<SUBMISSION>
<ACCESSION-NUMBER>0000950131-02-001966
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>3
<PERIOD>20020331
<FILING-DATE>20020514
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>GALLAGHER ARTHUR J & CO
<CIK>0000354190
<ASSIGNED-SIC>6411
<IRS-NUMBER>362151613
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-09761
<FILM-NUMBER>02645669
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>TWO PIERCE PL
<CITY>ITASCA
<STATE>IL
<ZIP>60143
<PHONE>7087733800
</BUSINESS-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>
<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]  Quarterly report pursuant to section 13 or 15 (d) of the Securities
     Exchange Act of 1934 for the quarterly period ended March 31, 2002 or
                                                         --------------

[_]  Transition report pursuant to section 13 or 15 (d) of the Securities
     Exchange Act of 1934 for the transition period from ______________________
     to __________________

Commission File Number 1-9761

                            ARTHUR J. GALLAGHER & CO.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              DELAWARE                                   36-2151613
--------------------------------------------------------------------------------
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                    Identification No.)

                  Two Pierce Place, Itasca, Illinois 60143-3141
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip code)

                                 (630) 773-3800
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


________________________________________________________________________________
     (Former name, former address and former fiscal year, if changed since
                                  last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [_]

The number of outstanding shares of the registrant's Common Stock, $1.00 par
value, as of March 31, 2002 was 86,087,701

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                                      INDEX
<TABLE>
<CAPTION>

                                                                                              Page No.
<S>                                                                                           <C>
Part I.   Financial Information:

          Item 1.   Financial Statements (Unaudited):

                    Consolidated Statements of Earnings for the three-month
                       periods ended March 31, 2002 and 2001 ...............................      3

                    Consolidated Balance Sheets at March 31, 2002 and
                       December 31, 2001 ...................................................      4

                    Consolidated Statements of Cash Flows for the three-month
                       periods ended March 31, 2002 and 2001 ...............................      5

                    Notes to Consolidated Financial Statements .............................   6-11

          Item 2.   Management's Discussion and Analysis of Financial Condition
                       and Results of Operations ...........................................  12-18

Part II.  Other Information:

          Item 2.   Changes in Securities ..................................................     19

          Item 6.   Exhibits and Reports on Form 8-K .......................................     19

          Signatures .......................................................................     20
</TABLE>

                                       -2-

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

                            ARTHUR J. GALLAGHER & CO.

                       CONSOLIDATED STATEMENTS OF EARNINGS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      Three-month period ended March 31,
                                                                          2002                   2001
                                                                    ---------------         --------------
                                                                    (in thousands, except per share data)
<S>                                                                <C>                      <C>
Operating Results
Revenues:
   Commissions                                                      $       143,216         $      121,610
   Fees                                                                      89,762                 76,437
   Investment income and other:
        Investment income                                                     3,601                  6,092
        Income from equity investments,
            installment sales and partnerships                                5,925                  3,151
        Income from real estate ventures                                      3,476                  6,551
        Other income                                                          3,182                  2,811
                                                                    ---------------         --------------
            Total investment income and other                                16,184                 18,605
                                                                    ---------------         --------------
                 Total revenues                                             249,162                216,652

Expenses:
   Salaries and employee benefits                                           126,322                110,923
   Other operating expenses                                                  63,767                 60,227
   Expenses of real estate ventures                                           1,810                  2,520
   Partnership investment expenses                                            1,718                  3,246
   Depreciation and amortization                                              6,740                  5,663
                                                                    ---------------         --------------
                 Total expenses                                             200,357                182,579
                                                                    ---------------         --------------

Earnings before income taxes                                                 48,805                 34,073
Provision for income taxes                                                   15,130                  6,990
                                                                    ---------------         --------------
            Net earnings                                            $        33,675         $       27,083
                                                                    ===============         ==============

Net earnings per common share                                       $           .39         $          .32
Net earnings per common and common equivalent share                             .37                    .30

Dividends declared per common share                                             .15                    .13
</TABLE>

                 See notes to consolidated financial statements.

                                       -3-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      March 31,          December 31,
                                                                        2002                 2001
                                                                     -----------         -----------
                                                                              (in thousands)
<S>                                                                  <C>                 <C>
                        ASSETS
Current assets:
    Cash and cash equivalents                                        $   103,197         $    98,530
    Restricted cash                                                      246,829             209,509
    Premiums and fees receivable                                       1,088,795           1,117,238
    Investment strategies - trading                                       53,446              52,588
    Other                                                                 84,724              85,142
                                                                     -----------         -----------
        Total current assets                                           1,576,991           1,563,007

Marketable securities - available for sale                                16,579              18,290
Deferred income taxes                                                     99,367              99,263
Other noncurrent assets                                                  217,822             216,196

Fixed assets                                                             292,298             283,807
Accumulated depreciation and amortization                               (103,290)           (100,562)
                                                                     -----------         -----------
        Net fixed assets                                                 189,008             183,245

Intangible assets - net                                                   72,845              65,341
                                                                     -----------         -----------
                                                                     $ 2,172,612         $ 2,145,342
                                                                     ===========         ===========

        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Premiums payable to insurance and reinsurance companies          $ 1,352,045         $ 1,366,516
    Accrued salaries and bonuses                                          60,995              56,572
    Accounts payable and other accrued liabilities                       114,208             111,618
    Unearned fees                                                         17,419              16,527
    Income taxes payable                                                  17,430              33,746
    Borrowings on line of credit facilities                               57,050              38,552
    Other                                                                  8,936              11,273
                                                                     -----------         -----------
        Total current liabilities                                      1,628,083           1,634,804

Long-term debt                                                            99,683              99,850
Other noncurrent liabilities                                              40,272              39,075

Stockholders' equity:
    Common stock - issued and outstanding 86,088 shares in
        2002 and 85,111 shares in 2001                                    86,088              85,111
    Capital in excess of par value                                        33,996               8,768
    Retained earnings                                                    304,623             283,796
    Unearned deferred compensation                                        (7,381)             (3,438)
    Unearned restricted stock                                             (9,972)                  -
    Accumulated other comprehensive earnings (loss)                       (2,780)             (2,624)
                                                                     -----------         -----------
        Total stockholders' equity                                       404,574             371,613
                                                                     -----------         -----------
                                                                     $ 2,172,612         $ 2,145,342
                                                                     ===========         ===========
</TABLE>

                See notes to consolidated financial statements.

                                       -4-

<PAGE>

                           ARTHUR J. GALLAGHER & CO.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           Three-month period ended March 31,
                                                                                                2002                2001
                                                                                           -------------        -------------
                                                                                                     (in thousands)
<S>                                                                                        <C>                  <C>
Cash flows from operating activities:
     Net earnings                                                                           $     33,675         $     27,083
     Adjustments to reconcile net earnings to net cash provided by
      operating activities:
         Net gain on investments and other                                                          (543)                (521)
         Gain on sales of operations                                                              (2,500)              (2,375)
         Depreciation and amortization                                                             6,740                5,663
         (Increase) decrease in restricted cash                                                  (37,320)                 790
         Decrease in premiums receivable                                                          32,807               30,241
         Decrease in premiums payable                                                            (14,471)             (14,754)
         (Increase) decrease in trading investments - net                                            (26)               3,775
         Decrease in other current assets                                                            418                2,802
         Increase (decrease) in accrued salaries and bonuses                                       4,510              (18,491)
         Increase (decrease) in accounts payable and other accrued liabilities                       707               (3,353)
         Decrease in income taxes payable                                                        (16,316)              (1,862)
         Tax benefit from issuance of common stock                                                 3,907                4,471
         Net change in deferred income taxes                                                           6               (1,350)
         Other                                                                                      (271)             (15,293)
                                                                                           -------------        -------------
             Net cash provided by operating activities                                            11,323               16,826
                                                                                           -------------        -------------

Cash flows from investing activities:
     Purchases of marketable securities                                                           (3,499)              (4,469)
     Proceeds from sales of marketable securities                                                  3,346                4,781
     Proceeds from maturities of marketable securities                                             1,319                   11
     Net additions to fixed assets                                                               (11,243)              (6,624)
     Cash paid for acquisitions, net of cash acquired                                             (3,641)                   -
     Proceeds from sales of operations                                                             2,500                2,700
     Other                                                                                        (6,570)             (11,694)
                                                                                           -------------        -------------
             Net cash used by investing activities                                               (17,788)             (15,295)
                                                                                           -------------        -------------

Cash flows from financing activities:
     Proceeds from issuance of common stock                                                        3,865                4,258
     Repurchases of common stock                                                                       -              (12,836)
     Dividends paid                                                                              (11,064)              (9,148)
     Borrowings on line of credit facilities                                                     151,498                2,200
     Repayments on line of credit facilities                                                    (133,000)              (2,200)
     Repayments of long term debt                                                                   (167)                (103)
     Equity transactions of pooled companies prior to dates of acquisition                             -               (4,446)
                                                                                           -------------        -------------
             Net cash provided (used) by financing activities                                     11,132              (22,275)
                                                                                           -------------        -------------
Net increase (decrease) in cash and cash equivalents                                               4,667              (20,744)
Cash and cash equivalents at beginning of period                                                  98,530              149,387
                                                                                           -------------        -------------
Cash and cash equivalents at end of period                                                  $    103,197         $    128,643
                                                                                           =============        =============

Supplemental disclosures of cash flow information:
     Interest paid                                                                          $      2,230         $      2,351
     Income taxes paid                                                                            26,418                2,063
</TABLE>

                See notes to consolidated financial statements.

                                      -5-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   Nature of Operations and Basis of Presentation

     Arthur J. Gallagher & Co. (Gallagher) provides insurance brokerage and risk
     management services to a wide variety of commercial, industrial,
     institutional and governmental organizations. Commission revenue is
     principally generated through the negotiation and placement of insurance
     for its clients. Fee revenue is primarily generated by providing other risk
     management services including claims management, information management,
     risk control services and appraisals in either the property/casualty market
     or human resource/employee benefit market. Investment income and other is
     generated from Gallagher's investment portfolio, which includes fiduciary
     funds, equity securities, and tax advantaged and other strategic
     investments. Gallagher is headquartered in Itasca, Illinois, has more than
     250 offices in nine countries and does business in more than 100 countries
     around the world through a network of correspondent brokers and
     consultants.

     The accompanying unaudited consolidated financial statements have been
     prepared by Gallagher pursuant to the rules and regulations of the
     Securities and Exchange Commission. Certain information and footnote
     disclosures normally included in annual financial statements have been
     omitted pursuant to such rules and regulations. Gallagher believes the
     disclosures are adequate to make the information presented not misleading.
     The unaudited consolidated financial statements included herein are, in the
     opinion of management, prepared on a basis consistent with the audited
     consolidated financial statements for the year ended December 31, 2001,
     except for the conforming reclassifications discussed in Note 3, and
     include all adjustments (consisting only of normal recurring adjustments)
     necessary for a fair presentation of the information set forth. The
     quarterly results of operations are not necessarily indicative of results
     of operations for subsequent quarters or the full year. These unaudited
     consolidated financial statements should be read in conjunction with the
     audited consolidated financial statements and the notes thereto included in
     Gallagher's 2001 Annual Report on Form 10-K.

2.   Effect of New Pronouncements

     In June 2001, the FASB issued Statements of Financial Accounting Standards
     No. 141 (SFAS 141), "Business Combinations," and No. 142 (SFAS 142),
     "Goodwill and Other Intangible Assets." SFAS 141 requires that all business
     combinations initiated after June 30, 2001 be accounted for using the
     purchase method of accounting. In addition, SFAS 141 further clarifies the
     criteria to recognize intangible assets separately from goodwill. The
     requirements of SFAS 141 were effective for any business combination
     accounted for by the purchase method that was completed after June 30,
     2001.

     Under SFAS 142, goodwill and indefinite lived intangible assets are no
     longer amortized, but are subject to periodic review for impairment (at
     least annually or more frequently if impairment indicators arise).
     Separable intangible assets that are not deemed to have an indefinite life
     will continue to be amortized over their useful lives. The amortization
     provisions of SFAS 142 initially only applied to goodwill and intangible
     assets related to business combinations accounted for by the purchase
     method that were completed after June 30, 2001. With respect to goodwill
     and intangible assets acquired prior to July 1, 2001, companies were
     required to adopt SFAS 142 in their fiscal year beginning after December
     15, 2001 (i.e., January 1, 2002 for calendar year companies). Because of
     the different transition dates for goodwill and intangible assets acquired
     on or before June 30, 2001 and those acquired after that date, pre-existing
     goodwill and intangible assets were amortized during the transition period
     (June 30 to December 31, 2001). Effective January 1, 2002, Gallagher
     adopted the remaining provisions of SFAS 142 with respect to pre-existing
     goodwill and intangible assets, the effect of which was not material to
     Gallagher's consolidated operating results or financial position.

                                       -6-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (Continued)

2.   Effect of New Pronouncements (Continued)

     In performing the impairment reviews, Statement No. 142 requires Gallagher
     to compare the fair value of a reporting unit with its carrying amount on
     an annual basis to determine if there is impairment of goodwill. If the
     fair value of the reporting unit is less than its carrying value, an
     impairment loss would be recorded to the extent that the fair value of the
     goodwill within the reporting unit is less than its carrying value. While
     Gallagher is still in the process of performing the initial goodwill
     impairment review by reporting unit as of January 1, 2002, it is
     management's preliminary assessment that a goodwill impairment charge will
     not be recorded as of the date of adoption.

3.   Reclassifications of Previously Reported Financial Statements

     During the three-month period ended March 31, 2002, Gallagher undertook a
     review of how it was accounting for all of its partially owned entities.
     Given the current environment regarding ownership/control relationships
     with respect to partially owned entities, Gallagher determined that it
     would be appropriate to consolidate three operations that were previously
     accounted for using the equity method of accounting. In addition, prior to
     2002, the premiums and claims receivable and payable relating to a
     reinsurance intermediary subsidiary of Gallagher were reported on a net
     basis in Gallagher's consolidated balance sheets with the gross amounts
     disclosed in the notes to the consolidated financial statements. During
     2002, Gallagher determined that it would be appropriate to include these
     amounts on a gross basis in its consolidated balance sheets in order to
     conform to a more common industry practice. Reclassifications have been
     made to the previously reported financial statements in order to conform
     them to the current year presentation. These reclassifications had no
     impact on the previously reported net earnings or stockholders' equity. The
     following summarizes the reclassifications that were made to the 2001
     consolidated financial statements (in thousands, except per share data):

<TABLE>
<CAPTION>
     Three-month period ended          As Previously               Amounts
     March 31, 2001                       Reported               Reclassified        As Reclassified
     --------------                       --------               ------------        ---------------
<S>                                     <C>                     <C>                     <C>
     Total revenue                      $  211,694              $    4,958              $  216,652
     Total expenses                        177,621                   4,958                 182,579
     Earnings before income taxes           34,073                      --                  34,073
     Net earnings                           27,083                      --                  27,083
     Net earnings per common share             .32                      --                     .32
     Net earnings per common and
      common equivalent share                  .30                      --                     .30


     December 31, 2001
     -----------------
     Premiums and fees receivable       $  555,276              $  561,962              $1,117,238
     Net fixed assets                       51,246                 131,999                 183,245
     Total assets                        1,471,823                 673,519               2,145,342
     Premiums payable to insurance and
      reinsurance companies                805,595                 560,921               1,366,516
     Long-term debt                             --                  99,850                  99,850
     Total stockholders' equity            371,613                      --                 371,613
</TABLE>

                                       -7-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (Continued)

4.   Business Combinations

     During the three-month period ended March 31, 2002, Gallagher acquired
     substantially all of the net assets of the following insurance brokerage
     firms in exchange for its common stock and/or cash using the purchase
     accounting method for recording business combinations (in thousands):

<TABLE>
<CAPTION>
                                  Common        Common                                                   Total
     Name and Date of             Shares         Share        Cash      Contingent       Escrow        Purchase
       Acquisitions               Issued         Value        Paid        Payable       Deposited       Price
---------------------------      --------      --------      ------     ----------      ---------      --------
<S>                              <C>           <C>           <C>        <C>             <C>            <C>
Life Plans Unlimited, Inc.
    February 28, 2002                 127      $  3,987      $    -     $        -      $     443      $  4,430
Tom Sherwin Insurance
  Agency, Inc.
    February 28, 2002                   -             -         720            600             80         1,400
                                 --------      --------      ------     ----------      ---------      --------
                                      127      $  3,987      $  720     $      600      $     523      $  5,830
                                 ========      ========      ======     ==========      =========      ========
</TABLE>

     Common shares exchanged in connection with these acquisitions were valued
     at closing market prices as of the effective date of the respective
     acquisition. Contingent obligations, which are primarily based upon future
     earnings of the acquired entities, were included in the purchase price
     recorded for these acquisitions at the maximum amount per the purchase
     agreements. Contingent consideration or escrow deposits that are returned
     to Gallagher as a result of purchase price adjustment provisions are
     recorded as adjustments to intangibles when the contingencies are settled.

     These acquisitions allow Gallagher to expand into desirable geographic
     locations, further extend its presence in the retail and wholesale
     insurance brokerage services industry and increase the volume of general
     services currently provided. The excess of the purchase price over the
     estimated fair value of the tangible net assets acquired at the acquisition
     date was allocated to goodwill and expiration lists of the Insurance
     Brokerage Services segment. Purchase price allocations are preliminarily
     established at the time of the acquisition and are subsequently reviewed
     within the first year of operations to determine the necessity for
     allocation adjustments. Expiration lists, related to these acquisitions,
     will be amortized on a straight-line basis over an estimated useful life of
     10 years. Gallagher's consolidated financial statements for the three-month
     period ended March 31, 2002 include the operations of these companies from
     the date of their respective acquisitions. The historical operating results
     of these purchase acquisitions for the three-month periods ended March 31,
     2002 and 2001 were not material to Gallagher's consolidated statements of
     earnings.

                                       -8-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (Continued)

5.   Earnings Per Share

     The following table sets forth the computation of net earnings per common
     share and net earnings per common and common equivalent share (in
     thousands, except per share data):

<TABLE>
<CAPTION>
                                                                                             Three-month period
                                                                                               ended March 31,
                                                                                           2002              2001
                                                                                        ---------         ---------
     <S>                                                                                  <C>                 <C>
     Net earnings                                                                       $  33,675         $  27,083
                                                                                        =========         =========

     Weighted average number of common shares outstanding                                  85,405            84,713
     Dilutive effect of stock options using the treasury stock method                       5,190             5,378
                                                                                        ---------         ---------
     Weighted average number of common and common equivalent
         shares outstanding                                                                90,595            90,091
                                                                                        =========         =========

     Net earnings per common share                                                      $     .39         $     .32
     Net earnings per common and common equivalent share                                      .37               .30
</TABLE>

     Options to purchase 83,000 and 144,000 shares of common stock were
     outstanding at March 31, 2002 and 2001, respectively, but were not included
     in the computation of the dilutive effect of stock options for the
     three-month period then ended. These options were excluded from the
     computation because the options' exercise prices were greater than the
     average market price of the common shares during the respective period and,
     therefore, would be antidilutive to earnings per share under the treasury
     stock method.

6.   Comprehensive Earnings

     The components of comprehensive earnings and accumulated other
     comprehensive earnings (loss) are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                             Three-month period
                                                                                               ended March 31,
                                                                                           2002              2001
                                                                                        ---------         ---------
     <S>                                                                                <C>               <C>
     Net earnings                                                                       $  33,675         $  27,083
     Net change in unrealized gain (loss) on available for sale
        securities, net of income taxes of $(104) and $748, respectively                     (156)            1,122
                                                                                        ---------         ---------
     Comprehensive earnings                                                             $  33,519         $  28,205
                                                                                        =========         =========

     Accumulated other comprehensive earnings (loss) at beginning of period             $  (2,624)        $  (2,498)
     Net change in unrealized gain (loss) on available for sale
        securities, net of income taxes                                                      (156)            1,122
                                                                                        ---------         ---------
     Accumulated other comprehensive earnings (loss) at end of period                   $  (2,780)        $  (1,376)
                                                                                        =========         =========
</TABLE>

                                       -9-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (Continued)

7.   Restricted Stock Awards

     In 2001, Gallagher adopted an incentive compensation plan for several of
     its key executives and management personnel. The compensation under this
     plan is determined by a formula applied to the pretax profitability of
     certain operating divisions and may include an equity award as part of such
     incentive compensation.

     Effective on March 31, 2002, Gallagher contributed $8.9 million to the plan
     through the issuance of 274,000 shares of Gallagher common stock. Also,
     effective on March 31, 2002, Gallagher granted a restricted stock award of
     32,000 shares of Gallagher common stock to its Chief Executive Officer,
     with an aggregate value of $1.1 million. All of the 2002 restricted stock
     awards vest over a three year period at the rate of 33 1/3% per year
     beginning on March 31, 2003. Gallagher accounts for restricted stock at
     historical cost which equals its fair market value at the date of grant.
     When restricted shares are issued, an unearned restricted stock obligation
     is recorded as a reduction of stockholders' equity which will be ratably
     charged to expense over the vesting period of the participants. During the
     three-month period ended March 31, 2002, no amounts were charged to expense
     related to these awards.

                                       -10-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (UNAUDITED) (Continued)

8.   Quarterly Operating Results

     Quarterly operating results for 2001 were reclassified to conform to the
     current year presentation, which had no impact on previously reported net
     earnings. The reclassified results were as follows (in thousands, except
     per share data):

<TABLE>
<CAPTION>
                                                                        1st              2nd             3rd             4th
                                                                     ---------        ---------       ----------      ----------
<S>                                                                  <C>              <C>             <C>             <C>
     Revenues:
        Commissions                                                  $ 121,610        $ 125,963       $  136,653      $  154,797
        Fees                                                            76,437           77,554           84,422          86,451
        Investment income and other:
            Investment income                                            6,092            7,098            4,350           3,881
            Income from equity investments,
               installment sales and partnerships                        3,151              685            6,806           9,110
            Income from real estate ventures                             6,551            1,855            1,975           1,734
            Other income                                                 2,811              792            1,458             752
                                                                     ---------        ---------       ----------      ----------
               Total investment income and other                        18,605           10,430           14,589          15,477
                                                                     ---------        ---------       ----------      ----------
                  Total revenues                                       216,652          213,947          235,664         256,725
     Expenses:
        Salaries and employee benefits                                 110,923          111,001          115,139         141,500
        Other operating expenses                                        60,227           59,943           63,530          68,007
        Expenses of real estate ventures                                 2,520            1,348            1,320           1,452
        Partnership investment expenses                                  3,246            7,466            8,259           2,108
        Depreciation and amortization                                    5,663            5,417            5,397           6,669
                                                                     ---------        ---------       ----------      ----------
                  Total expenses                                       182,579          185,175          193,645         219,736
                                                                     ---------        ---------       ----------      ----------
     Earnings before income taxes                                       34,073           28,772           42,019          36,989
     Provision for income taxes                                          6,990            5,575              116           3,916
                                                                     ---------        ---------       ----------      ----------
        Net earnings                                                 $  27,083        $  23,197       $   41,903      $   33,073
                                                                     =========        =========       ==========      ==========

     Net earnings per common share                                   $     .32        $     .27       $      .49      $      .39
     Net earnings per common and common
        equivalent share
                                                                           .30              .26              .47             .36
</TABLE>

                                       -11-

<PAGE>

Item 2.

                            ARTHUR J. GALLAGHER & CO.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - CONSOLIDATED

The insurance industry was jolted by the tragic terrorist attacks that occurred
on September 11, 2001. The destruction and devastation of those events have
resulted in the largest insurance loss in America's history and have reshaped
the insurance marketplace more rapidly than expected. Along with this historic
loss, larger than anticipated loss experience across all risks, stock market
declines, lower interest rates and diminished risk capacity have led to
unprecedented premium rate increases. Higher premium rates are referred to as a
"hard market" and generally result in increased commission revenues.
Fluctuations in premiums charged by insurance companies have a direct and
potentially material impact on the insurance brokerage industry. Commission
revenues are generally based on a percentage of the premiums paid by insureds
and normally follow premium levels. Thus, a hard market will generally
contribute positively to Gallagher's operating results, and since September
11th, the premium rates charged by insurance companies have soared having a
positive impact on Gallagher's 2002 operating results in spite of some insurance
companies' efforts to reduce commission rates during the upturn in premium
pricing. Although, management believes this hard market will continue for the
foreseeable future, the longevity of the hard market and its future effect on
Gallagher's business is difficult to predict.

In a period of rising insurance costs, there is resistance among certain "risk"
buyers (Gallagher's clients) to pay increased premiums and the higher
commissions generated by these premiums. Such resistance may cause some buyers
to raise their deductibles and/or reduce the overall amount of insurance
coverage that they purchase. In addition, some buyers will switch to negotiated
fee in lieu of commission arrangements with the broker for placing the risk.
These factors will reduce commission revenue to Gallagher. Other buyers will
move toward the alternative insurance market, which would tend to have a
favorable effect on Gallagher's Risk Management Services segment. Gallagher
anticipates that new sales and renewal increases in the areas of risk
management, claims management, insurance captive and self-insurance services
will continue to be a major factor in Gallagher's fee revenue growth during
2002.

During the first quarter of 2002, Gallagher acquired two companies which were
accounted for as purchases. Gallagher continues to search for merger partners
which complement existing operations, provide entry into new markets, add new
products and enhance local sales and service capabilities. For information
concerning business combinations, see Note 4 to the Consolidated Financial
Statements.

Commission revenues increased by 18% to $143.2 million in the first quarter of
2002 over the respective period in 2001. This increase is due principally to new
business of approximately $28.5 million and renewal rate increases partially
offset by lost business of $18.1 million and a reduction in revenue from
national insurance revenue-sharing programs.

Fee revenues increased by 17% or $13.3 million to $89.8 million in the first
quarter of 2002 over the respective period in 2001. This increase, generated
primarily by the Risk Management Services segment, resulted from new business
production of approximately $14.4 million, renewal rate increases and favorable
retention rates on existing business partially offset by lost business of $7.4
million.

Investment income, primarily interest on cash and restricted funds, was down
$2.5 million or 41% from the same period in 2001 due primarily to lower interest
income as a result of declining short term interest rates and lower returns on
invested funds managed by external fund managers. Rates of return on interest
bearing accounts and certificates are down in excess of 60% on a
quarter-over-quarter basis putting considerable pressure on short term interest
returns.

                                      -12-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS - CONSOLIDATED (Continued)

In the first quarter of 2002, income from equity investments, installment sales
and partnerships increased 88% to $5.9 million over the same period in 2001 due
primarily to installment gains recognized in 2002 from sales of a portion of its
interests in two limited partnerships that operate synthetic fuel facilities
which were completed in the third and fourth quarters of 2001. Gallagher will
continue to recognize additional installment gains over time through 2007 based
on qualified fuel production generated by these facilities. Production at these
facilities, which ultimately determines the amount of the gains realized, did
not meet full expectations in the first quarter of 2002 due to the unusually
mild winter and a short term shut down of production as the facilities were
moved to more permanent sites to accommodate the ultimate purchaser.

Income from real estate ventures represents revenue related to Gallagher's
consolidation of its investments in two real estate partnerships. These real
estate partnerships represent an investment in a limited partnership that owns
the building that Gallagher leases for its corporate headquarters and several of
its subsidiary operations and an investment in a limited partnership that owns
11,000 acres of land near Orlando, Florida, that is currently under development.
In the first quarter of 2002, income from real estate ventures decreased 47% to
$3.5 million primarily due to a one-time gain of $3.0 million generated from the
sale of land by the Florida real estate partnership that was reported in the
first quarter of 2001.

Other income consists primarily of gains on the sales of books of business. In
the first quarter of 2002, Gallagher recognized a $2.5 million gain on the sale
of a book of business compared to a $2.4 million gain that was recorded on the
sale of a book of business in 2001.

Salaries and employee benefits increased by $15.4 million or 14% to $126.3
million in the first quarter of 2002. This increase was higher than usual and
reflects a 13% increase in employee headcount in the period from March 31, 2001
to March 31, 2002, salary increases and associated employee benefit costs. The
increase in employee headcount relates to the hiring of additional staff to
support the new business growth previously discussed, to an ongoing initiative
to hire additional production personnel to generate future revenue growth, and
to employees associated with the acquisitions accounted for as purchases that
were made in the fourth quarter of 2001 and the first quarter of 2002.

Other operating expenses increased from $60.2 million to $63.8 million or 6% in
the first quarter of 2002 over the first quarter of 2001 due primarily to an
increase in business insurance costs and commissions paid to sub-brokers. For
the first quarter of 2002, expenses of real estate ventures decreased $700,000
or 28% to $1.8 million from the same period in 2001 due to a decrease in
minority interest expense associated with the two investments in real estate
partnerships previously discussed.

Partnership investment expenses represent Gallagher's portion of the ongoing
expenses associated with the operations of the synthetic fuel facilities. In the
first quarter of 2002, these expenses decreased $1.5 million or 47% to $1.7
million from the same period in 2001 due to the two sales of interests in
limited partnerships that operate synthetic fuel facilities discussed above.

Depreciation and amortization increased 19% to $6.7 million in the first three
months of 2002 over the same period in 2001 due primarily to amortization
expense associated with acquisitions accounted for as purchases that were made
in the fourth quarter of 2001 and the first quarter of 2002.

                                      -13-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS - CONSOLIDATED (Continued)

The effective income tax rate was 31% for the first quarter of 2002 and 21% for
the first quarter of 2001. These rates are net of the effect of tax credits
generated by investments in limited partnerships that operate qualified
affordable housing and alternative energy projects, which are partially offset
by state and foreign taxes. The increase in the effective income tax rate in
2002 over the prior year is due to a reduction in the tax credits earned in
2002. This decrease in the amount of tax credits earned was due to the two sales
of interests in limited partnerships that operate synthetic fuel facilities.

Net earnings per common and common equivalent share for the first quarter of
2002 were $.37 compared to $.30 in 2001, a 23% increase. This increase is
primarily due to the previously discussed revenue growth in 2002 which was
partially offset by increased expenses and by an increase in the effective
income tax rate in 2002.

RESULTS OF OPERATIONS - SEGMENT INFORMATION

Financial information relating to Gallagher's operating segments is as follows
(in thousands):

<TABLE>
<CAPTION>
                                Insurance
                                Brokerage   Risk Management      Financial
                                 Services      Services          Services        Corporate          Total
                               -----------  ----------------    -----------     -----------       ---------
<S>                            <C>          <C>                 <C>             <C>               <C>
Three-month period ended
------------------------
March 31, 2002
--------------
Total revenues                 $  164,566     $   70,059        $   12,544      $    1,993        $  249,162
Earnings (loss) before
    income taxes                   31,730         11,947             6,590          (1,462)           48,805
March 31, 2001
--------------
Total revenues                    136,399         65,760            12,553           1,940           216,652
Earnings (loss) before
    income taxes                   22,016          9,448             3,965          (1,356)           34,073

Total Identifiable Assets at
----------------------------
March 31, 2002                  1,520,960         72,327           292,351         286,974         2,172,612

March 31, 2001                  1,075,620         60,366           272,821         194,144         1,602,951
</TABLE>

Insurance Brokerage Services

The Insurance Brokerage Services segment encompasses operations that, for
commission or fee compensation, place or arrange to place insurance directly
related to the clients' management of risk. This segment also provides
consulting, for fee compensation, related to clients' risk financing programs
and includes Gallagher's retail, reinsurance and wholesale brokerage operations.

                                      -14-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS - SEGMENT INFORMATION (Continued)

Insurance Brokerage Services (Continued)

Total revenues for this segment in the three-month period ended March 31, 2002
increased 21% to $164.6 million over the same period in 2001. This increase is
due principally to new business of approximately $28.5 million and renewal rate
increases partially offset by lost business of $18.1 million and a reduction in
revenue from national insurance revenue-sharing programs. Earnings before income
taxes for this segment in the three-month period ended March 31, 2002 increased
44% to $31.7 million over the same period in 2001. This increase is due
primarily to the new business production and rate increases mentioned above.

Risk Management Services

The Risk Management Services segment includes Gallagher's third party
administration, loss control and risk management consulting, workers'
compensation investigations and insurance property appraisal operations. Third
party administration is principally claims management programs for Gallagher's
clients or clients of other brokers.

Total revenues for this segment in the three-month period ended March 31, 2002
increased 7% to $70.1 million over the respective period in 2001 due primarily
to new business production of approximately $14.4 million, renewal rate
increases and favorable retention rates on existing business partially offset by
lost business of $7.4 million. Earnings before income taxes for this segment in
the first quarter of 2002 increased over the first quarter of 2001 by 26% to
$11.9 million. This increase is due primarily to the earnings leverage created
by the increased revenues discussed above.

Financial Services

The Financial Services segment is responsible for the management of Gallagher's
diversified investment portfolio, which includes fiduciary funds, marketable and
other equity securities, and tax advantaged and other strategic investments. The
invested assets of Gallagher are managed in this segment in order to maximize
the return to the company.

In the first quarter of 2002, revenues for this segment were $12.5 million,
which were flat to the prior year. Revenue in 2002 for this segment includes
installment gains from sales of interests in two limited partnerships that
operate synthetic fuel facilities that were completed in the third and fourth
quarters of 2001. However, the increase in income generated by these installment
gains was substantially offset by the $3.1 million decrease in income from real
estate ventures during the first quarter of 2002 and a reduction in income
generated from Gallagher's unconsolidated equity portfolio. As previously
discussed, the decrease in income from real estate ventures was primarily due to
a one-time gain of $3.0 million generated from the sale of land by the Florida
real estate partnership that was reported in the first quarter of 2001. Earnings
before income taxes for this segment increased $2.6 million or 66% to $6.6
million in the first quarter of 2002. This increase is due primarily to a
reduction in ongoing expenses related to the operations of synthetic fuel
facilities.

                                      -15-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS - SEGMENT INFORMATION (Continued)

Corporate

The Corporate segment consists of the operating results of the real estate
limited partnership that owns the building that Gallagher leases for its
corporate headquarters and several of its subsidiary operations, unallocated
administrative costs and the provision for income taxes which is not allocated
to Gallagher's operating entities. Only revenues not attributable to one of the
three operating segments are recorded in the Corporate segment. All costs are
generated in the United States.

FINANCIAL CONDITION AND LIQUIDITY

The insurance brokerage industry is not capital intensive. The capital used to
fund Gallagher's investment portfolio has been primarily generated from the
excess cash provided by its operations. Cash generated from operating activities
was $11.3 million and $16.8 million for the three months ended March 31, 2002
and 2001, respectively. Because of the variability related to the timing of
premiums and fees receivable and premiums payable, net cash flows from
operations vary substantially from period to period. Funds restricted as to
Gallagher's use, primarily premiums held as fiduciary funds, have not been
included in determining Gallagher's overall liquidity. Currently, Gallagher
believes it has sufficient capital to meet its cash flow needs. However, in the
event that Gallagher needs capital to fund its operations and investing
requirements, it would use borrowings under its credit agreement to meet its
short-term needs and would consider other alternatives for its long-term needs.
Such alternatives would include raising capital through public markets or
restructuring its operations in the event that cash flows from operations are
reduced dramatically due to lost business. However, Gallagher has historically
been profitable and cash flows from operations and short-term borrowings under
its credit agreements have been sufficient to fund Gallagher's operating,
investment and capital expenditure needs. Gallagher expects this favorable cash
flow trend to continue in the future.

In 2000, Gallagher and one of its significant subsidiaries entered into an
unsecured Revolving Credit Agreement (the Revolving Credit Agreement), which
expires on September 10, 2003, with a group of five financial institutions. The
Revolving Credit Agreement provides for short-term and long-term revolving
credit commitments of $100.0 million and $50.0 million, respectively. The
facility provides for loans and letters of credit. Letter of credits are limited
to $75.0 million of which up to $50.0 million may be issued under the long-term
facility and up to $25.0 million may be issued under the short-term credit
facility in the determination of net funds available for future borrowing. The
Revolving Credit Agreement provides for borrowings to be denominated in either
U.S. dollars or Alternative Currencies, as defined in the credit agreement. In
addition, the credit agreement has two borrowing options, Domestic Rate Loans
and Eurocurrency Loans, as defined in the credit agreement. Interest rates on
borrowings under the Domestic Rate Loan option are based on the prime commercial
rate and interest rates on borrowings under the Eurocurrency Loan option are
based on LIBOR plus .400% for short-term and long-term revolving credit
commitments. The facility fee related to this credit agreement is based on .100%
of the used and unused portions of the short-term and long-term revolving credit
commitments.

As of March 31, 2002, under the long-term credit facility, Gallagher has
contingently committed to funding $47.3 million through letter of credit
arrangements related to its corporate insurance programs and several of its
equity and other strategic investments. Also, as of March 31, 2002, there were
$50.0 million of borrowings outstanding under the Revolving Credit Agreement.
Accordingly, Gallagher had $52.7 million available for future borrowing. In
2002, Gallagher borrowed $148.0 million and repaid $133.0 million of short-term
borrowings under this facility. These borrowings were used on a short-term basis
to finance a portion of Gallagher's operating and investment activities. Terms
of the Revolving Credit Agreement include various

                                      -16-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

FINANCIAL CONDITION AND LIQUIDITY (Continued)

covenants that require Gallagher to maintain specified levels of tangible net
worth and restrict the amount of payments on certain expenditures. Gallagher was
in compliance with these covenants as of March 31, 2002. As of March 31, 2002,
there were $7.1 million of borrowings on a line of credit facility and $99.7
million of long term debt outstanding related to Gallagher's investments in the
two real estate partnerships previously discussed. These borrowing were used by
the two real estate partnerships for their own operating and finance investment
activities. Borrowings under these facilities are not available to Gallagher and
as such have not been included in determining Gallagher's overall liquidity.
Based on the ownership structure of these two investments, management believes
that Gallagher's exposure to losses related to these investments is limited to
the combination of its net carrying value, letters of credit and financial
guarantees. There have been no material changes in Gallagher's exposure to
losses for these investments since December 31, 2001. For additional
information, see Note 4 to the Consolidated Financial Statements included in
Gallagher's 2001 Annual Report on Form 10-K. In the event that these limited
partnerships were to default on their debt obligations and Gallagher's net
carrying value became impaired, the amount to be written-off could have a
material effect on Gallagher's consolidated financial position or operating
results.

Through the first three months of 2002, Gallagher paid $11.1 million in cash
dividends on its common stock. Gallagher's dividend policy is determined by the
Board of Directors. Quarterly dividends are declared after considering
Gallagher's available cash from earnings and its anticipated cash needs. On
April 15, 2002, Gallagher paid a first quarter dividend of $.15 per share to
shareholders of record as of March 29, 2002, a 15% increase over the first
quarter dividend per share in 2001.

Net capital expenditures were $11.2 million and $6.6 million for each of the
three-month periods ended March 31, 2002 and 2001, respectively. These amounts
include net capital expenditures related to Gallagher's investments in the two
real estate partnerships previously discussed. In the first quarter of 2002, the
Florida real estate partnership made net capital expenditures of $3.4 million
related to its land development project. In 2002, exclusive of the net capital
expenditures related to the two real estate partnerships, Gallagher expects to
make total expenditures for capital improvements of approximately $25.0 million.
Capital expenditures by Gallagher are related primarily to office moves and
expansions and updating computer systems and equipment.

In 1988, Gallagher adopted a common stock repurchase plan that has been extended
through June 30, 2002. Under the plan, Gallagher repurchased 470,000 shares at a
cost of $12.8 million in the first three months of 2001, while there were no
repurchases made in the first three months of 2002. Repurchased shares are held
for reissuance in connection with exercises of options under its stock option
plans. Under the provisions of the repurchase plan, Gallagher is authorized to
repurchase approximately 2.3 million additional shares through June 30, 2002.
Gallagher is under no commitment or obligation to repurchase any particular
amount of common stock and at its discretion may suspend the repurchase plan at
any time.

                                      -17-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
    ACT OF 1995

This quarterly report contains forward-looking statements. Forward-looking
statements made by or on behalf of Gallagher are subject to risks and
uncertainties, including but not limited to the following: Gallagher's
commission revenues are highly dependent on premiums charged by insurers, which
are subject to fluctuation; lower interest rates reduce Gallagher's income
earned on invested funds; the alternative insurance market continues to grow
which could unfavorably impact commission and favorably impact fee revenue;
Gallagher's revenues vary significantly from period to period as a result of the
timing of policy inception dates and the net effect of new and lost business
production; the general level of economic activity can have a substantial impact
on Gallagher's renewal business; Gallagher's operating results, return on
investment and financial position may be adversely impacted by exposure to
various market risks such as interest rate, equity pricing, foreign exchange
rates and the competitive environment, and changes in income tax laws.
Gallagher's ability to grow has been enhanced through acquisitions, which may or
may not be available on acceptable terms in the future and which, if
consummated, may or may not be advantageous to Gallagher. Accordingly, actual
results may differ materially from those set forth in the forward-looking
statements.

                                      -18-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                           PART II - OTHER INFORMATION

Item 2.       Changes in Securities

              Effective March 31, 2002, Gallagher contributed $8.9 million to an
              incentive plan through the issuance of 274,000 shares of Gallagher
              common stock. Also, effective on March 31, 2002, Gallagher granted
              a restricted stock award of 32,000 shares of Gallagher common
              stock to its Chief Executive Officer, with an aggregate value of
              $1.1 million. These 2002 restricted stock awards vest over a three
              year period at the rate of 33 1/3% per year beginning on March 31,
              2003.

              Effective March 21, 2002, Gallagher contributed $4.0 million to
              the Deferred Equity Participation Plan through the issuance of
              122,000 shares of Gallagher common stock. Distributions under the
              plan normally may not be made until the participant retires after
              reaching age 62 and are subject to forfeiture in the event of
              voluntary termination of employment prior to age 62. All
              distributions from the plan are made in the form of Gallagher's
              common stock.

              Exemption from registration is provided under Section 4(2) of the
              Securities Act of 1933, as amended, regarding transactions by an
              issuer not involving any public offering.

Item 6.       Exhibits and Reports on Form 8-K

       a.     Exhibit   10.8.6   -  Arthur J. Gallagher & Co. and AJG Financial
                                    Services, Inc. Sixth Amendment to Credit
                                    Agreement Dated as of April 23, 2002.

              Exhibit   10.22    -  Arthur J. Gallagher & Co. Brokerage Services
                                    Division Management Bonus Plan Amended and
                                    Restated as of March 21, 2002.

       b.     Reports on Form 8-K.  No Reports on Form 8-K were filed during the
                                    three-month period ended March 31, 2002.

                                      -19-

<PAGE>

                            ARTHUR J. GALLAGHER & CO.

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 14th day of May,
2002.

                                  ARTHUR J. GALLAGHER & CO.



                                  /s/ Michael J. Cloherty
                                  ----------------------------------------------
                                             Michael J. Cloherty
                                          Executive Vice President
                                           Chief Financial Officer

                                  /s/ Richard C. Cary
                                  ----------------------------------------------
                                               Richard C. Cary
                                                 Controller
                                          Chief Accounting Officer

                                      -20-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>3
<FILENAME>dex108.txt
<DESCRIPTION>SIXTH AMENDMENT TO CREDIT AGREEMENT
<TEXT>
<PAGE>

                                                                  EXHIBIT 10.8.6

           Arthur J. Gallagher & Co. and AJG Financial Services, Inc.
                       Sixth Amendment to Credit Agreement


Harris Trust and Savings Bank                 Citibank, N.A.
Chicago, Illinois                             New York, New York

Bank of America, N.A.                         LaSalle Bank National Association
Chicago, Illinois                             Chicago, Illinois

The Northern Trust Company
Chicago, Illinois

Ladies and Gentlemen:

     This Sixth Amendment to Credit Agreement dated as of April 23, 2002, but
effective as of March 31, 2002 (herein, the "Amendment"), is entered into by and
between the undersigned, Arthur J. Gallagher & Co, a Delaware corporation
("Gallagher"), AJG Financial Services, Inc., a Delaware corporation ("AJG";
Gallagher and AJG being referred to herein collectively as the "Borrowers" and
individually as a "Borrower"), Citibank, N.A., Bank of America, N.A., LaSalle
Bank National Association, The Northern Trust Company and Harris Trust and
Savings Bank, individually and as Agent (the "Agent"). Reference is hereby made
to that certain Credit Agreement dated as of September 11, 2000, as amended,
between the Borrowers, the Banks and the Agent (the "Credit Agreement"). All
capitalized terms used herein without definition shall have the same meanings
herein as such terms have in the Credit Agreement.

     The Borrowers desire to modify certain financial covenants and make certain
other amendments to the Credit Agreement, and the Banks are willing to do so
under the terms and conditions set forth in this Amendment.

Section 1.   Amendments.

     Subject to the satisfaction of the conditions precedent set forth in
Section 2 below, the Credit Agreement shall be and hereby is amended (effective
as of March 31, 2002) as follows:

             1.1.  Section 6.1 of the Credit Agreement shall be amended by
     inserting the following new definitions in the appropriate alphabetical
     order:

             ""Birchwood" means Birchwood Acres Limited Partnership,
             LLP, a limited partnership.

             "Capitalization" means, at any time the same is to be determined,
             the sum of Funded Debt and Net Worth.

<PAGE>

            "Two Pierce" means HP Itasca Two Pierce L.L.C., a limited
            liability company."

            1.2.  Section 9.5 of the Credit Agreement shall be amended and
     restated in its entirety to read as follows:

            "Section 9.5.  Financial Reports. The Borrowers shall, and shall
            cause each Subsidiary to, maintain a standard system of accounting
            in accordance with GAAP and shall furnish to the Agent, each Bank
            and their duly authorized representatives such information
            respecting the business and financial condition of the Borrowers and
            their Subsidiaries as the Agent or such Bank may reasonably request;
            and without any request, shall furnish to the Agent and the Banks:

                  (a)  as soon as available, and in any event within 45 days
            after the close of each fiscal quarter accounting period of
            Gallagher, a copy of the consolidated balance sheet of each Borrower
            and its Subsidiaries as of the last day of such period and the
            consolidated statements of income, retained earnings and cash flows
            of each Borrower and its Subsidiaries for the fiscal quarter and for
            the fiscal year-to-date period then ended, each in reasonable detail
            showing in comparative form the figures for the corresponding date
            and period in the previous fiscal year, prepared by each Borrower in
            accordance with GAAP and certified to by its President or Chief
            Financial Officer or Vice President and Treasurer;

                  (b)  as soon as available, and in any event within 90 days
            after the close of each annual accounting period of Gallagher, a
            copy of the consolidated balance sheet of Gallagher and its
            Subsidiaries as of the last day of the period then ended and the
            consolidated statements of income, retained earnings and cash flows
            of Gallagher and its Subsidiaries for the period then ended, and
            accompanying notes thereto, each in reasonable detail showing in
            comparative form the figures for the previous fiscal year,
            accompanied by an unqualified opinion thereon of Ernst & Young LLP
            or another firm of independent public accountants of recognized
            national standing, selected by Gallagher and satisfactory to the
            Required Banks, to the effect that the financial statements have
            been prepared in accordance with GAAP and present fairly in
            accordance with GAAP the consolidated financial condition of
            Gallagher and its Subsidiaries as of the close of such fiscal year
            and the results of their operations and cash flows for the fiscal
            year then ended and that an examination of such accounts in
            connection with such financial statements has been made in

                                       -2-

<PAGE>

            accordance with generally accepted auditing standards and,
            accordingly, such examination included such tests of the
            accounting records and such other auditing procedures as were
            considered necessary in the circumstances;

                 (c)  as soon as available, and in any event within 45 days
            after the close of each fiscal quarter accounting period of
            Gallagher, a listing of Gallagher's investments accounted for
            under the equity method of accounting and each of these
            investments' contingent commitments, each in reasonable detail
            and prepared by Gallagher in accordance with GAAP and certified
            to by its President or Chief Financial Officer or Vice
            President and Treasurer;

                 (d)  as soon as available, and in any event within 45 days
            after the close of each fiscal quarter accounting period of
            Gallagher and within 90 days after the close of each annual
            accounting period of Gallagher, a summary of the assets and
            liabilities of Gallagher's investments accounted for under the
            equity method of accounting, in reasonable detail and prepared
            by Gallagher in accordance with GAAP and certified to by its
            President or Chief Financial Officer or Vice President and
            Treasurer;

                 (e)  within the period provided in subsection (b) above,
            the written statement of the accountants who certified the
            audit report thereby required that in the course of their audit
            they have obtained no knowledge of any Default or Event of
            Default, or, if such accountants have obtained knowledge of any
            such Default or Event of Default, they shall disclose in such
            statement the nature and period of the existence thereof;

                 (f)  promptly after receipt thereof, any additional written
            reports, management letters or other detailed information
            contained in writing concerning significant aspects of either
            Borrower's or any Subsidiary's operations and financial affairs
            given to it by its independent public accountants;

                 (g)  promptly after the sending or filing thereof, a copies
            of all proxy statements, financial statements and reports which
            each Borrower sends to its shareholders, and copies of all
            regular, periodic and special reports and all registration
            statements which either Borrower files with the Securities and
            Exchange Commission or any successor thereto or with any
            national securities exchange; and

                                       -3-

<PAGE>

                  (h)  promptly after knowledge thereof shall have come to
            the attention of any responsible officer of either Borrower,
            written notice of any threatened or pending litigation or
            governmental proceeding or labor controversy against either
            Borrower or any Subsidiary which, if adversely determined,
            would have a material adverse effect on the financial
            condition, Properties, business or operations of either
            Borrower or any Subsidiary or of the occurrence of any Default
            or Event of Default hereunder.

            Each of the financial statements furnished to the Agent and the
            Banks pursuant to subsections (a) and (b) of this Section shall
            be accompanied by a Compliance Certificate signed by the
            President, the Chief Financial Officer or the Vice President
            and Treasurer of Gallagher to the effect that to the best of
            such officer's knowledge and belief no Default or Event of
            Default has occurred during the period covered by such
            statements or, if any such Default or Event of Default has
            occurred during such period, setting forth a description of
            such Default or Event of Default and specifying the action, if
            any, taken by the Borrowers to remedy the same. Such Compliance
            Certificate shall also (i) set forth the calculations
            supporting such statements in respect of Sections 9.7, 9.8, 9.9
            and 9.12 of this Agreement and (ii) contain a "deconsolidating"
            balance sheet and income statement (in a form reasonably
            acceptable to the Agent) detailing the impact on Gallagher of
            removing the equity investments in Birchwood and Two Pierce
            from the consolidated financial statements of Gallagher as of
            the applicable compliance reporting date and also detailing the
            net effect of such removal on the calculation of the financial
            covenants set forth in Sections 9.7, 9.8 and 9.9 hereof."

            1.3.  Section 9.7 of the Credit Agreement shall be amended and
     restated in its entirety to read as follows:

            "Section 9.7.  Net Worth. Gallagher shall not at any time permit
            its Net Worth to be less than $325,000,000 plus 50% of Net
            Income for each fiscal year (if positive for such year)
            completed as of the date of determination, commencing with the
            fiscal year ending December 31, 2002."

            1.4.  Section 9.8 of the Credit Agreement shall be amended and
     restated in its entirety to read as follows:

            "Section 9.8.  Funded Debt to Capitalization Ratio. Gallagher
            shall not at any time permit the ratio of Funded Debt to
            Capitalization to be more than 0.40 to 1.0. For purposes of

                                       -4-

<PAGE>

            determining Gallagher's compliance with this Section, Funded
            Debt shall be deemed to exclude any Indebtedness for Borrowed
            Money which is not a legal obligation of Gallagher and which is
            associated with Gallagher's equity investments in Birchwood and
            Two Pierce as shown on Gallagher's most recent quarterly
            financial statements."

            1.5.  Section 9.9 of the Credit Agreement shall be amended and
     restated in its entirety to read as follows:

            "Section 9.9.  Fixed Charge Coverage Ratio. Gallagher shall, as
            of the last day of each of its fiscal quarters ending during
            the periods set forth below, maintain its Fixed Charge Coverage
            Ratio for the four fiscal quarters then ended at not less than:

                                                            Fixed Charge
                                                           Coverage Ratio
                    From and              To and            shall not be
                   Including:           Including:            less than:

                     10/1/01             12/31/01            1.50 to 1.0
                      1/1/02              3/31/02            1.25 to 1.0
                      4/1/02        all times thereafter     1.50 to 1.0

            For purposes of determining Gallagher's compliance with this
            Section, the figures used to calculate the Fixed Charge
            Coverage Ratio will be adjusted to exclude from EBITDAR,
            Capital Expenditures, Restricted Payments, or Indebtedness for
            Borrowed Money, as appropriate, any portion of those respective
            consolidated totals which are associated with Birchwood or Two
            Pierce, provided that the Indebtedness for Borrowed Money
            associated with Gallagher's investments in Birchwood and Two
            Pierce and which is part of this consolidation is not a legal
            obligation of Gallagher"

            1.6.  Section 9.10 of the Credit Agreement shall be amended and
     restated in its entirety to read as follows:

            "Section 9.10. Indebtedness for Borrowed Money. The Borrowers
            shall not, nor shall they permit any Subsidiary to, issue,
            incur, assume, create or have outstanding any Indebtedness for
            Borrowed Money; provided, however, that the foregoing shall not
            restrict nor operate to prevent:

                  (a)  the Obligations;

                                       -5-

<PAGE>

                           (b) purchase money indebtedness and Capitalized Lease
                  Obligations secured by Liens permitted by Section 9.11(d)
                  hereof in an amount not to exceed $25,000,000 at any one time
                  outstanding for the Borrowers and their Subsidiaries in the
                  aggregate;

                           (c) Indebtedness for Borrowed Money which is not a
                  legal obligation of Gallagher and which is associated with
                  Gallagher's equity investments in Birchwood and Two Pierce as
                  shown on Gallagher's most recent quarterly financial
                  statements; and

                           (d) Indebtedness for Borrowed Money other than that
                  which is permitted by either of the foregoing subsections (a)
                  or (b) or (c) provided such Indebtedness does not exceed
                  $25,000,000 at any time outstanding for the Borrowers and
                  their Subsidiaries in the aggregate."

                  1.7.     Section 9.12 of the Credit Agreement shall be amended
             and restated in its entirety to read as follows:

                  "Section 9.12. Investments, Acquisitions, Loans, Advances and
                  Guaranties. Neither Borrower shall, nor shall they permit any
                  Subsidiary to, directly or indirectly, make, retain or have
                  outstanding any investments (whether through purchase of stock
                  or obligations or otherwise) in, or loans or advances (other
                  than for travel advances, advances for relocation and other
                  similar cash advances made to employees in the ordinary course
                  of business) to, any other Person, or acquire all or any
                  substantial part of the assets or business of any other Person
                  or division thereof, or be or become liable as endorser,
                  guarantor, surety or otherwise for any debt, obligation or
                  undertaking of any other Person, or otherwise agree to provide
                  funds for payment of the obligations of another, or supply
                  funds thereto or invest therein or otherwise assure a creditor
                  of another against loss, or apply for or become liable to the
                  issuer of a letter of credit which supports an obligation of
                  another (other than Letters of Credit issued hereunder), or
                  subordinate any claim or demand it may have to the claim or
                  demand of any other Person; provided, however, that the
                  foregoing shall not apply to nor operate to prevent:

                           (a) investments in direct obligations of the United
                  States of America or of any agency or instrumentality thereof
                  whose obligations constitute full faith and credit obligations
                  of the United States of America, provided that any such
                  obligations shall mature within one year of the date of
                  issuance thereof;

                                      -6-

<PAGE>

                           (b) investments in commercial paper rated at least
                  P-1 by Moody's Investors Services, Inc. and at least A-1 by
                  Standard & Poor's Corporation maturing within 270 days of the
                  date of issuance thereof;

                           (c) investments in certificates of deposit issued by
                  any United States commercial bank having capital and surplus
                  of not less than $100,000,000 which have a maturity of one
                  year or less;

                           (d) investments in money market funds that invest
                  solely, and which are restricted by their respective charters
                  to invest solely, in investments of the type described in the
                  immediately preceding subsections (a), (b) and (c) above;

                           (e) endorsement of items for deposit or collection of
                  commercial paper received in the ordinary course of business;

                           (f) investments for which the projected tax credits
                  exceed the cost of such investments;

                           (g) investments in hedge funds;

                           (h) loans to employees not exceeding $15,000,000 at
                  any one time outstanding for the Borrowers and their
                  Subsidiaries in the aggregate;

                           (i) intercompany loans and advances between the
                  Borrowers and guaranties by either Borrower of the obligations
                  of the other provided that such underlying obligations are not
                  prohibited under the terms of this Agreement;

                           (j) (i) investments in real estate limited
                  partnerships not included in subsection (f) above, (ii) equity
                  investments (including investments in preferred and common
                  stock) and (iii) investments, guarantees and contingent
                  obligations which are not specifically permitted by
                  subsections (a) through (i) above or by the foregoing clauses
                  (i) or (ii) of this subsection (j), provided that, (x) the
                  aggregate amount of all such investments under this subsection
                  (j) does not at any time exceed 90% of Net Worth as then
                  determined and computed, (y) the aggregate amount of the
                  relevant Borrower's or Subsidiary's initial investment in any
                  single asset does not exceed $25,000,000 and (z) the
                  investment in any such asset (computed as of any time
                  subsequent to the one year anniversary date of the initial
                  investment in such asset) does not exceed $50,000,000 unless
                  the Required Banks have consented in writing; and

                                      -7-

<PAGE>

                           (k) acquisitions of all or substantially all of the
                  assets or business of any other Person or division thereof, or
                  all or any part of the Voting Stock of or other equity
                  interest in any Person (including as such an acquisition, any
                  action to participate as a joint venturer in any joint venture
                  or as a partner in any partnership), in each case if and so
                  long as (i) no Default or Event of Default exists or would
                  exist after giving effect to such acquisition, (ii) the Board
                  of Directors or other governing body of such Person whose
                  Property or Voting Stock or other equity interest is being so
                  acquired has approved the terms of such acquisition and (iii)
                  such acquisition involves a line of business which is
                  complementary to the lines of business in which the Borrower
                  or the Subsidiary, as the case may be, making such acquisition
                  is engaged on the Effective Date.

                  In determining the amount of investments, acquisitions, loans,
                  advances and guarantees permitted under this Section,
                  investments and acquisitions shall always be taken at the
                  original cost thereof (regardless of any subsequent
                  appreciation or depreciation therein), loans and advances
                  shall be taken at the principal amount thereof then remaining
                  unpaid, and guarantees shall be taken at the amount of
                  obligations guaranteed thereby."

                  1.8. The Attachment to the form of Compliance Certificate
         appearing on Exhibit J to the Credit Agreement shall be amended and
         restated in its entirety to read as set forth on Annex I attached
         hereto.

Section 2.        Conditions Precedent.

         The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:

                  2.1. The Borrowers and the Required Banks shall have executed
         and delivered this Amendment.

                  2.2. The Borrowers shall have paid to the Agent, for the
         ratable benefit of those Banks which have executed this Amendment as of
         the date hereof, an amendment fee in an amount agreed to between the
         Agent and the Borrowers.

                  2.3. Legal matters incident to the execution and delivery of
         this Amendment shall be satisfactory to the Agent and its counsel.

Section 3.        Representations.

         In order to induce the Agent and the Banks to execute and deliver this
Amendment, the Borrowers hereby represent to the Agent and the Banks that as of
the date hereof the

                                      -8-

<PAGE>

representations and warranties set forth in Section 7 of the Credit Agreement
are and shall be and remain true and correct (except that the representations
contained in Section 7.5 shall be deemed to refer to the most recent financial
statements of the Borrowers delivered to the Agent and the Banks) and the
Borrowers are in compliance with the terms and conditions of the Credit
Agreement and no Default or Event of Default has occurred and is continuing
under the Credit Agreement or shall result after giving effect to this
Amendment.

Section 4.        Miscellaneous.

        4.1. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection therewith,
or in any certificate, letter or communication issued or made pursuant to or
with respect to the Credit Agreement, any reference in any of such items to the
Credit Agreement being sufficient to refer to the Credit Agreement as amended
hereby.

        4.2. The Borrowers agree to pay on demand all costs and expenses of or
incurred by the Agent in connection with the negotiation, preparation, execution
and delivery of this Amendment, including the fees and expenses of counsel for
the Agent.

        4.3. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.

                  [Remainder of Page Intentionally Left Blank]

                                      -9-

<PAGE>

         This Sixth Amendment to Credit Agreement is entered into as of the date
and year first above written.

                                        Arthur J. Gallagher & Co.


                                        By   /s/ Jack H. Lazzaro
                                             -----------------------------------
                                             Name:  Jack H. Lazzaro
                                                    ----------------------------
                                             Title: Vice President & Treasurer
                                                    ----------------------------


                                        AJG Financial Services, Inc.


                                        By   /s/ Jack H. Lazzaro
                                             -----------------------------------
                                             Name:  Jack H. Lazzaro
                                                    ----------------------------
                                             Title: Vice President and CFO
                                                    ----------------------------

                                      -10-

<PAGE>

Accepted and agreed to.
                                              Harris Trust and Savings Bank,
                                                      individually and as Agent


                                              By /s/ Len E. Meyer
                                                 ------------------------------
                                                 Name  Len E. Meyer
                                                       ------------------------
                                                 Title Vice President
                                                       ------------------------


                                              Citibank, N.A.


                                              By /s/ Peter C. Bickford
                                                 ------------------------------
                                                 Name  Peter C. Bickford
                                                       ------------------------
                                                 Title Vice President
                                                       ------------------------


                                              Bank of America, N.A.


                                              By /s/ Mehul Mehta
                                                 ------------------------------
                                                 Name  Mehul Mehta
                                                       ------------------------
                                                 Title Vice President
                                                       ------------------------


                                              LaSalle Bank National Association


                                              By /s/ Kyle Freimuth
                                                 ------------------------------
                                                 Name  Kyle Freimuth
                                                       ------------------------
                                                 Title Vice President
                                                       ------------------------


                                              The Northern Trust Company


                                              By /s/ Eric Dybing
                                                 ------------------------------
                                                 Name  Eric Dybing
                                                       ------------------------
                                                 Title Second Vice President
                                                       ------------------------

                                      -11-

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>4
<FILENAME>dex1022.txt
<DESCRIPTION>AMENDED AND RESTATED MANAGEMENT BONUS PLAN
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.22

                            ARTHUR J. GALLAGHER & CO.

                           BROKERAGE SERVICES DIVISION

                              MANAGEMENT BONUS PLAN

                    Amended and Restated as of March 21, 2002

1.       Purpose

The purpose of the Brokerage Services Division (BSD) Management Bonus Plan
(Plan) is to improve the revenue and pretax profit of BSD by providing rewards
to those management employees who have a substantial ongoing impact on BSD's
results. The objective of the Plan is to foster divisional identity and
interoffice teamwork among branches/niches and to recognize and reward operating
divisional, regional and branch results.

2.       Eligibility

         A. Eligibility is determined each year by the President and CEO of BSD
         and is limited to management employees whose actions have a significant
         impact on the continued profitability of the division, and who have
         signed the appropriate Executive Agreement. The purpose of the Plan is
         to promote management's role in directing business development. Thus to
         be eligible for this Plan, Regional and Branch Managers must limit
         their direct involvement in their books of business to $250,000. Day to
         day responsibility for books in excess of $250,000 or accounts in
         excess of $150,000 must be assigned to Account Executives or Account
         Managers as house accounts. Regional or Branch Managers who choose to
         maintain larger books of business will be compensated as producers
         rather than under this Plan.

         B.    Eligible employees, at the discretion of the President and CEO of
         BSD, will become participants (Participants) at the beginning of a
         calendar year only. Profit Center Managers included as a result of an
         acquisition will be considered for eligibility one full calendar year
         following the year of acquisition.

3.       Bonus Calculation

Participants are categorized by level of responsibility and impact on
profitability as follows:

<PAGE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Bonus Incentive Potential
as a % of Base Salary                   Position/Responsibility Levels
====================================================================================
<S>                          <C>
         100%                BSD Board Members
                             Profit Center Managers in excess of $1.5 million pretax
------------------------------------------------------------------------------------
          35%                Profit Center Managers below $1.5 million pretax
------------------------------------------------------------------------------------
          25%                BSD Staff (Regional Managers, General Counsel, etc.)
------------------------------------------------------------------------------------
</TABLE>

..    50% of the Management Bonus will be accrued upon attaining pretax
     profitability of BSD.

..    25% of the Management Bonus will be accrued upon attaining Regional or
     Profit Center pretax profitability, as determined by the President and CEO
     of BSD. Regional Managers and Regional Controllers must attain pretax
     targets for the Region and Branch Managers must attain pretax targets for
     their Branches.

..    25% of the Management Bonus will be accrued upon attaining specific
     individual goals determined by the Participant's manager.

All goals must be in writing prior to March 31 and on file with Corporate Human
Resources to be eligible for payment. Failure to submit goals in writing will
result in the Participant not being eligible to receive a Management Bonus.

In all cases, pretax profitability will not include the management bonus accrual
for the division, region and branch. Acquisition results will not be included in
regional or branch numbers during the initial acquisition year and for one year
thereafter.

4.   Vesting and Payout

     A. It is critically important to the continued success of BSD that
     Participants provide a consistent and continuous level of service in the
     performance of their respective duties, as assigned by management
     (including but not limited to managing personnel and resources to maintain
     continuity in staffing and services, such as a consistent and high level of
     client contact; monitoring and resolving account management issues; and
     preserving business by retaining valued and experienced employees). In the
     event a Participant terminates employment, management will incur additional
     expense and suffer other intangible economic loss in replacing the
     Participant and arranging for the continuation of important initiatives and
     projects handled by him/her. Accordingly, the Management Bonus, though
     calculated on the results and performance of a single calendar year, shall
     be earned and vested over a three year period at the rate of thirty-three
     and one-third percent (33 1/3%) per year on March 31 of each year, with the
     first such payment due on the March 31 of the year following the year for
     which the Management Bonus was calculated. The earned and vested

                                       2

<PAGE>

     portion will be paid in cash, less the applicable payroll deductions, no
     later than March 31 of each calendar year.

     B.   Any unearned and unvested portion of the Management Bonus will become
     fully earned, vested and payable in the event a Participant dies or becomes
     permanently and totally disabled. In order to earn and vest in any unpaid
     Management Bonus, all other Participants must at the time of vesting either
     (i) remain employed as active, regular, full-time employees through the
     bonus payment date, or (ii) execute a consulting agreement with BSD to
     provide a continuous and orderly transition of management services.
     Consulting agreements will be offered only to Participants that (i) retire
     at age 65 or older, (ii) qualify for severance under the ARTHUR J.
     GALLAGHER & CO. SEVERANCE PLAN, or (iii) are terminated by BSD for any
     reason other than for cause. Termination "for cause" shall include a
     termination based on management's determination that the Participant has:

     .   Committed any dishonest or fraudulent act to the detriment of the
         Company;

     .   Been convicted of any felony or crime involving moral turpitude or for
         any felony;

     .   Been insubordinate;

     .   Failed to perform his or her duties to the expectation of management;

     .   Violated any policy or procedure established by management; or

     .   Lost any professional licenses required for the performance of the
         Participant's duties.

5.   Grant of Equity Awards

The President and CEO of BSD (or in the case of grants to executive officers of
the Company, the Compensation Committee of the Board of Directors of the
Company, as provided in Section 11) may also grant shares of common stock
(Common Stock) of Arthur J. Gallagher & Co. (Company) to such Participants at
such times and in such amounts, and subject to such other terms and conditions
not inconsistent with the Plan as he shall determine (Equity Award). Each grant
of an Equity Award shall be evidenced by a written agreement setting forth the
terms of such award.

                                       3

<PAGE>

6.       Regulatory Approvals and Listing

The Company shall not be required to issue any certificate or certificates for
shares of Common Stock upon the vesting of an Equity Award granted under the
Plan prior to (i) the obtaining of any approval from any governmental agency
which the Company shall, in its sole discretion, determine to be necessary or
advisable, (ii) the admission of such shares to listing on any stock exchange on
which the Common Stock may then be listed, and (iii) the completion of any
registration or other qualification of such shares under any state or Federal
law or rulings or regulations of any governmental body which the Company shall,
in its sole discretion, determine to be necessary or advisable.

7.       Adjustment in Event of Changes in Capitalization

In the event of a recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation, rights offering, separation,
reorganization or liquidation, or any other change in the corporate structure or
shares of the Company, the Board of Directors of the Company shall make such
equitable adjustments, designed to protect against dilution, as it may deem
appropriate in the number and kind of shares authorized by the Plan thereby and
the number and kind of shares covered thereby.

8.       Termination or Amendment of the Plan

The Board of Directors may at any time terminate the Plan, and may from time to
time alter or amend the Plan or any part thereof (including, but without
limiting the generality of the foregoing, any amendment deemed necessary to
ensure that the Company may obtain any regulatory approval, referred to in
clause (i) of Section 6 hereof), provided that no change in any Management Bonus
or Equity Award theretofore granted may be made which would impair the rights of
a Participant, without the consent of such Participant.

9.       Change in Control

In the event of a change in control of the Company, as defined below, each
Management Bonus or Equity Award outstanding shall immediately vest in full. For
all purposes of the Plan, a "change in control of the Company" occurs if: (a)
any person or group, as defined in Sections 13(d) and 14(d)(2) of the Exchange
Act, as amended, is or becomes the beneficial owner, directly or indirectly of
securities of the Company representing 50 percent or more of the combined voting
power of the Company's outstanding securities then entitled to vote for the
election of directors; or (b) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors and any new directors whose election by the Board or nomination for
election by the Company's Stockholders was approved by at least two-thirds of
the directors then still in office who either were directors at the beginning of
the period or whose election was previously so approved cease for any reason to
constitute at least a majority thereof; or the Stockholders of the Company shall
approve the sale of all or substantially all of the assets of the Company or any
merger, consolidation,

                                       4

<PAGE>

issuance of securities or purchase of assets, the result of which would be the
occurrence of any event described in clause (a) or (b) above.

10.      Beneficiary

All Management Bonuses and Equity Awards shall be distributed to the Participant
during the lifetime of the Participant. The Participant may designate a
beneficiary to receive any undistributed Management Bonuses or Equity Awards in
the event of the death of the Participant.

11.      Compensation Committee Approval

To the extent that the President and CEO of BSD or any other executive officer
of the Company is a Participant, then any approval exercised by the President
and CEO of BSD under this Plan shall be exercised by the Compensation Committee
of the Board of Directors of the Company with respect to such Participants.

12.      Effective Date of Plan

The Plan, as restated and amended, is effective March 21, 2002.

                                       5

</TEXT>
</DOCUMENT>
</SUBMISSION>
