Aon CORPORATION
1994 AMENDED AND RESTATED OUTSIDE
DIRECTOR STOCK AWARD PLAN
1. PURPOSE: Aon Corporation (the "Company") has established the 1994 Amended
and Restated Outside Director Stock Award Plan (the "Plan"). The purposes of
the Plan are to attract and retain well qualified persons for service as
directors of the Company, who are not salaried employees of the Company or any
of its subsidiaries ("Outside Directors"); and to provide such Outside Directors
with the opportunity to increase their proprietary interest in the Company, and
thereby to increase their personal interest in the Company's continued success,
through the payment of a portion of directors' fees and through the payment of
retirement income in the form of shares of the Company Common Stock, $1.00 par
value ("Common Stock").
2. ADMINISTRATION: The Organization and Compensation Committee (the
"Committee") of the Board of Directors of Aon Corporation will have the
responsibility and authority to administer and interpret the provisions of the
Plan.
In administering the Plan, the Committee may employ attorneys, consultants,
accountants or other persons, and the Company and the Committee shall be
entitled to rely upon the advice, opinions or valuation of any such persons.
All usual and reasonable expenses of the Committee shall be paid by the Company.
No member of the Committee shall be personally liable for any action,
determination or interpretation taken or made with respect to the Plan or awards
made thereunder, and all members of the Committee shall be fully indemnified and
protected by the Company in respect of any such action, determination or
interpretation, in the absence of a fraudulent act or omission.
3. ELIGIBILITY: Awards under the Plan shall be available to all Outside
Directors; provided, that no director who is an employee of the Company or any
of its subsidiaries shall be eligible for participation in the Plan.
1
4. AWARDS:
(a) ANNUAL AWARDS: At each meeting of the Board of Directors of the
Company (the "Board") next following the Annual Meeting of Stockholders of the
Company (the "Annual Meeting of the Board") beginning with the meeting to be
held on April 20, 1990 (the "Effective Date"), each Outside Director shall be
awarded 300 shares of Common Stock (the "Annual Fees Award") subject to and in
accordance with the terms of Section 5. Each such award shall be evidenced by a
written agreement, executed by the Outside Director and the Company.
In the case of an Outside Director who is appointed to the Board other than
at the Annual Meeting of Stockholders in any year, such Outside Director shall
be awarded a prorated number of full shares of Common Stock based on the number
of prospective full months of service during the year to end at the then next
Annual Meeting of the Board.
(b) RETIREMENT AWARDS:
(i) Beginning April 15, 1994, each Outside Director in office as of
April 15, 1994 will be credited as of each Annual Meeting of the Board
with shares of Common Stock, subject to and in accordance with the
terms of Section 5, with a Market Value equivalent to the product of
(a) each such Outside Director's years of past service as an Outside
Director of the Company, subject to a maximum of 10 years, multiplied
by (b) ten thousand dollars ($10,000) and divided by (c) the number of
years of service from April 15, 1994 to each such Outside Director's
Mandatory Retirement Date (the "Past Service Award").
(ii) Beginning April 15, 1994, for each full year of service as an
Outside Director after April 15, 1994, an Outside Director will be
credited as of each Annual Meeting of the Board with shares of Common
Stock, subject to and in accordance with the terms of Section 5,
equivalent to twenty thousand
2
dollars ($20,000) in value (the "Future Service Award").
(iii) The "Market Value" as of the date of the Annual Meeting of
Stockholders shall mean the arithmetic mean of the high and low prices
of the Common Stock as quoted on the New York Stock Exchange as
published in the Wall Street Journal.
(iv) All accumulated shares (hereinafter referred to as "Retirement
Shares") credited pursuant to this subparagraph (b) shall vest at the
rate of ten percent per year of total service; provided, however, all
Retirement Shares credited pursuant to this subparagraph (b) shall be
100% vested at such time as an Outside Director reaches the Mandatory
Retirement Date. As used herein, a "year of total service" means that
period of time measured from Annual Meeting of Stockholders to the
next following Annual Meeting of Stockholders. As used herein
"Mandatory Retirement Date" shall mean the next regularly scheduled
Annual Meeting of Stockholders immediately following attainment of age
72.
(v) On the first day of the month following the latter of the
Mandatory Retirement Date or the date a Director ceases to serve as a
director, the number of Retirement Shares credited to the Outside
Director will be distributed to the retired Director in ten equal
annual installments.
If an Outside Director retires prior to the Mandatory Retirement
Date, the distribution of vested Retirement Shares shall be deferred
for the lesser of five years from the date services to the Board
ceases, or the number of years remaining until the Mandatory
Retirement Date and shall be paid in equal annual installments over
ten years. Such deferred distribution shall commence on the first day
of the month following the deferral period.
3
In the event of an Outside Director's death following retirement
from the Board any remaining shares payable pursuant to this
subparagraph (b)(v) shall be distributed to the designated beneficiary
or if none then the estate.
(vi) In the event that an Outside Director becomes unable to fulfill
his duties as a director due to death or disability all Retirement
Shares including unaccrued Past Service Awards as of that date shall
be 100% vested and payable to the director in ten equal annual
installments commencing at the beginning of the month following death
or determination of disability.
In the event of an Outside Director's death while an active member of
the Board of Directors, all shares payable pursuant to this
subparagraph (b)(vi) shall be distributed to the designated
beneficiary, or if none then the estate, in ten equal installments.
5. TERMS AND CONDITIONS:
(a) Up to 30,000 shares of Common Stock may be issued pursuant to the Plan.
Shares of Common Stock issued pursuant to the Plan will be drawn from treasury
shares. Such shares will not be registered under the Securities Act of 1933, as
amended (the "Act") and will be "restricted securities" as defined in the Act or
rules promulgated thereunder. Such shares may not be sold, assigned,
transferred or otherwise disposed of in the absence of an effective registration
statement covering such shares, or unless such registration is not required by
reason of an exemption available under the Act. Shares awarded under the Plan
shall be certificated. Certificates for shares issued under the Plan shall
include the following legend:
"The Shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and, accordingly, may not
be offered, sold or otherwise pledged, hypothecated or transferred
unless (A) pursuant to an effective
4
registration statement under the Act or (B) an applicable exemption
from the registration requirements of the Act is available. In
addition, the transferability of this certificate and the shares of
stock represented hereby are subject to the terms and conditions
contained in the Aon Corporation 1994 Amended and Restated Outside
Director Stock Award Plan."
(b) No award of Common Stock received under the Plan may be sold, assigned,
transferred or otherwise disposed of for at least six months after receipt of
the award, unless death or disability of the Outside Director occurs before the
expiration of the six-month period.
(c) An Annual Fees Award received by an Outside Director who does not elect
to defer such receipt as provided in Section 6, shall be shown in the Company's
proxy statement if appropriate for the year in which the Common Stock was
granted, and the Outside Director, as of the date of receipt of the Common
Stock, shall be registered as a "Stockholder of Record" and shall immediately
become entitled to all dividends paid on the Company's Common Stock and to all
voting rights accorded the Company's Common Stock and the shares shall be shown
on the appropriate form for reporting beneficial ownership of securities
pursuant to Section 16 of the Securities Exchange Act of 1934.
(d) The Board shall appropriately adjust the number of shares for which
awards may be granted pursuant to the Plan in the event of reorganization,
recapitalization, stock split, reverse stock split, stock dividend, exchange or
combination of shares, merger, consolidation, rights offering, or any change in
capitalization.
6. DEFERMENT OF ANNUAL FEES AWARD:
(a) Each year the Outside Director may make an irrevocable election to
defer the receipt of the Annual Fees Award until a date agreed upon between the
Outside Director
5
and the Company (the "Distribution Date"). Such election shall be made each
year in advance of the date of the Annual Meeting of Stockholders at which the
Outside Director is standing for election. In the case of an Outside Director
who is elected to the Board other than at the Annual Meeting of Stockholders,
such election to defer shall be in advance of the Board meeting at which the
Outside Director is standing for election.
(b) A bookkeeping account shall be established for each Outside Director's
deferred Annual Fees Award ("Bookkeeping Account"). The Bookkeeping Account
shall reflect the number of shares of Common Stock deferred from time to time by
each Outside Director. The Bookkeeping Account shall also be credited with the
amount of cash dividends each Outside Director would have received from time to
time had the Outside Director actually owned the number of shares credited to
his or her Bookkeeping Account on each dividend payment date. With regard to
the cash dividends, each Outside Director may choose either:
(i) To have the Bookkeeping Account credited with a number of
units("Stock Units") equal to the number of shares of Common Stock
(including fractions of a share) which is equal to the cash dividend
portion of the Bookkeeping Account then attributed to the Outside
Director, assuming the purchase price per share is equal to the Market
Price on such dividend payment date.
(ii) To have the Bookkeeping Account credited with cash and that cash
portion of the Bookkeeping Account shall be credited with interest,
compounded semi-annually at an annual rate determined as of January
1st and July 1st of each year by averaging the one-year Treasury bill
yield as published monthly by the Federal Reserve Bank of St. Louis on
a bank discount basis through the secondary market for the last six
months immediately prior thereto.
6
7. COMPANY'S OBLIGATION: The Company's obligation with respect to each
Outside Director's Bookkeeping Account or Retirement Shares shall be a general
liability of the Company and the Company shall not be required to fund in any
manner any such Bookkeeping Account or Retirement Shares. Any shares of Common
Stock deliverable or cash payable with respect to any Bookkeeping Account or
Retirement Shares shall come solely from the general assets of the Company. The
rights of an Outside Director with respect to any Bookkeeping Account or
Retirement Shares shall be those of an unsecured general creditor. Outside
Directors shall not have the right to vote Common Stock credited to any
Bookkeeping Account or any credited Retirement Shares, and shall not be required
to be shown as owning such Common Stock on any proxy statement and shall not be
required to show such Common Stock on the appropriate form for reporting
beneficial ownership under Section 16 of the Securities Exchange Act of 1934
until the Distribution Date of such Annual Fees Award or receipt of Retirement
Shares after the Mandatory Retirement Date.
8. TRANSFERABILITY: Any award deferred pursuant to Section 6 and/or any
credited Retirement Shares shall not be transferable other than by will or the
laws of descent and distribution, and shall not be receivable prior to the
Distribution Date or the Mandatory Retirement Date with regard to Retirement
Shares, but in no event shall such date be less than six months from the date of
the award, except in the case of the Outside Director's death or disability.
9. REGULATORY COMPLIANCE AND LISTING: The delivery of any shares under this
Plan may be postponed by the Company for such period as may be required to
comply with Federal or State securities laws, including listing requirements,
national securities exchange requirements and any other law or regulation
applicable to the delivery of such shares. The Company shall not be obligated
to deliver any shares under this Plan if such delivery shall constitute a
violation of any provision of any law or any regulation of any governmental
authority or any national securities exchange. In addition, the shares when
delivered may be subject to conditions, including transfer restrictions, if such
conditions are required to
7
comply with applicable securities law.
10. NO RIGHT TO CONTINUE AS OUTSIDE DIRECTOR: Nothing contained in this Plan
shall be construed as conferring upon the Outside Director the right to continue
to be associated with the Company as an Outside Director or in any other
capacity.
11. AMENDMENT OR DISCONTINUANCE: The Board may amend, rescind or terminate the
Plan as it shall deem advisable; provided, however, that no change may be made
more than once every six months and no changes may be made in awards theretofore
granted under the Plan which would impair an Outside Director's rights without
his or her consent.
12. APPROVAL OF PLAN: The Outside Director Stock Award Plan was originally
adopted by the Board on March 16, 1990 and approved by the Company's
stockholders as of April 19, 1991. The 1994 Amended and Restated Outside
Director Stock Award Plan was adopted by the Board on March 18, 1994 and must be
submitted to the Company's stockholders within 18 months of its approval by the
Board. If the Company does not obtain stockholder approval of the 1994 Amended
and Restated Plan within 18 months, any Retirement Awards made subsequent to
March 18, 1994 will be null and void, but the Outside Director Stock Award Plan
will be deemed to have continued unamended and in full force and effect.
13. GOVERNING LAW: This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Illinois
pertaining to contracts made and to be performed wholly within such
jurisdiction, except as Federal Law may apply.
8