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To The Aon Stock Option Plan - AON CORP - 5-14-1999

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To The Aon Stock Option Plan - AON CORP - 5-14-1999 Powered By Docstoc
					Exhibit 10(a) FIRST AMENDMENT TO THE AON STOCK OPTION PLAN AS AMENDED AND RESTATED THROUGH 1997 THIS FIRST AMENDMENT ("First Amendment") TO THE AON STOCK OPTION PLAN AS AMENDED AND RESTATED THROUGH 1997 (the "Plan") is hereby made effective as of the 19th day of March, 1999. RECITALS WHEREAS, the Company deems it in the best interests of the Company to amend certain provisions of the Plan to clarify existing policies, practices and procedures; and WHEREAS, the Company desires to make available to participants in the Plan certain deferral features. NOW, THEREFORE, the Plan is hereby amended as follows: 1. All references in the Plan to "paragraph" when used in conjunction with a specific paragraph number, e.g., "paragraph" 7, shall be changed to "Section." 2. Section 2 of the Plan is hereby amended by deleting the second and third sentences and inserting the following: "Since the adoption of the Plan in 1982, after giving effect to subsequent additions approved by shareholders and stock splits, the aggregate number of shares of Common Stock which may be issued pursuant to options granted under the Plan shall be 23,250,000. The administration of the Plan, agreements relating to Grants, including but not limited to agreements governing unfair competition, forms, practices, procedures, all questions involving the eligibility for Grants, interpretations of the provisions of the Plan, or the operation of the Plan shall be decided by the Committee." 3. Section 4 of the Plan is hereby amended by adding the following as a final sentence: "The Committee in its sole discretion may satisfy its liability under this Section 4 by making a cash payment equal to the Fair Market Value of the shares of Common Stock to be delivered."

4. Section 6 is hereby amended by adding the following as a final sentence: "Any Participant who terminates employment, other than by death or disability, will be permitted to exercise any vested shares for a period of 30 days immediately following the Participant's termination of employment, after which any vested shares will be forfeited." 5. Section 7 is hereby amended by deleting the following sentence: "Shares subject to a Grant shall not be delivered to the Participant until such time as such payment has been made." 6. Section 15 is hereby amended by adding the following as new second and third paragraphs, and moving the current second paragraph to be the fourth paragraph: "To the extent any shares of Common Stock covered by a Grant are not delivered to a Participant or beneficiary because the Grant was forfeited or canceled, or the shares of Common Stock are not delivered because the Grant or exercise of the option is settled in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan.

4. Section 6 is hereby amended by adding the following as a final sentence: "Any Participant who terminates employment, other than by death or disability, will be permitted to exercise any vested shares for a period of 30 days immediately following the Participant's termination of employment, after which any vested shares will be forfeited." 5. Section 7 is hereby amended by deleting the following sentence: "Shares subject to a Grant shall not be delivered to the Participant until such time as such payment has been made." 6. Section 15 is hereby amended by adding the following as new second and third paragraphs, and moving the current second paragraph to be the fourth paragraph: "To the extent any shares of Common Stock covered by a Grant are not delivered to a Participant or beneficiary because the Grant was forfeited or canceled, or the shares of Common Stock are not delivered because the Grant or exercise of the option is settled in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan. If the exercise price of any Grant under this Plan is satisfied by tendering shares of Common Stock to the Corporation (by either actual delivery of by attestation), only the number of shares of Common Stock issued net of shares of Common Stock tendered shall be deemed delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan." 7. There is added a new Section 16 as follows: "The Committee may, in its discretion and subject to such rules as it may adopt, permit a Participant to defer all or a portion of such shares otherwise deliverable pursuant to an exercise of a Grant."

Exhibit 10(b) FIRST AMENDMENT TO THE AON STOCK AWARD PLAN AS AMENDED AND RESTATED THROUGH 1997 THIS FIRST AMENDMENT ("First Amendment") TO THE AON STOCK AWARD PLAN AS AMENDED AND RESTATED THROUGH 1997 (the "Plan") is hereby made effective as of the 19th day of March, 1999. RECITALS WHEREAS, the Company deems it in the best interests of the Company to amend certain provisions of the Plan to clarify existing policies, practices and procedures. NOW, THEREFORE, the Plan is hereby amended as follows: 1. All references in the Plan to "paragraph" when used in conjunction with a specific paragraph number, e.g., "paragraph" 7, shall be changed to "Section." 2. Section 2 of the Plan is hereby amended by deleting the second, third and fourth sentences and inserting the following: "Since the adoption of the Plan in 1987, after giving effect to subsequent additions approved by shareholders and stock splits, the aggregate number of shares of Common Stock which may be issued pursuant to Awards under the Plan shall be 12,900,000. The administration of the Plan, agreements relating to Awards, including but not limited to agreements governing unfair competition, forms, practices, procedures, all questions involving the

Exhibit 10(b) FIRST AMENDMENT TO THE AON STOCK AWARD PLAN AS AMENDED AND RESTATED THROUGH 1997 THIS FIRST AMENDMENT ("First Amendment") TO THE AON STOCK AWARD PLAN AS AMENDED AND RESTATED THROUGH 1997 (the "Plan") is hereby made effective as of the 19th day of March, 1999. RECITALS WHEREAS, the Company deems it in the best interests of the Company to amend certain provisions of the Plan to clarify existing policies, practices and procedures. NOW, THEREFORE, the Plan is hereby amended as follows: 1. All references in the Plan to "paragraph" when used in conjunction with a specific paragraph number, e.g., "paragraph" 7, shall be changed to "Section." 2. Section 2 of the Plan is hereby amended by deleting the second, third and fourth sentences and inserting the following: "Since the adoption of the Plan in 1987, after giving effect to subsequent additions approved by shareholders and stock splits, the aggregate number of shares of Common Stock which may be issued pursuant to Awards under the Plan shall be 12,900,000. The administration of the Plan, agreements relating to Awards, including but not limited to agreements governing unfair competition, forms, practices, procedures, all questions involving the eligibility for Awards, interpretations of the provisions of the Plan, or the operation of the Plan shall be decided by the Committee." 3. Section 4 of the Plan is hereby amended by deleting the fourth sentence of the second paragraph and substituting the following: "The Participant does not have the right to vote any shares subject to an Award or receive dividends on such shares prior to the time they are vested." 4. Section 6 is hereby amended by deleting the second paragraph and inserting the following: "The Committee may, in its discretion and subject to such rules as it may adopt,

permit or, in the absence of the receipt of payment therefore within prescribed time periods, require Participant to pay all or a portion of such taxes arising in connection with vesting of an Award by electing to have the Corporation withhold shares of Common Stock otherwise issuable having a Fair Market Value equal to all or any portion of such tax to be satisfied in this manner." 5. Section 13 is hereby amended by adding the following: "To the extent any shares of Common Stock covered by an Award are not delivered to a Participant or beneficiary because the Award was forfeited or canceled, or the shares of Common Stock are not delivered because the Award or exercise of the option is settled in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan." 6. The text of Section 15 is hereby deleted and the following inserted: "The Committee may, in its discretion and subject to such rules as it may adopt, permit a Participant to defer all or a portion of such shares otherwise deliverable pursuant to an exercise of a Award."

permit or, in the absence of the receipt of payment therefore within prescribed time periods, require Participant to pay all or a portion of such taxes arising in connection with vesting of an Award by electing to have the Corporation withhold shares of Common Stock otherwise issuable having a Fair Market Value equal to all or any portion of such tax to be satisfied in this manner." 5. Section 13 is hereby amended by adding the following: "To the extent any shares of Common Stock covered by an Award are not delivered to a Participant or beneficiary because the Award was forfeited or canceled, or the shares of Common Stock are not delivered because the Award or exercise of the option is settled in cash or used to satisfy the applicable tax withholding obligation, such shares shall not be deemed to have been delivered for purposes of determining the maximum number of shares of Common Stock available for delivery under the Plan." 6. The text of Section 15 is hereby deleted and the following inserted: "The Committee may, in its discretion and subject to such rules as it may adopt, permit a Participant to defer all or a portion of such shares otherwise deliverable pursuant to an exercise of a Award."

Exhibit 12(a) Aon Corporation and Consolidated Subsidiaries Combined With Unconsolidated Subsidiaries Computation of Ratio of Earnings to Fixed Charges

(millions except ratios) Income from continuing operations before provision for income taxes (1) ADD BACK FIXED CHARGES: Interest on indebtedness Interest on ESOP Portion of rents representative of interest factor

First Quarter Ended March 31, Years Ended December 31, ----------------- -----------------------------------------1999 1998 1998 1997 1996 1995 1994 -------- -------- ------- -------- ------- ------- -------$ 96 $ 238 $ 931 $ 542 $ 446 $ 458 $ 397

21 -

20 1

87 2

70 3

45 4

56 5

46 6

13 ------$ 130 =======

11

51

44

29

21 ------$ 540 =======

29 ------$ 478 =======

INCOME AS ADJUSTED

------- ------$ 270 $ 1,071 ======= =======

------- ------$ 659 $ 524 ======= =======

FIXED CHARGES: Interest on indebtedness Interest on ESOP Portion of rents representative of interest factor $ 21 $ 20 1 $ 87 2 $ 70 3 $ 45 4 $ 56 5 $ 46 6

13 ------$ 34 ======= 3.8 ======= 8.6 ======= before

11

51

44

29

21 ------$ 82 ======= 6.6 =======

29 ------$ 81 ======= 5.9 =======

TOTAL FIXED CHARGES

------- ------$ 32 $ 140 ======= ======= 8.5 7.6 ======= =======

------- ------$ 117 $ 78 ======= ======= 5.6 6.7 ======= ======= 7.1 7.9 ======= =======

RATIO OF EARNINGS TO FIXED CHARGES

RATIO OF EARNINGS TO FIXED CHARGES (2)

(1)

Income from continuing

operations

provision for income taxes and

Exhibit 12(a) Aon Corporation and Consolidated Subsidiaries Combined With Unconsolidated Subsidiaries Computation of Ratio of Earnings to Fixed Charges

(millions except ratios) Income from continuing operations before provision for income taxes (1) ADD BACK FIXED CHARGES: Interest on indebtedness Interest on ESOP Portion of rents representative of interest factor

First Quarter Ended March 31, Years Ended December 31, ----------------- -----------------------------------------1999 1998 1998 1997 1996 1995 1994 -------- -------- ------- -------- ------- ------- -------$ 96 $ 238 $ 931 $ 542 $ 446 $ 458 $ 397

21 -

20 1

87 2

70 3

45 4

56 5

46 6

13 ------$ 130 =======

11

51

44

29

21 ------$ 540 =======

29 ------$ 478 =======

INCOME AS ADJUSTED

------- ------$ 270 $ 1,071 ======= =======

------- ------$ 659 $ 524 ======= =======

FIXED CHARGES: Interest on indebtedness Interest on ESOP Portion of rents representative of interest factor $ 21 $ 20 1 $ 87 2 $ 70 3 $ 45 4 $ 56 5 $ 46 6

13 ------$ 34 ======= 3.8 ======= 8.6 =======

11

51

44

29

21 ------$ 82 ======= 6.6 =======

29 ------$ 81 ======= 5.9 =======

TOTAL FIXED CHARGES

------- ------$ 32 $ 140 ======= ======= 8.5 7.6 ======= =======

------- ------$ 117 $ 78 ======= ======= 5.6 6.7 ======= ======= 7.1 7.9 ======= =======

RATIO OF EARNINGS TO FIXED CHARGES

RATIO OF EARNINGS TO FIXED CHARGES (2)

(1)

Income from continuing operations before provision for income taxes and minority interest includes special charges of $163 million for the first quarter ended March 31, 1999 and $172 million and $90 million for the years ended December 31, 1997 and 1996, respectively. The calculation of this ratio of earnings to fixed charges reflects the exclusion of special charges from the income from continuing operations before provision for income taxes component for the first quarter ended March 31, 1999 and for the years ended December 31, 1997 and 1996, respectively.

(2)

Exhibit 12(b) Aon Corporation and Consolidated Subsidiaries Combined With Unconsolidated Subsidiaries Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends

(millions except ratios)

First Quarter Ended March 31, Years Ended December 31, ----------------- -----------------------------------------1999 1998 1998 1997 1996 1995 1994

Exhibit 12(b) Aon Corporation and Consolidated Subsidiaries Combined With Unconsolidated Subsidiaries Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends

(millions except ratios) Income from continuing operations before provision for income taxes (1) ADD BACK FIXED CHARGES: Interest on indebtedness Interest on ESOP Portion of rents representative of interest factor

First Quarter Ended March 31, Years Ended December 31, ----------------- -----------------------------------------1999 1998 1998 1997 1996 1995 1994 -------- -------- ------- -------- ------- ------- -------$ 96 $ 238 $ 931 $ 542 $ 446 $ 458 $ 397

21 -

20 1

87 2

70 3

45 4

56 5

46 6

13 ------$ 130 =======

11

51

44

29

21 ------$ 540 =======

29 ------$ 478 =======

INCOME AS ADJUSTED

------- ------$ 270 $ 1,071 ======= =======

------- ------$ 659 $ 524 ======= =======

FIXED CHARGES AND PREFERRED STOCK DIVIDENDS: Interest on indebtedness Preferred stock dividends $ 21 17 ------38 $ 20 17 $ 87 70 $ 70 82 $ 45 29 $ 56 38 ------94 5 $ 46 48 ------94 6

Interest and dividends Interest on ESOP Portion of rents representative of interest factor

------- ------37 157 1 2

------- ------152 74 3 4

13

11

51

44

29

21

29

TOTAL FIXED CHARGES AND PREFERRED ------- ------- ------- ------- ------- ------- ------STOCK DIVIDENDS $ 51 $ 49 $ 210 $ 199 $ 107 $ 120 $ 129 ======= ======= ======= ======= ======= ======= ======= RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (2) 2.5 =======

5.5 5.1 ======= =======

3.3 4.9 ======= =======

4.5 =======

3.7 =======

RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (3) 5.7 4.2 5.8 ======= ======= ======= (1) Income from continuing operations before provision for income taxes and minority interest includes special charges of $163 million for the first quarter ended March 31, 1999 and $172 million and $90 million for the years ended December 31, 1997 and 1996, respectively. (2) Included in total fixed charges and preferred stock dividends are $16 million for the first quarters ended March 31, 1999 and 1998, and $66 million and $64 million for the years ended December 31, 1998 and 1997, respectively, of pretax distributions on the 8.205% mandatorily redeemable preferred capital securities which are classified as "minority interest" on the condensed consolidated statements of operations. The calculation of this ratio of earnings to fixed charges reflects the exclusion of special charges from the income from continuing operations before provision for income taxes component for the first quarter ended March 31, 1999 and for the years ended December 31, 1997 and 1996, respectively.

(3)

Exhibit 15 Board of Directors and Stockholders Aon Corporation We are aware of the incorporation by reference in the Registration Statements of Aon Corporation ("Aon") described in the following table of our report dated May 4, 1999 relating to the unaudited condensed consolidated interim financial statements of Aon Corporation that are included in its Form 10-Q for the quarter ended March 31, 1999: Registration Statement
Form ---S-8 S-8 S-8 S-8 S-4 S-3 Number -----33-27984 33-42575 33-59037 333-55773 333-21237 333-50607 Purpose ------Pertaining to Aon's savings plan Pertaining to Aon's stock award plan and stock option plan Pertaining to Aon's stock award plan and stock option plan Pertaining to Aon's stock award plan, stock option plan and employee stock purchase plan Offer to exchange Capital Securities of Aon Capital A Pertaining to the registration of 369,000 shares of common stock

Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part of the registration statements prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP --------------------ERNST & YOUNG LLP

Chicago, Illinois May 4, 1999

ARTICLE 5 This schedule contains summary financial information extracted from Condensed Consolidated Statements of Financial Position and Condensed Consolidated Statements of Income and is qualified in its entirety by reference to such financial statements. MULTIPLIER: 1,000,000 CURRENCY: USD

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END EXCHANGE RATE CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION

3 MOS DEC 31 1999 JAN 01 1999 MAR 31 1999 1.0 3,408 3,498 7,196 83 0 0 1,438 763

1 2

3

Exhibit 15 Board of Directors and Stockholders Aon Corporation We are aware of the incorporation by reference in the Registration Statements of Aon Corporation ("Aon") described in the following table of our report dated May 4, 1999 relating to the unaudited condensed consolidated interim financial statements of Aon Corporation that are included in its Form 10-Q for the quarter ended March 31, 1999: Registration Statement
Form ---S-8 S-8 S-8 S-8 S-4 S-3 Number -----33-27984 33-42575 33-59037 333-55773 333-21237 333-50607 Purpose ------Pertaining to Aon's savings plan Pertaining to Aon's stock award plan and stock option plan Pertaining to Aon's stock award plan and stock option plan Pertaining to Aon's stock award plan, stock option plan and employee stock purchase plan Offer to exchange Capital Securities of Aon Capital A Pertaining to the registration of 369,000 shares of common stock

Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a part of the registration statements prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP --------------------ERNST & YOUNG LLP

Chicago, Illinois May 4, 1999

ARTICLE 5 This schedule contains summary financial information extracted from Condensed Consolidated Statements of Financial Position and Condensed Consolidated Statements of Income and is qualified in its entirety by reference to such financial statements. MULTIPLIER: 1,000,000 CURRENCY: USD

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END EXCHANGE RATE CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS

3 MOS DEC 31 1999 JAN 01 1999 MAR 31 1999 1.0 3,408 3,498 7,196 83 0 0 1,438 763 20,484

1 2

3

3

ARTICLE 5 This schedule contains summary financial information extracted from Condensed Consolidated Statements of Financial Position and Condensed Consolidated Statements of Income and is qualified in its entirety by reference to such financial statements. MULTIPLIER: 1,000,000 CURRENCY: USD

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END EXCHANGE RATE CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED
1 2 3 4 5 6 7

3 MOS DEC 31 1999 JAN 01 1999 MAR 31 1999 1.0 3,408 3,498 7,196 83 0 0 1,438 763 20,484 0 576 850 0 258 2,629 20,484 0 1,699 0 0 1,603 0 21 96 36 60 0 0 0 50 0.19 0.19

1 2

3

3 4 5 6

7

6 6

Includes short term investments. Includes fixed maturities and equity securities at fair value. Not applicable based on current reporting format. Represents notes payable. Redeemable preferred stock. Includes Company obligated Mandatorily Redeemable Preferred Capital Securities of Subsidiary Trust Holding Solely the Company's Junior Subordinated Debentures. Adjusted to reflect three for two stock split effective May 4, 1999. Represents total expenses.