grant or assume options otherwise than under this Plan in connection with any
proper corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
14. Notices.
Any notice to be given under the terms of the Plan to the Company shall
be addressed to the Company in care of the Committee and any notice to be given
to the Eligible Employee shall be addressed to the Eligible Employee at his or
her last address as reflected in the Company's records. By a notice given
pursuant to this paragraph, either party may hereafter designate a different
address for notices to be given to it or the Eligible Employee. Any notice which
is required to be given to the Eligible Employee shall, if the Eligible Employee
is then deceased, be given to the Eligible Employee's personal representative if
such representative has previously informed the Company of his or her status and
address by written notice under this paragraph. Any notice shall have been
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deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office,
branch post office, or other depository regularly maintained by the United
States Post Office.
15. Titles.
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of the Plan.
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