-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NNJQCCsIxFzz4QqncPefMoia35jARdnoa05svcprq+DRWOfUpdDApjASA2ric7hH 7tyK/4M1hGJd4h5NEvaXTQ== 0000912057-01-524082.txt : 20010718 0000912057-01-524082.hdr.sgml : 20010718 ACCESSION NUMBER: 0000912057-01-524082 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010717 GROUP MEMBERS: PATRICK G. RYAN, JR. GROUP MEMBERS: ROBERT J.W. RYAN GROUP MEMBERS: RYAN PATRICK G GROUP MEMBERS: SHIRLEY W. RYAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AON CORP CENTRAL INDEX KEY: 0000315293 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 363051915 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-32053 FILM NUMBER: 1682695 BUSINESS ADDRESS: STREET 1: 123 N WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3127013000 FORMER COMPANY: FORMER CONFORMED NAME: COMBINED INTERNATIONAL CORP DATE OF NAME CHANGE: 19870504 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RYAN PATRICK G CENTRAL INDEX KEY: 0001145037 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O RYAN ENTERPRISES STREET 2: 123 N WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3127012300 SC 13D 1 a2054372zsc13d.txt SC 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 5)* Aon Corporation (Name of Issuer) Common Stock, $1.00 Par Value (Title of Class of Securities) 200166106 (CUSIP Number) Lisa J. Reategui Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 16, 2001 (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e),13d-1(f) or 13d-1(g), check the following: / / The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, SEE the NOTES). (Continued on the following pages) (Page 1 of 15 Pages) * See Introduction SCHEDULE 13D 1 NAME OF REPORTING PERSON PATRICK G. RYAN 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS SC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,875,833 WITH 8 SHARED VOTING POWER 12,342,300 9 SOLE DISPOSITIVE POWER 9,875,833 10 SHARED DISPOSITIVE POWER 7,994,681 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 31,361,493 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.68% 14 TYPE OF REPORTING PERSON IN SCHEDULE 13D 1 NAME OF REPORTING PERSON SHIRLEY W. RYAN 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS SC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING PERSON 9,143,360 WITH 8 SHARED VOTING POWER 9,450,037 9 SOLE DISPOSITIVE POWER 10,598,716 10 SHARED DISPOSITIVE POWER 7,994,681 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 31,361,493 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.68% 14 TYPE OF REPORTING PERSON IN SCHEDULE 13D 1 NAME OF REPORTING PERSON PATRICK G. RYAN, JR. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS SC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 WITH 8 SHARED VOTING POWER 1,445,794 9 SOLE DISPOSITIVE POWER 1,445,794 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,445,794 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .54% 14 TYPE OF REPORTING PERSON IN SCHEDULE 13D 1 NAME OF REPORTING PERSON ROBERT J.W. RYAN 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS SC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 WITH 8 SHARED VOTING POWER 1,446,469 9 SOLE DISPOSITIVE POWER 1,446,469 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,446,469 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .54% 14 TYPE OF REPORTING PERSON IN INTRODUCTION This filing is being made jointly by Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr. and Robert J.W. Ryan and relates to the common stock, $1.00 par value ("Aon Common Stock"), of Aon Corporation, a Delaware corporation ("Aon"). These individuals own Aon Common Stock directly and Shirley W. Ryan acts as trustee of various trusts to benefit these individuals and Corbett M.W. Ryan. This filing amends the Schedule 13D previously filed by Patrick G. Ryan and constitutes the initial filing on Schedule 13D of Shirley W. Ryan, Patrick G. Ryan, Jr. and Robert J. W. Ryan. Shirley W. Ryan is the spouse of Patrick G. Ryan, and Patrick G. Ryan, Jr., Robert J.W. Ryan and Corbett M.W. Ryan are adult sons of Patrick G. Ryan and Shirley W. Ryan. ITEM 1. SECURITY AND ISSUER. This statement relates to the Common Stock. Aon is a Delaware corporation, the principal executive offices of which are located at 200 E. Randolph Drive, Chicago, Illinois 60601. ITEM 2. IDENTITY AND BACKGROUND. The name, business address and present principal occupation or employment of each of the persons filing this statement are as follows: PATRICK G. RYAN: Mr. Ryan is the Chairman and Chief Executive Officer of Aon, a holding company that comprises a family of insurance brokerage, consulting and insurance underwriting subsidiaries. Aon's principal executive offices are as set forth in Item 1, and Mr. Ryan's business address is c/o Aon at such address. SHIRLEY W. RYAN: Mrs. Ryan is co-founder and chairman of Pathways Awareness Foundation, a foundation that promotes early detection and inclusion for infants and children with physical differences or disabilities, and President of Pathways Center, an outpatient pediatric therapy clinic. The business address of the foundation and the center, and Mrs. Ryan's business address, are c/o Ryan Enterprises Group, 123 N. Wacker Drive, Suite 900, Chicago, Illinois 60606. PATRICK G. RYAN, JR.: Mr. Ryan is the Chief Executive Officer and founder of First Look Networks LLC, a Chicago-based firm pioneering the creation of value added B2B networks in information intensive industries. The business address of First Look Networks is 123 N. Wacker Drive, Suite 900, Chicago, Illinois 60606. Mr. Ryan's business address is c/o Ryan Enterprises Group, 123 N. Wacker Drive, Suite 900, Chicago, Illinois 60606. ROBERT J.W. RYAN: Mr. Ryan is the director of business development of eChalk, LLC, a provider of Web-based communication networks for K-12 schools and districts. The principal executive offices of eChalk are located at 26 Broadway, Suite 941, New York, New York 10004. Mr. Ryan's business address is c/o Ryan Enterprises Group, 123 N. Wacker Drive, Suite 900, Chicago, Illinois 60606. None of the persons filing this statement has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). None of the persons filing this statement has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding been or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. Each of the persons filing this statement is a citizen of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Pursuant to an Agreement and Plan of Merger dated July 16, 2001 (the "Merger Agreement") among Aon, Holdco #1, Inc., a Delaware corporation and wholly owned subsidiary of Aon ("Holdco #1"), Holdco #2, Inc., a Delaware corporation and wholly owned subsidiary of Aon ("Holdco #2"), Ryan Holding Corporation of Illinois, a Delaware corporation ("RHC"), Ryan Enterprises Corporation of Illinois, a Delaware corporation ("REC"), Patrick G. Ryan, Shirley W. Ryan and the stockholders of RHC and REC, who consisted solely of members of the Ryan family or trusts controlled by members of the Ryan family, on July 16, 2001, (1) Holdco #1 merged with and into RHC (the "RHC Merger") with the result that the surviving corporation became a wholly owned subsidiary of Aon and the stock of RHC outstanding immediately prior to the RHC Merger was converted into an aggregate 13,992,089 shares of Aon Common Stock, and (2) Holdco #2 merged with and into REC (the "REC Merger") with the result that the surviving corporation became a wholly owned subsidiary of Aon and the outstanding stock of REC outstanding immediately prior to the REC Merger was converted into an aggregate 8,372,348 shares of Aon Common Stock. At the time of the RHC Merger and the REC Merger, the sole assets of RHC and REC consisted of an aggregate of 22,364,437 shares of Aon Common Stock and cash aggregating $6 million more than the balance sheet liabilities of RHC and REC, which consisted solely of bank indebtedness. The number of shares beneficially owned by the persons filing this statement in the aggregate (without duplication) after the REC Merger and the RHC Merger is the same as the number beneficially owned by them prior to such mergers. The persons filing this statement and all of the former stockholders of REC and RHC have agreed in the Merger Agreement to indemnify Aon, REC and RHC for any breaches of representations of REC, RHC and such persons and stockholders made in the Merger Agreement and for all liabilities of REC and RHC relating to the period prior to the Effective Time, other than certain balance sheet liabilities. The foregoing discussion of the Merger Agreement is not complete and is qualified by reference to the form of Merger Agreement included as an exhibit to this statement and hereby incorporated by reference. ITEM 4. PURPOSE OF TRANSACTION. The transactions contemplated by the Merger Agreement simplified the manner in which Patrick G. Ryan's family owns Aon Common Stock, from indirect ownership through corporations to direct ownership by the Ryan family members and associated trusts. This will produce ongoing administrative cost savings for the Ryan family and will also be more tax efficient. Aon benefited from these transactions, including by the receipt of cash, net of liabilities and expenses, of approximately $5 million and by the agreement of members of the Ryan family to certain restrictions on their ability to transfer Aon Common Stock. Patrick G. Ryan is Chairman and Chief Executive Officer and a director of Aon and in such capacities participates in the decisions made by the Board of Directors of Aon in the ordinary course of the business of Aon. Except as may arise in connection with the normal execution of the positions that Patrick G. Ryan holds with Aon, or in connection with Aon's proposed spin-off of its insurance underwriting business, as previously publicly disclosed by Aon, or as provided in the next paragraph, none of the persons filing this statement has any present plans or proposals which relate to or would result in (a) the acquisition by any person of additional securities of Aon or the disposition of securities of Aon; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Aon or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of Aon or of any of its subsidiaries; (d) any change in the present board of directors or management of Aon, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of Aon; (f) any other material change in Aon's business or corporate structure; (g) changes in Aon's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of Aon by any person; (h) causing a class of securities of Aon to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of Aon becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) any action similar to any of those enumerated above. Any of the reporting persons may from time to time acquire additional securities of Aon or dispose of shares of Aon Common Stock. Such acquisitions or dispositions may be made in the open market or in privately negotiated transactions. In addition, Patrick G. Ryan may acquire additional shares of Aon Common Stock upon exercise of employee stock options granted to him from time to time by Aon or under employee benefit plans of Aon in which he participates. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. The persons filing this statement beneficially own in the aggregate (without duplication) 31,095,839 shares of Aon Common Stock, representing approximately 11.68% of the 268,482,089 issued and outstanding shares of Aon Common Stock as of May 31, 2001 (as provided by Aon). The shares of Aon Common Stock beneficially owned by such persons are beneficially owned as follows:
SOLE POWER SHARED POWER SOLE POWER SHARED POWER TO DISPOSE OR DIRECT TO DISPOSE OR TO VOTE OR TO VOTE OR THE DIRECT THE DIRECT THE VOTE DIRECT THE VOTE DISPOSITION DISPOSITION --------------- --------------- -------------------- -------------- Patrick G. Ryan 9,875,833(1) 12,342,300 (2) 9,875,833(1) 7,994,681 (3) Shirley W. Ryan 9,143,360 9,450,037 (4) 10,598,716 7,994,681 (5) Patrick G. Ryan, Jr. 0 1,445,794 (6) 1,445,794 0 Robert J.W. Ryan 0 1,446,469 (7) 1,446,469 0
- ---------- (1) Includes 738,000 shares which Patrick G. Ryan has the right to acquire within 60 days of the date of this statement upon exercise of employee stock options granted to him by Aon. Also includes 4,400 Common Shares beneficially owned under the ESOP Account of the Aon Savings Plan and allocated to Mr. Ryan, and 314,300 Common Shares beneficially owned and attributed to Mr. Ryan pursuant to his investment in the Aon Common Stock Fund of the Aon Savings Plan. (2) Shares power to vote with Shirley W. Ryan as to 9,450,037 shares, with Patrick G. Ryan, Jr. as to 1,445,794 shares and with Robert J.W. Ryan as to 1,446,469 shares. (3) Shares power to dispose with Shirley W. Ryan as to 7,994,681 shares. (4) Shares power to vote with Patrick G. Ryan as to 9,450,037 shares. (5) Shares power to dispose with Patrick G. Ryan as to 7,994,681 shares. (6) Shares power to vote with Patrick G. Ryan. (7) Shares power to vote with Patrick G. Ryan. No transactions, other than as described under Item 3, in Aon Common Stock were effected by any of the persons filing this statement within the past sixty days. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The following agreements have been entered into by the persons filing this statement with respect to the securities of Aon: 1. Stock Restriction Agreement dated July 16, 2001 (the "Stock Restriction Agreement") among Aon, Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan and certain trusts for which one or more of such persons is trustee. 2. Escrow Agreement dated July 16, 2001 (the "Escrow Agreement") among Aon, Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, certain trusts for which one or more of such persons is trustee and American National Bank and Trust Company of Chicago, as escrow agent. 3. Irrevocable Stockholders' Voting Agreement and Proxy dated July 16, 2001 (the "Voting Agreement") among Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan and certain trusts for which one or more of such persons is trustee. STOCK RESTRICTION AGREEMENT. The Stock Restriction Agreement places certain restrictions on the ability of the persons filing this statement and certain trusts for which one or more of such persons is trustee (the "Restricted Holders") to transfer shares of Aon Common Stock. Each Restricted Holder agreed that no shares of Aon Common Stock owned as of the date of the Stock Restriction Agreement or later acquired by such Restricted Holder will be transferred by such Restricted Holder, either directly or indirectly, except as follows: (a) a transfer may be made to any other Restricted Holder or a Permitted Transferee who is or becomes bound by the Stock Restriction Agreement (as defined in the Stock Restriction Agreement); (b) a transfer may be made to a Charitable Organization (as defined in the Stock Restriction Agreement); (c) a sale may be made on a national securities exchange or by means of an inter-dealer quotation system maintained by a registered securities association, but only to the extent such sales made by each Restricted Holder, together with sales by such Restricted Holder's Permitted Transferees of shares transferred by such Restricted Holder to such Permitted Transferees, do not exceed the amount which would be permitted to be sold by each such Restricted Holder under Rule 144 under the Securities Act of 1933; provided, that prior to the fifth anniversary of the date of the Stock Restriction Agreement (i) each Restricted Holder shall be deemed to be an "affiliate" (within the meaning of Rule 144) of Aon regardless of whether or not such Restricted Holder is in fact such an affiliate of Aon or otherwise subject to the provisions of Rule 144 and (ii) such Restricted Holder, the other Restricted Holders and all of such Restricted Holders' Permitted Transferees shall be deemed to be the same "person" (within the meaning of Rule 144) regardless of whether or not such Restricted Holder, the other Restricted Holders and all of such Restricted Holders' Permitted Transferees are in fact the same person; (d) a transfer may be made to a person other than a Permitted Transferee in a transaction effected without registration under the Securities Act of 1933 or applicable state securities laws on terms and under circumstances corresponding to those terms and circumstances on and under which exempt private placements may be made by the Company pursuant to Section 4(2) of the Securities Act of 1933; provided that the Restricted Holder complies with the terms and provisions of the Stock Restriction Agreement giving Aon the right of first refusal with respect to the shares proposed to be transferred; (e) shares may be pledged, to the extent such pledge is made to a party pursuant to a bona fide pledge of such shares as collateral security for indebtedness due to such party (the "Bona Fide Pledgee"), provided that (i) upon any release or termination of such pledge, such shares shall continue to constitute shares subject to the terms of the Stock Restriction Agreement, (ii) in the event of foreclosure or other similar action by the Bona Fide Pledgee, any such pledged shares may be transferred in any manner permitted by law, free of all restrictions under the Stock Restriction Agreement and (iii) with respect to any bona fide pledge of shares granted or executed pursuant to a credit facility or loan agreement entered into after the date of the Stock Restriction Agreement, the Bona Fide Pledgee agrees to notify Aon at least three business days prior to any foreclosure or similar action or any transfer by the Bona Fide Pledgee; (f) a transfer may be made pursuant to the terms of any tender or exchange offer made to all holders of Aon Common Stock which is approved by the board of directors of Aon, subject to certain terms and conditions contained in the Stock Restriction Agreement; (g) a transfer may be made pursuant to any merger or consolidation involving Aon which is approved by the board of directors of Aon, subject to certain terms and conditions contained in the Stock Restriction Agreement; and (h) a transfer may be made in connection with any recapitalization, reorganization, reclassification, change of domicile merger or other similar transaction which is approved by the board of directors of Aon, subject to certain terms and conditions contained in the Stock Restriction Agreement. The Stock Restriction Agreement terminates (i) upon the liquidation or dissolution of Aon, (ii) the occurrence of any reorganization, merger or other transaction in which holders of Aon Common Stock immediately prior to such event, in their capacity as such holders, receive less than 50% of the combined voting power of the surviving or resulting entity, or (iii) the earlier of (a) two years after the later of the death of Patrick G. Ryan and Shirley W. Ryan or (b) the tenth anniversary of the date of Stock Restriction Agreement. The foregoing discussion of the Stock Restriction Agreement is not complete and is qualified by reference to the form of Stock Restriction Agreement included as an exhibit to this statement and hereby incorporated by reference. ESCROW AGREEMENT. Under the Escrow Agreement, 583,942 shares of Aon Common Stock owned by a trust the trustee of which is Shirley W. Ryan, have been pledged to secure certain of the indemnification obligations under the Merger Agreement of the persons filing this statement and the former stockholders of REC and RHC. Any shares held under the Escrow Agreement at the end of the fifth anniversary of the date of the Escrow Agreement will be distributed to the trust that pledged such shares unless a claim for indemnification remains outstanding, in which case shares having a value of twice the amount of the unresolved claim shall be retained pending resolution of the claim. The shares so pledged do not represent a limitation on the indemnification obligations of such persons and stockholders as Aon will be permitted to seek recovery either under the Escrow Agreement or directly from such persons and stockholders. The foregoing discussion of the Escrow Agreement is not complete and is qualified by reference to the form of Escrow Agreement included as an exhibit to this statement and hereby incorporated by reference. VOTING AGREEMENT. Under the Voting Agreement, each of Patrick G. Ryan, Jr., Robert J.W. Ryan and a trust for the benefit of Corbett M.W. Ryan, the trustee of which trust is Shirley W. Ryan, have agreed, with respect to all matters submitted to Aon's stockholders for approval, to vote all shares of Aon Common Stock owned by such person or trust in the same manner in which Patrick G. Ryan votes the shares of Aon Common Stock owned or controlled by him or as otherwise directed by him. In addition, certain trusts have agreed that if Patrick G. Ryan or Shirley W. Ryan cease to be the trustee thereof, such trusts will vote the shares of Aon Common Stock owned or controlled by them in the manner described in the preceding sentence. Patrick G. Ryan has been appointed proxy for purposes of voting the shares of Aon Common Stock in accordance with such voting agreements. The Voting Agreement also places certain restrictions on the ability of the persons filing this statement and certain trusts for which one or more of such persons is trustee to transfer shares of Aon Common Stock to anyone other than such persons or trusts. The Voting Agreement terminates upon the death of Patrick G. Ryan. The foregoing discussion of the Voting Agreement is not complete and is qualified by reference to the form of Voting Agreement included as an exhibit to this statement and hereby incorporated by reference. Patrick G. Ryan and certain trusts for whom he or Shirley W. Ryan is a trustee have revolving and other credit facilities with various financial institutions. An aggregate of 12,167,727 shares of Aon Common Stock beneficially owned by the persons filing this statement have been pledged as of July 16, 2001 to secure repayment of such amounts as may be outstanding under such facilities from time to time. Additional shares of Aon Common Stock may be pledged by such persons from time to time hereafter to secure borrowings under such facilities or other facilities entered into in the future. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit I Agreement of Joint Filing, dated July 16, 2001 Exhibit II Agreement and Plan of Merger, dated July 16, 2001 among Aon Corporation, Ryan Holding Corporation of Illinois, Ryan Enterprises Corporation of Illinois, Holdco #1, Inc., Holdco #2, Inc., Patrick G. Ryan, Shirley W. Ryan and the stockholders of Ryan Holding Corporation of Illinois and of Ryan Enterprises Corporation of Illinois set forth on the signature pages thereto. Exhibit III Stock Restriction Agreement dated July 16, 2001 among Aon Corporation, Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001 and the Family GST Trust under the PGR 2000 Trust dated November 22, 2000. Exhibit IV Escrow Agreement dated July 16, 2001 among Aon Corporation, Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001 and the Family GST Trust under the PGR 2000 Trust dated November 22, 2000 and American National Bank and Trust Company of Chicago, as escrow agent. Exhibit V Irrevocable Stockholders' Voting Agreement and Proxy dated July16, 2001among Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001, and the Family GST Trust under PGR 2000 Trust dated November 22, 2000. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, correct and complete. /s/ Patrick G. Ryan ------------------------------------ Patrick G. Ryan Dated: July 16, 2001 /s/ Shirley W. Ryan ------------------------------------ Shirley W. Ryan Dated: July 16, 2001 /s/ Patrick G. Ryan, Jr. ------------------------------------ Patrick G. Ryan, Jr. Dated: July 16, 2001 /s/ Robert J.W. Ryan ------------------------------------ Robert J.W. Ryan Dated: July 16, 2001 EXHIBIT INDEX Exhibit I Agreement of Joint Filing, dated July 16, 2001 Exhibit II Agreement and Plan of Merger, dated July 16, 2001 among Aon Corporation, Ryan Holding Corporation of Illinois, Ryan Enterprises Corporation of Illinois, Holdco #1, Inc., Holdco #2, Inc., Patrick G. Ryan, Shirley W. Ryan and the stockholders of Ryan Holding Corporation of Illinois and of Ryan Enterprises Corporation of Illinois set forth on the signature pages thereto. Exhibit III Stock Restriction Agreement dated July 16, 2001 among Aon Corporation, Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001 and the Family GST Trust under the PGR 2000 Trust dated November 22, 2000. Exhibit IV Escrow Agreement dated July 16, 2001 among Aon Corporation, Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001 and the Family GST Trust under the PGR 2000 Trust dated November 22, 2000 and American National Bank and Trust Company of Chicago, as escrow agent. Exhibit V Irrevocable Stockholders' Voting Agreement and Proxy dated July 16, 2001 among Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001, and the Family GST Trust under PGR 2000 Trust dated November 22, 2000. EX-99.1 2 a2054372zex-99_1.txt EXHIBIT 99.1 EXHIBIT I AGREEMENT OF JOINT FILING Pursuant to Rule 13d-1(k)(1)(iii) of Regulation 13D-G of the General Rules and Regulations of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, the undersigned agree that the statement to which this exhibit is attached is filed on behalf of each of them in the capacities set forth below. Date: July 16, 2001 /s/ Patrick G. Ryan --------------------------------------- Patrick G. Ryan /s/ Shirley W. Ryan --------------------------------------- Shirley W. Ryan /s/ Patrick G. Ryan, Jr. --------------------------------------- Patrick G. Ryan, Jr. /s/ Robert J.W. Ryan --------------------------------------- Robert J.W. Ryan EX-99.2 3 a2054372zex-99_2.txt EXHIBIT 99.2 Exhibit II AGREEMENT AND PLAN OF MERGER among Aon Corporation, Holdco #1, Inc., Holdco #2, Inc., Ryan Holding Corporation of Illinois, Ryan Enterprises Corporation of Illinois, Patrick G. Ryan, Shirley W. Ryan, and the Stockholders of Ryan Holding Corporation of Illinois and Ryan Enterprises Corporation of Illinois Dated July 16, 2001 TABLE OF CONTENTS Page ---- AGREEMENT AND PLAN OF MERGER.......................................................................................1 ARTICLE I THE MERGER...............................................................................................2 SECTION 1.1. The Mergers; Surviving Corporations..........................................................2 SECTION 1.2. Effect of the Mergers........................................................................2 SECTION 1.3. Certificates of Incorporation of the Surviving Corporations..................................2 SECTION 1.4. Bylaws of the Surviving Corporations.........................................................2 SECTION 1.5. Board of Directors and Officers of the Surviving Corporations................................3 SECTION 1.6. Effective Time of the Mergers................................................................3 ARTICLE II CONVERSION OF SHARES....................................................................................3 SECTION 2.1. Conversion of Capital Stock..................................................................3 SECTION 2.2. No Fractional Shares.........................................................................5 SECTION 2.3. Transfer of Aon Common Stock.................................................................5 SECTION 2.4. No Further Ownership Rights in the Companies.................................................6 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE HOLDING COMPANIES AND THE RYAN FAMILY MEMBERS....................6 SECTION 3.1. Organization and Authority; Qualification....................................................6 SECTION 3.2. No Subsidiaries; Investments.................................................................7 SECTION 3.3. Reorganization...............................................................................7 SECTION 3.4. Authorization................................................................................7 SECTION 3.5. No Violation.................................................................................8 SECTION 3.6. Capitalization of the Companies..............................................................8 SECTION 3.7. Ownership of Aon Common Stock................................................................9 SECTION 3.8. Consents and Approvals.......................................................................9 SECTION 3.9. Books and Records............................................................................9 SECTION 3.10. Financial Statements........................................................................10 SECTION 3.11. Absence of Certain Changes..................................................................11 SECTION 3.12. Absence of Undisclosed Liabilities..........................................................11 SECTION 3.13. Compliance with Applicable Law..............................................................11 SECTION 3.14. Litigation..................................................................................11 SECTION 3.15. Contracts...................................................................................11 SECTION 3.16. Employee Benefit Plans......................................................................12 SECTION 3.17. Environmental Matters.......................................................................12 SECTION 3.18. Taxes.......................................................................................13 SECTION 3.19. Labor Matters...............................................................................14 SECTION 3.20. Bank Accounts...............................................................................14 SECTION 3.21. Real Estate; Personal Property..............................................................14 SECTION 3.22. Names.......................................................................................14 SECTION 3.23. Disclosure..................................................................................14 i ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE RYAN FAMILY MEMBERS...............................................15 SECTION 4.1. Authorization................................................................................15 SECTION 4.2. No Violation.................................................................................16 SECTION 4.3. Consents and Approvals.......................................................................16 SECTION 4.4. Investment Representation....................................................................16 SECTION 4.5. Waiver of Notice of Appraisal Rights........................................................17 SECTION 4.6. Tax Matters..................................................................................17 ARTICLE V REPRESENTATIONS AND WARRANTIES OF AON AND THE SUBS.......................................................17 SECTION 5.1. Organization and Qualification...............................................................17 SECTION 5.2. Authorization................................................................................17 SECTION 5.3. No Violation.................................................................................17 SECTION 5.4. Capitalization of Aon........................................................................18 SECTION 5.5. Consents and Approvals.......................................................................18 ARTICLE VI COVENANTS...............................................................................................18 SECTION 6.1. Representations and Warranties; Conduct of Business of the Companies Prior to the Effective Time....................................................................................18 SECTION 6.2. All Reasonable Efforts.......................................................................19 SECTION 6.3. Consents and Approvals.......................................................................19 SECTION 6.4. Public Announcements.........................................................................19 SECTION 6.5. Disclosure Supplements.......................................................................19 SECTION 6.6. Payment of Transaction Expenses..............................................................19 SECTION 6.7. Specific Performance.........................................................................20 SECTION 6.8. Tax-Free Reorganization......................................................................20 SECTION 6.9. Tax Matters..................................................................................20 SECTION 6.10.Voting Agreement.............................................................................22 ARTICLE VII CLOSING................................................................................................22 SECTION 7.1. Closing......................................................................................22 ARTICLE VIII SURVIVAL AND INDEMNIFICATION..........................................................................24 SECTION 8.1. Survival and Remedies........................................................................24 SECTION 8.2. Indemnification of Aon.......................................................................25 SECTION 8.3. Notice of Claim..............................................................................27 SECTION 8.4. Indemnification Procedures; Conditions.......................................................27 SECTION 8.5. Treatment of Indemnification Payments........................................................28 ARTICLE IX MISCELLANEOUS PROVISIONS................................................................................28 SECTION 9.1. Amendment and Modification...................................................................28 SECTION 9.2. Waiver of Compliance; Consents...............................................................28 SECTION 9.3. Validity.....................................................................................28 ii SECTION 9.4. Expenses and Obligations.....................................................................28 SECTION 9.5. Parties in Interest..........................................................................28 SECTION 9.6. Notices......................................................................................28 SECTION 9.7. Governing Law................................................................................29 SECTION 9.8. Counterparts.................................................................................29 SECTION 9.9. Headings.....................................................................................30 SECTION 9.10. Certain Definitions.........................................................................30 SECTION 9.11. Entire Agreement............................................................................33 SECTION 9.12. Interpretation of Certain Terms.............................................................33 SECTION 9.13. Assignment..................................................................................33 SECTION 9.14. No Strict Construction......................................................................33 SECTION 9.15. Dispute Resolution..........................................................................34
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EXHIBITS -------- Exhibit A Form of Certificate of Merger to be filed with the Delaware Secretary of State with respect to the RHC Merger (Section 1.6) Exhibit B Form of Certificate of Merger to be filed with the Delaware Secretary of State with respect to the REC Merger (Section 1.6) Exhibit C Form of Voting Agreement (Section 6.10) Exhibit D Form of Assumption Agreement (Section 7.1(a)) Exhibit E Certificate of Transfer Agent and Registrar (Section 7.1(a)) Exhibit F Form of RHC Officer's Certificate (Section 7.1(a)) Exhibit G Form of REC Officer's Certificate (Section 7.1(a)) Exhibit H Form of Escrow Agreement (Section 2.1(e)) Exhibit I Form of Stock Restriction Agreement (Section 7.1(b)) Exhibit J Form of Trustee's Certificate (Section 7.1(b)) Exhibit K Form of Aon Officer's Certificate (Section 7.1(c)) Exhibit L Form of Fairness Opinion of William Blair & Company, L.L.C. (Section 7.2(e)) Exhibit M Form of Opinion of Ernst & Young LLP regarding tax matters (Section 7.2(f)) Exhibit N Form of Letter of Ernst & Young LLP regarding financial accounting matters (Section 7.2(g)) Exhibit O Form of Opinion of Sidley Austin Brown & Wood (Section 7.2(h))
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SCHEDULES --------- SCHEDULE 3.1. List of Jurisdictions Where Licensed or Qualified to do Business SCHEDULE 3.6. Ownership of Shares of the Companies SCHEDULE 3.7. Bank Liens SCHEDULE 3.10. Most Recent Balance Sheets SCHEDULE 3.14. List and Summary of all Pending and Threatened Claims SCHEDULE 3.17. Environmental Matters SCHEDULE 3.18. Taxes SCHEDULE 3.20. Bank Accounts SCHEDULE 9.10. Reorganization Transactions
v AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated July 16, 2001 ("AGREEMENT"), by and among Ryan Holding Corporation of Illinois, a Delaware corporation ("RHC"), Ryan Enterprises Corporation of Illinois, a Delaware corporation ("REC" and collectively with RHC, the "COMPANIES"), Aon Corporation, a Delaware corporation ("AON"), Holdco #1, Inc., a Delaware corporation and a wholly-owned subsidiary of Aon ("RHC SUB"), Holdco #2, Inc., a Delaware corporation and a wholly-owned subsidiary of Aon ("REC SUB" and collectively with RHC Sub, the "SUBS"), Patrick G. Ryan ("PGR"), Shirley W. Ryan ("SWR") and the stockholders of the Companies set forth on the signature pages hereto (the "STOCKHOLDERS" and collectively with PGR and SWR, the "RYAN FAMILY MEMBERS"). RHC and RHC Sub are sometimes referred to collectively herein as the "RHC CONSTITUENT CORPORATIONS." REC and REC Sub are sometimes referred to collectively herein as the "REC CONSTITUENT CORPORATIONS." RECITALS A. RHC and REC are corporations whose sole assets consist of cash and shares of Aon Common Stock. The Stockholders own all of the issued and outstanding capital stock of RHC and REC. B. Aon, RHC Sub and RHC desire to effect a merger ("RHC MERGER") of RHC Sub into RHC, pursuant to which (i) subject to Section 2.2 hereof, each issued and outstanding share of RHC Common Stock and RHC Preferred Stock will be converted into the right to receive the number of shares of Aon Common Stock specified herein, and (ii) Aon will become the sole stockholder of the RHC Surviving Corporation (as defined below). C. Aon, REC Sub and REC desire to effect a merger ("REC MERGER" and collectively with the RHC Merger, the "MERGERS") of REC Sub into REC, pursuant to which (i) subject to Section 2.2 hereof, each issued and outstanding share of REC Common Stock and REC Preferred Stock will be converted into the right to receive the number of shares of Aon Common Stock specified herein, and (ii) Aon will become the sole stockholder of the REC Surviving Corporation (as defined below). D. The Special Committee and the Board of Directors (with PGR absent and not voting) of Aon and the Boards of Directors of RHC Sub and RHC have each approved the RHC Merger upon the terms and subject to the conditions set forth herein and deem it advisable and in the best interests of their respective stockholders that the RHC Merger be consummated, and the stockholders of each of RHC and RHC Sub have unanimously approved the RHC Merger upon the terms and subject to the conditions set forth herein. E. The Special Committee and the Board of Directors (with PGR absent and not voting) of Aon and Boards of Directors of REC Sub and REC have each approved the REC Merger upon the terms and subject to the conditions set forth herein and deem it advisable and in the best interests of their respective stockholders that the REC Merger be consummated, and the stockholders of each of REC and REC Sub have unanimously approved the REC Merger upon the terms and subject to the conditions set forth herein. F. For federal income tax purposes, it is intended that each of the Mergers qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"). G. Certain of the capitalized terms used herein are defined in Section 9.10. AGREEMENTS NOW, THEREFORE, in consideration of the recitals (which are deemed to be a part of this Agreement), mutual covenants, representations, warranties and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I THE MERGER SECTION 1.1. THE MERGERS; SURVIVING CORPORATIONS. Upon the terms and subject to the conditions hereof, and in accordance with the provisions of the Delaware General Corporation Law, as amended (the "DGCL"), as soon as practicable after the execution and delivery of this Agreement, (a) RHC Sub shall be merged with and into RHC, and (b) REC Sub shall be merged with and into REC. Following the Mergers, the separate existence of the Subs shall cease, and RHC shall continue as the surviving corporation in the RHC Merger (the "RHC SURVIVING CORPORATION") and REC shall continue as the surviving corporation in the REC Merger (the"REC SURVIVING CORPORATION" and collectively with the RHC Surviving Corporation, the "SURVIVING CORPORATIONS"). SECTION 1.2. EFFECT OF THE MERGERS. Each of the Mergers shall have the effects set forth in the DGCL. From and after the Effective Time (as defined below), the Surviving Corporations shall each be a wholly-owned subsidiary of Aon. SECTION 1.3. CERTIFICATES OF INCORPORATION OF THE SURVIVING CORPORATIONS. (a) The Certificate of Incorporation of RHC, as in effect immediately prior to the Effective Time of the RHC Merger, shall be amended and restated as of the Effective Time without any further action on the part of the RHC Constituent Corporations to read in its entirety as set forth in Annex 1 to the RHC Certificate of Merger (as defined below), and, as so amended and restated, such Certificate of Incorporation shall be the Certificate of Incorporation of the RHC Surviving Corporation until thereafter changed or amended as provided therein or by applicable law. (b) The Certificate of Incorporation of REC, as in effect immediately prior to the Effective Time of the REC Merger, shall be amended and restated as of the Effective Time without any further action on the part of the REC Constituent Corporations to read in its entirety as set forth in Annex 1 to the REC Certificate of Merger (as defined below), and, as so amended and restated, such Certificate of Incorporation shall be the Certificate of Incorporation of the REC Surviving Corporation until thereafter changed or amended as provided therein or by applicable law. SECTION 1.4. BYLAWS OF THE SURVIVING CORPORATIONS. At the Effective Time and without any further action on the part of the Constituent Corporations, (a) the Bylaws of RHC Sub shall be the Bylaws of the RHC Surviving Corporation, and (b) the Bylaws of REC Sub shall be the Bylaws of the REC Surviving Corporation. 2 SECTION 1.5. BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATIONS. (a) At the Effective Time, the directors and officers of RHC Sub, respectively, immediately prior to the Effective Time shall be the directors and officers of the RHC Surviving Corporation, respectively, each of such directors and officers to hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. (b) At the Effective Time, the directors and officers of REC Sub, respectively, immediately prior to the Effective Time shall be the directors and officers of the REC Surviving Corporation, respectively, each of such directors and officers to hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal. SECTION 1.6. EFFECTIVE TIME OF THE MERGERS. Upon the terms and subject to the conditions hereof, and in accordance with the provisions of the DGCL, as soon as practicable following the execution and delivery of this Agreement: (a) the RHC Constituent Corporations will cause a certificate of merger substantially in the form attached hereto as EXHIBIT A (the "RHC CERTIFICATE OF MERGER"), executed in accordance with the relevant provisions of the DGCL, to be filed with the Secretary of State of Delaware (the "DELAWARE AUTHORITY"), and the RHC Merger shall become effective at the time specified in such certificate of merger, and (b) the REC Constituent Corporations will cause a certificate of merger substantially in the form attached hereto as EXHIBIT B (the "REC CERTIFICATE OF MERGER"), executed in accordance with the relevant provisions of the DGCL, to be filed with the Delaware Authority, and the REC Merger shall become effective at the time specified in such certificate of merger. Because it is the intent of the parties hereto that the RHC Merger and the REC Merger be effective simultaneously, the RHC Certificate of Merger and the REC Certificate of Merger shall each specify 5:45 P.M., EDT, on the date hereof as the time and date for the effectiveness of the RHC Merger and the REC Merger, respectively. The term "EFFECTIVE TIME" shall mean the time for the effectiveness of the RHC Merger and the REC Merger specified in the RHC Certificate of Merger and the REC Certificate of Merger, respectively. ARTICLE II CONVERSION OF SHARES SECTION 2.1. CONVERSION OF CAPITAL STOCK. (a) RHC MERGER. As of the Effective Time, by virtue of the RHC Merger and without any action on the part of the holders of the capital stock of the RHC Constituent Corporations: (i) RHC SUB COMMON STOCK. Each issued and outstanding share of RHC Sub common stock, $.01 par value per share ("RHC SUB COMMON STOCK"), shall be converted into and become one fully paid and non-assessable share of common stock of the RHC Surviving Corporation. (ii) CANCELLATION OF TREASURY STOCK OF RHC. All shares of RHC Common Stock and RHC Preferred Stock that are owned directly or indirectly by RHC shall be cancelled, and no consideration shall be delivered in exchange therefor. (iii) CONVERSION OF RHC COMMON STOCK. Subject to Section 2.2 hereof: 3 (1) each share of RHC Class A Common Stock issued and outstanding immediately prior to the Effective Time of the RHC Merger shall be converted into and exchanged solely for 2,609.827954 shares of Aon Common Stock; and (2) each share of RHC Class B Common Stock issued and outstanding immediately prior to the Effective Time of the RHC Merger shall be converted into and exchanged solely for 2,609.827954 shares of Aon Common Stock. (iv) CONVERSION OF RHC PREFERRED STOCK. Subject to Section 2.2 hereof: (1) each share of RHC Series A 10% Preferred Stock issued and outstanding immediately prior to the Effective Time of the RHC Merger shall be converted into and exchanged solely for 2.919708 shares of Aon Common Stock; (2) each share of RHC Series B 8% Preferred Stock issued and outstanding immediately prior to the Effective Time of the RHC Merger shall be converted into and exchanged solely for 2.919708 shares of Aon Common Stock; (3) each share of RHC Series C 7% Preferred Stock issued and outstanding immediately prior to the Effective Time of the RHC Merger shall be converted into and exchanged solely for 2.919708 shares of Aon Common Stock; and (4) each share of RHC Series D 7% Preferred Stock issued and outstanding immediately prior to the Effective Time of the RHC Merger shall be converted into and exchanged solely for 2.919708 shares of Aon Common Stock. (b) REC MERGER. As of the Effective Time, by virtue of the REC Merger and without any action on the part of the holders of the capital stock of the REC Constituent Corporations: (i) REC SUB COMMON STOCK. Each issued and outstanding share of REC Sub common stock, $.01 par value per share ("REC SUB COMMON STOCK"), shall be converted into and become one fully paid and non-assessable share of common stock of the REC Surviving Corporation. (ii) CANCELLATION OF TREASURY STOCK OF REC. All shares of REC Common Stock and REC Preferred Stock that are owned directly or indirectly by REC shall be cancelled, and no consideration shall be delivered in exchange therefor. (iii) CONVERSION OF REC COMMON STOCK. Subject to Section 2.2 hereof: (1) each share of REC Class A Common Stock issued and outstanding immediately prior to the Effective Time of the REC Merger shall be converted into and exchanged solely for 624.883784 shares of Aon Common Stock; and 4 (2) each share of REC Class B Common Stock issued and outstanding immediately prior to the Effective Time of the REC Merger shall be converted into and exchanged solely for 624.883784 shares of Aon Common Stock. (iv) CONVERSION OF REC PREFERRED STOCK. Subject to Section 2.2 hereof: (1) each share of REC Convertible Preferred Stock issued and outstanding immediately prior to the Effective Time of the REC Merger shall be converted into and exchanged solely for 624.883784 shares of Aon Common Stock; and (2) each share of REC Senior 9% Preferred Stock issued and outstanding immediately prior to the Effective Time of the REC Merger shall be converted into and exchanged solely for 291.970803 shares of Aon Common Stock. The shares of Aon Common Stock to be received pursuant to Sections 2.1(a), 2.1(b) and 2.2 hereof upon the conversion of the capital stock of the Companies shall be referred to as the "MERGER CONSIDERATION." SECTION 2.2. NO FRACTIONAL SHARES. (a) No certificates representing fractional shares of Aon Common Stock shall be issued upon the surrender for exchange of certificates formerly representing RHC Common Stock, RHC Preferred Stock, REC Common Stock or REC Preferred Stock. (b) In lieu of issuance of any such fractional shares in the RHC Merger, each Stockholder of RHC (other than the Shirley W. Ryan Living Trust dated July 10, 2001) hereby assigns, transfers and conveys all right, title and interest such Stockholder has with respect to any fractional shares to be received in such Merger to the Patrick G. Ryan Living Trust dated July 10, 2001, who shall be issued the whole number of shares of Aon Common Stock equal to the aggregate of such fractional shares. (c) In lieu of issuance of any such fractional shares in the REC Merger, each Stockholder of REC hereby assigns, transfers and conveys all right, title and interest such Stockholder has with respect to any fractional shares to be received in such Merger one-half to the Corbett M.W. Ryan Living Trust dated July 13, 2001 and one-half to the Patrick G. Ryan Living Trust dated July 10, 2001, each of which shall be issued the nearest whole number of shares of Aon Common Stock to the aggregate of the fractional shares of such Person. SECTION 2.3. TRANSFER OF AON COMMON STOCK. Unless and until otherwise permitted by this Agreement, each certificate of Aon Common Stock issued pursuant to this Agreement to any Stockholder or the nominee of such Stockholder, or to any subsequent transferee of such certificate shall be stamped or otherwise imprinted with legends in substantially the following forms: a) SECURITIES ACT LEGEND. 5 "These securities have been obtained from the issuer in a transaction not including a public offering and have not been registered under and are subject to restrictions on resale pursuant to the Securities Act of 1933 and state securities laws." b) STOCK RESTRICTION AGREEMENT LEGEND. "The sale, transfer or other disposition of the shares represented by this certificate is subject to the conditions specified in a Stock Restriction Agreement with Aon Corporation (the "Company"). A copy of the Stock Restriction Agreement is on file and may be inspected at the principal office of the Company and will be furnished by the Company to the holder hereof upon request and without charge. " c) VOTING AGREEMENT LEGEND. "The shares represented by this certificate are subject to the Irrevocable Stockholders' Voting Agreement and Proxy (the "Voting Agreement"). A copy of the Voting Agreement is on file and may be inspected at the principal office of the Company and will be furnished by the Company to the holder hereof upon request and without charge." SECTION 2.4. NO FURTHER OWNERSHIP RIGHTS IN THE COMPANIES. At and after the Effective Time, each Stockholder shall cease to have any rights as a stockholder of RHC or REC, as the case may be, except for the right to surrender such Stockholder's certificates in exchange for receipt of that portion of the Merger Consideration to which such Stockholder is entitled pursuant to Sections 2.1(a) and (b) and 2.2 hereof, and after the Effective Time no transfer of shares shall be made on the stock transfer books of RHC or REC. Any certificates presented by a Stockholder after the Effective Time for transfer shall be canceled and exchanged for that portion of the Merger Consideration to which such Stockholder is entitled pursuant to Sections 2.1(a) and (b) hereof and Section 2.2 hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE HOLDING COMPANIES AND THE RYAN FAMILY MEMBERS RHC, REC and each of the Ryan Family Members hereby jointly and severally represent and warrant to each of Aon, RHC Sub and REC Sub as of the date hereof and as of the Effective Time as set forth below. The information disclosed on any Schedule attached hereto shall be deemed to relate solely to the section of this Article III to which such Schedule relates and shall not be deemed made for other sections to which such disclosure may apply unless such disclosure is cross-referenced in the Schedule(s) relating to such other section(s), and only to the extent that the applicable information or risk is described. SECTION 3.1. ORGANIZATION AND AUTHORITY; QUALIFICATION. Each of RHC and REC is duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to own, lease and operate its properties and to carry on its 6 business as now being conducted. The Companies have delivered to Aon complete and correct copies of the Certificate of Incorporation and Bylaws presently in effect for each Company, and neither Company is in default under or in violation of any provision of such documents. Each Company is qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or leasing of property by it or the conduct of its business requires such licensing or qualification. SCHEDULE 3.1 contains a list of all jurisdictions in which each Company is qualified or licensed to do business as a foreign corporation. SECTION 3.2. NO SUBSIDIARIES; INVESTMENTS. Neither Company has any subsidiaries and, except for ownership by RHC of 14,651,212 shares of Aon Common Stock and ownership by REC of 7,713,225 shares of Aon Common Stock (such aggregate of 22,364,437 shares of Aon Common Stock being referred to herein as the "AON SHARES"), neither Company owns, directly or indirectly, any equity interest in any Person. SECTION 3.3. REORGANIZATION. The consummation of the Reorganization transactions and the execution, delivery and performance of all documents and instruments executed and delivered in connection therewith were authorized by all necessary corporate action on the part of the Companies; and all consents, approvals, authorizations, orders, licenses, certificates, permits, registrations or qualifications required to be obtained by either of the Companies in connection with the Reorganization were obtained. The consummation of the Reorganization did not (a) violate, conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws of RHC or REC, (b) violate, conflict with or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination of, or require any notice under, or require the consent of any other party to, or result in the acceleration of, or entitle any party to accelerate (whether as a result of a change in control of either Company or otherwise) any obligation or agreement, or result in the loss of any benefit or the imposition of any fee or penalty, or give rise to the creation of any Lien upon any of the respective properties or assets of RHC or REC, in each case under any of the terms, conditions or provisions of any debt, note, bond, mortgage, indenture, deed of trust, license, lease, permit, agreement or other instrument or obligation to which either Company is a party or by which either Company or any of its properties or assets may be bound or affected, excluding from the foregoing violations, conflicts, breaches or defaults which, in the aggregate, would not have a significant adverse effect on the business, assets, net income or condition (financial or otherwise) of the Companies taken as a whole, on the ability of either Company or any of the Ryan Family Members to perform their respective obligations under this Agreement or any of the Additional Agreements to which such Person is a party, or on the transactions contemplated by this Agreement or the Additional Agreements (an "ADVERSE EFFECT"), or (c) violate any Rules (including foreign, federal and state securities laws) of any Governmental Authority applicable to REC, RHC, or any of their respective properties, assets or operations. SECTION 3.4. AUTHORIZATION. Each Company has full corporate power and authority to enter into, execute and deliver this Agreement and the Additional Agreements to which it is a party and to perform and observe fully its obligations hereunder and thereunder and to perform the transactions contemplated hereby and thereby. The Board of Directors and Stockholders of each Company have taken all action required by law, such Company's Certificate of Incorporation and Bylaws, or otherwise to authorize the execution, delivery and performance of this Agreement and the Additional Agreements to which such Company is a party and the consummation by such Company of the transactions contemplated hereby and thereby. This Agreement and the Additional Agreements to which either Company is a party have been duly 7 and validly executed and delivered by such Company, and, assuming due authorization, execution and delivery by Aon and the Subs, constitute valid and binding legal obligations of RHC and REC, enforceable against RHC and REC in accordance with their terms. SECTION 3.5. NO VIOLATION. Neither the execution, delivery or performance of this Agreement or the Additional Agreements nor the consummation of the transactions contemplated hereby or thereby will (a) violate, conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws of RHC or REC, (b) violate, conflict with or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination of, or require any notice under, or require the consent of any other party to, or result in the acceleration of, or entitle any party to accelerate (whether as a result of a change in control of either Company or otherwise) any obligation or agreement, or result in the loss of any benefit or the imposition of any fee or penalty, or give rise to the creation of any Lien upon any of the respective properties or assets of RHC or REC, in each case under any of the terms, conditions or provisions of any debt, note, bond, mortgage, indenture, deed of trust, license, lease, permit, agreement or other instrument or obligation to which either Company is a party or by which either Company or any of its properties or assets may be bound or affected, excluding from the foregoing violations, conflicts, breaches or defaults which, in the aggregate, would not have an Adverse Effect or (c) violate any Rules (including foreign, federal and state securities laws) of any Governmental Authority applicable to REC, RHC, or any of their respective properties, assets or operations. SECTION 3.6. CAPITALIZATION OF THE COMPANIES. (a) The authorized capital stock of RHC consists of: 38 shares of RHC Class A Common Stock, 4,963 shares of RHC Class B Common Stock, 300,000 shares of RHC Series A Preferred Stock, 300,000 shares of RHC Series B Preferred Stock, 200,000 shares of RHC Series C Preferred Stock and 200,000 shares of RHC Series D Preferred Stock. There are issued and outstanding 37.5 shares of RHC Class A Common Stock, 4,962.5 shares of RHC Class B Common Stock, 29,000 shares of RHC Series A Preferred Stock, 67,410 shares of RHC Series B Preferred Stock, 114,000 shares of RHC Series C Preferred Stock and 112,550 shares of RHC Series D Preferred Stock, owned of record and beneficially by the Persons and in the amounts specified on SCHEDULE 3.6 attached hereto, free and clear of all Liens. There are no shares of RHC Common Stock or RHC Preferred Stock held by RHC as treasury stock. All of the issued and outstanding shares of RHC Common Stock and RHC Preferred Stock are validly issued, fully paid, and non-assessable, are without, and were not issued in violation of, any preemptive rights, and were not issued in violation of federal or state securities laws. No other class of capital stock of RHC is issued or outstanding, and there are no options, warrants, calls, subscriptions, conversion or other rights, agreements or commitments to acquire from RHC any shares of capital stock of RHC or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any shares of capital stock of RHC or the RHC Surviving Corporation, or any other security of RHC or the RHC Surviving Corporation. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to RHC. There are no voting agreements, voting trust agreements, proxies or stockholder or similar agreements relating to the capital stock of RHC. RHC is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock. (b) The authorized capital stock of REC consists of 156 shares of REC Class A Common Stock, 20,644 shares of REC Class B Common Stock, 1,351 shares of REC Convertible Preferred Stock, and 15,000 shares of REC Senior 9% Cumulative Preferred Stock. 8 There are issued and outstanding 144.1875 shares of REC Class A Common Stock, 9,811.1004 shares of REC Class B Common Stock, 1,351 shares of REC Convertible Preferred Stock, and 4,477.2708 shares of REC Senior 9% Cumulative Preferred Stock, owned of record and beneficially by the Persons and in the amounts specified on SCHEDULE 3.6 attached hereto, free and clear of all Liens. There are no shares of REC Common Stock or REC Preferred Stock held by REC as treasury stock. All of the issued and outstanding shares of REC Common Stock and REC Preferred Stock are validly issued, fully paid, and non-assessable, are without, and were not issued in violation of, any preemptive rights, and were not issued in violation of federal or state securities laws. No other class of capital stock of REC is issued or outstanding, and there are no options, warrants, calls, subscriptions, conversion or other rights, agreements or commitments to acquire from REC any shares of capital stock of REC or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any shares of capital stock of REC or the REC Surviving Corporation, or any other security of REC or the REC Surviving Corporation. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to REC. There are no voting agreements, voting trust agreements, proxies or stockholder or similar agreements relating to the capital stock of REC. REC is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock. SECTION 3.7. OWNERSHIP OF AON COMMON STOCK. The Aon Shares are owned of record and beneficially by the Companies as set forth in Section 3.2, and are owned free and clear of all Liens. Each of the Liens set forth on SCHEDULE 3.7 attached hereto (the "BANK LIENS") was released immediately prior to the execution and delivery of this Agreement. There are no options, warrants, calls, subscriptions, conversion or other rights, agreements or commitments to acquire from RHC or REC shares of Aon Common Stock. There are no voting agreements, voting trust agreements, proxies or stockholder or similar agreements relating to the Aon Shares. SECTION 3.8. CONSENTS AND APPROVALS. Except (a) for the filing with the Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "DOJ") of the notification form and other information required under the HSR Act, and (b) for the filing with the Delaware Authority of certificates of merger pursuant to the DGCL, as contemplated by Section 1.6, no filing or registration with, no notice to and no permit, authorization, consent or approval of, any Person or any Governmental Authority (collectively, the "CONSENTS AND APPROVALS") is necessary for the consummation by the Ryan Family Members and the Companies of the transactions contemplated by this Agreement or the Additional Agreements or to enable the Companies to continue to conduct their business after the Effective Time in a manner consistent with that in which it is presently conducted. All Consents and Approvals required to be delivered, filed or obtained prior to the execution and delivery of this Agreement or the Closing have been delivered, filed or obtained, and copies thereof have been delivered to Aon. The Ryan Family Members and the Companies have caused to be filed with the FTC and the DOJ the notifications and other information required to be filed under the HSR Act with respect to the transactions contemplated hereby. All such filings were, as of the date filed, true and accurate and in accordance with the HSR Act. The waiting period under the HSR Act with respect to the transactions expired on July 12, 2001. SECTION 3.9. BOOKS AND RECORDS. The books and records of each of the Companies are, and have been, maintained in the usual, regular, ordinary and appropriate manner by such Company, and all of the transactions of such Company are properly reflected therein in all material respects. 9 SECTION 3.10. FINANCIAL STATEMENTS. (a) REC has furnished to Aon (i) the final draft of the reviewed consolidated balance sheets of REC as of the last day of each of the three years in the period ended December 31, 2000, together with the related reviewed consolidated statements of income, stockholders' equity and changes in cash flows for such fiscal years, and the notes and supplementary information thereto, accompanied by the draft reports thereon of REC's independent public accountant (the "REC 2000 FINANCIAL STATEMENTS"), (ii) the unaudited consolidated balance sheet of REC as of June 30, 2001, together with the related unaudited consolidated statement of income, stockholders' equity and changes in cash flows for the six-month period ended on such date, certified by the president of REC, and (iii) the unaudited balance sheet of REC as of 10:00 a.m. Chicago time on July 16, 2001, certified by the president of REC, attached hereto as SCHEDULE 3.10 (the "MOST RECENT REC BALANCE SHEET"). Promptly following the Closing, the REC 2000 Financial Statements, including the signed reports thereon of REC's independent public accountant, will be finalized and issued, and such financial statements will be identical to the REC 2000 Financial Statements furnished to Aon pursuant to this paragraph (a) except for the addition of a subsequent events note describing the Mergers and related matters. (a) RHC has furnished to Aon (i) the final draft of the audited consolidated balance sheets of RHC as of the last day of each of the three years in the period ended February 28, 2001, together with the related audited consolidated statements of income, stockholders' equity and changes in cash flows for such fiscal years, and the notes and supplementary information thereto, accompanied by the draft reports thereon of the Companies' independent public accountant (the "RHC FISCAL 2000 FINANCIAL STATEMENTS"), (ii) the unaudited consolidated balance sheet of RHC as of June 30, 2001, together with the related unaudited consolidated statement of income, stockholders' equity and changes in cash flows for the four-month period ended on such date, certified by the president of RHC, and (iii) the unaudited consolidated balance sheet of RHC as of 10:00 a.m. Chicago time on July 16, 2001, certified by the president of RHC, attached hereto as SCHEDULE 3.10 (the "MOST RECENT RHC BALANCE SHEET", and together with the Most Recent REC Balance Sheet, the "MOST RECENT BALANCE SHEETS"). The Most Recent Balance Sheets collectively have a cash balance not less than $6 million greater than the total liabilities of the Companies set forth thereon. Promptly following the Closing, the RHC Fiscal 2000 Financial Statements, including the signed reports thereon of RHC'S independent public accountant, will be finalized and issued, and such financial statements will be identical to the RHC Fiscal 2000 Financial Statements furnished to Aon pursuant to this paragraph (b) except for the addition of a subsequent events note describing the Mergers and related matters. (b) The financial statements referred to in Sections 3.10(a) and 3.10(b) (collectively, the "FINANCIAL STATEMENTS") and each item therein, including the notes thereto (i) were prepared in accordance with generally accepted accounting principles in the United States of America applied on a consistent basis throughout the periods covered thereby ("GAAP"), except as provided in the opinion referred to in Section 7.1(g) related to deferred tax liability, (ii) present fairly the financial position, results of operations and changes in cash flows, as applicable, of RHC or REC, as applicable, as of such dates and for the periods then ended (subject, in the case of the unaudited interim Financial Statements, to normal year-end audit adjustments consistent with prior periods), (iii) are accurate, correct and complete in all material respects and are in accordance with the books of account and records of the Companies, and (iv) can be reconciled with the financial statements and the financial records maintained and the accounting methods applied by each of the Companies for federal income tax purposes. 10 SECTION 3.11. ABSENCE OF CERTAIN CHANGES. Since the date of the Most Recent Balance Sheets, neither Company has conducted any operations or effected any transactions of any kind whatsoever. There has been no change in the assets, liabilities, and stockholders' equity of the Companies since the date of the Most Recent Balance Sheets. SECTION 3.12. ABSENCE OF UNDISCLOSED LIABILITIES. Notwithstanding any limitations or qualifications of, or exceptions (whether in a Schedule or otherwise) to any other representation and warranty contained in this Article III, to the Knowledge of the Ryan Family Members and the Companies, there are no Liabilities, commitments or obligations of RHC or REC of any kind whatsoever, there is no valid basis for the assertion of any such Liabilities, commitments or obligations, and there is no existing condition, situation or set of circumstances which is reasonably likely to result in such a Liability, commitment or obligation, other than liabilities, commitments and obligations to the extent and in the amounts set forth on the Most Recent Balance Sheets (none of which results from, arises out of, relates to, is in the nature of or was caused by any breach of contract, breach of warranty, tort, infringement or violation of law). SECTION 3.13. COMPLIANCE WITH APPLICABLE LAW. To the Knowledge of the Ryan Family Members and the Companies, (a) each Company holds, and at all times has held, all Licenses necessary for the lawful conduct of its business under and pursuant to any Rule of any Governmental Authority applicable to the Companies or any of their respective properties, assets or operations, (b) the business and activities of each Company is not being, and has not been, conducted in violation of any Rule of any Governmental Authority applicable to the Companies or any of their respective properties, assets or operations, and (c) neither Company has received any notification of any asserted present or past failure by it to comply with any such Rules which has not been withdrawn or definitively resolved prior to the date hereof. SECTION 3.14. LITIGATION. Except as set forth on SCHEDULE 3.14 attached hereto, which contains a list and summary description of all pending and, to the Knowledge of the Companies and the Ryan Family Members, threatened Claims, there are no Claims pending or, to the Knowledge of the Companies and the Ryan Family Members, threatened by or before any Governmental Authority or before any arbitrator of any nature, brought by or against any Ryan Family Member, the Companies, or any of their respective officers, directors, employees or agents involving, affecting or relating to the assets, activities or securities of either Company, or the transactions contemplated by this Agreement or the Additional Agreements, nor, to the Knowledge of the Companies and the Ryan Family Members, is there any basis for any such Claim. None of the Companies or the Ryan Family Members, or any of their respective businesses, assets or properties, is subject to any order, writ, judgment, award, injunction or decree of any Governmental Authority or arbitrator. No injunction, restraining order or other ruling or order issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of the RHC Merger or the REC Merger is in effect and no proceeding brought by any Governmental Authority is pending or threatened which seeks any injunction, restraining order or other order which would prohibit consummation of either of the Mergers or materially impair the ability of Aon to own and enjoy the assets of the Surviving Corporations after the Effective Time. SECTION 3.15. CONTRACTS. The Companies have provided or made available to Aon true and complete originals or copies of all material contracts, mortgages, notes, security agreements, trust indentures, arrangements, leases, licenses, commitments and other agreements and instruments (collectively, "CONTRACTS") to which RHC, REC or any Ryan Family Member is a 11 party which relates to or affects the capital stock, business, assets, properties or operations of either Company or to which either Company or their respective businesses, assets, properties or operations may be bound or subject, including all written or oral, express or implied Contracts (a) not made in the ordinary course of business, (b) relating to the borrowing of money or for lines of credit, (c) for the sale of any assets other than in the ordinary course of business or for the grant of any options or preferential rights to purchase any assets, property or rights, (d) granting any power of attorney with respect to the affairs of either Company, (e) involving suretyship contracts, working capital maintenance or other form of guaranty agreements, (f) involving partnerships or joint ventures in which either Company is a partner or participant, or (g) involving amendments, modifications, extensions or renewals of any of the foregoing. Except for this Agreement and the agreements contemplated hereby, there are no contracts and agreements currently being negotiated by either Company. Except for Contracts relating to borrowings from third parties with an aggregate outstanding balance not exceeding the aggregate amount of debt reflected in the Most Recent Balance Sheets, each Company has used reasonable efforts to terminate or transfer all Contracts which such Company has the right to terminate or transfer. Each Company has used reasonable efforts with respect to any transferred Contract to enter into a novation agreement relieving such Company of any liabilities or obligations thereunder. There are no existing defaults or events of default under any Contract which (whether with or without notice, lapse of time or the happening or occurrence of any other event) would constitute a default by either Company thereunder or, to the Knowledge of the Companies and the Ryan Family Members, by any other party thereto. There is no Lien on the interests of either Company under any of the Contracts. SECTION 3.16. EMPLOYEE BENEFIT PLANS. Neither of the Companies maintains, has ever maintained, or has any Liability with respect to any Plan (whether formal or informal, written or oral), including an employee benefit plan, as defined in Section 3(3) of ERISA, that is subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code. Neither Company maintains, contributes to, or has any Liability for medical, health, life, death or other welfare benefits for any former employee or any other Person. Neither Company shall have any Liability with respect to any Plan presently or formerly maintained by any Person who may be deemed an ERISA Affiliate of such Company. SECTION 3.17. ENVIRONMENTAL MATTERS. (a) To the Knowledge of the Companies and the Ryan Family Members, there are no past or present actions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or disposal of any Materials of Environmental Concern, or exposures of employees or other Persons to Materials of Environmental Concern that could reasonably be expected to form the basis of any Environmental Claim against either Company or against any Person whose Liability for any Environmental Claim either Company has or may have retained or assumed either contractually or by operation of law. (b) Without in any way limiting the generality of the foregoing, to the Knowledge of the Companies and the Ryan Family Members, (i) all on-site and off-site locations where any Company (directly or indirectly through a subsidiary, affiliate or otherwise) has stored or has disposed or arranged for the disposal of, Materials of Environmental Concern, are identified in SCHEDULE 3.17, (ii) all underground storage tanks previously or presently located on property owned or leased by any Company (directly or indirectly through a subsidiary, affiliate or otherwise) are identified in SCHEDULE 3.17, along with a description of the capacity and contents of such tanks, any removal or closure activities associated with such tanks and the compliance of 12 such tanks with underground storage tank requirements, and (iii) except as set forth in SCHEDULE 3.17, there is no asbestos contained in or forming part of any building, building component, equipment, structure or office space previously or presently owned by either Company (directly or indirectly through a subsidiary, affiliate or otherwise). SECTION 3.18. TAXES. The Companies have timely filed or will cause to be timely filed all federal, state, local and foreign Tax (as defined below) and information returns ("Tax Returns") required to be filed by each of them, the amount of Tax on such Tax Returns is or will be correctly determined, and all items of income, gain, loss, deduction or credit required to be included in such Tax Returns have been or will be so included in such Tax Returns in the correct amount. The Companies have paid or caused to be paid, or have made adequate provision or set up an adequate accrual or reserve for the payment of, all Taxes required to be paid in respect of the periods for which Tax Returns are due, and have established an adequate accrual or reserve for the payment of all Taxes payable in respect of the period, including portions thereof, subsequent to the last of said periods required to be so accrued or reserved up to and including the Effective Time. For these purposes, the Tax attributable to the period including the Effective Time should be determined as if the taxable year ended at the Effective Time. Neither Company is delinquent in the payment of any Tax, and no deficiencies for any Tax, assessment or governmental charge have been claimed, proposed, assessed or, to the Knowledge of the Companies or the Ryan Family Members, threatened. There are no Liens on the assets of the Companies for unpaid Taxes, except for Liens relating to Taxes that are not yet due and payable. Except as set forth on Schedule 3.18 attached hereto, no waiver or extension of time to assess any Taxes has been given or requested. Schedule 3.18 attached hereto sets forth the federal, state, local and foreign income Tax Returns for all Open Periods (as defined below). For the purposes of this Section, (a) the term "Tax" shall include all taxes, charges, withholdings, fees, levies, penalties, additions, interest or other assessments imposed by any Governmental Authority or other taxing authority (including as a result of being a member of an affiliated, combined or unitary group or as a result of any obligation arising out of an agreement to indemnify any other Person), and including those related to income, employment, employee welfare or retirement (including social security), withholding, payroll, net income, gross income, gross receipts, profits, sales, use, value-added, ad valorem, property, severance, occupation, services, leasing, valuation, addition of value, transfer, estimated, stamp, license, excise, customs duties or franchise and all interest and penalties thereon and (b) the term "Open Period" shall mean all periods for which the applicable statutes of limitation have not run in full and with respect to which the Tax Return has (i) not been audited by the Internal Revenue Service or comparable state, local or foreign agencies or (ii) has been audited by the Internal Revenue Service or comparable state, local or foreign agencies but all aspects of such audit have not been fully and finally resolved. Except as set forth in SCHEDULE 3.18: (i) neither Company has been a member of an Affiliated Group or been included in a combined, consolidated or unitary Tax return; (ii) neither Company is a party to or bound by any Tax allocation or Tax sharing agreement or has any current or potential obligation to indemnify any other Person with respect to Taxes; (iii) neither Company has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable periods specified in Code Section 897(c)(1)(a)(ii); (iv) neither Company is required to make any adjustments under Section 481(a) of the Code by reason of a change in accounting method which affects any taxable year ending after the Effective Time, or has any application pending to effect such a change of accounting method; and (v) neither Company is obligated to make any payments, or is a party to an agreement that 13 could make it obligated to make payments, which will not be deductible under Section 280G of the Code. As of the date hereof, neither Company has taken or agreed to take any action, nor do either of them have any Knowledge of any facts or circumstances, that would prevent the Mergers from qualifying as "reorganizations" within the meaning of Section 368(a) of the Code. SECTION 3.19. LABOR MATTERS. The Companies have no employees. Neither Company is a party to or bound by any Contract (including a collective bargaining agreement or any other agreement with any labor organization) for the employment of any director or employee of such Company or for the performance by any independent contractor (including consultants and the like) of services for such Company. No Person is entitled to compensation from RHC or REC for service as a director, officer, employee, independent contractor or otherwise, or is entitled to any severance pay, lump sum or other payment, compensation or other remuneration from RHC or REC upon termination of employment or service or as a result of any of the transactions contemplated by this Agreement. SECTION 3.20. BANK ACCOUNTS. SCHEDULE 3.20 attached hereto sets forth the names and addresses of all banks, trust companies, savings and loan associations and other financial institutions at which either Company maintains an account, deposit, safe deposit box, lock box or other arrangement for the collection of funds, line of credit or other loan facility relationship or accounts of any nature and the names of all Persons authorized to draw thereon, make withdrawals therefrom or have access thereto. Prior to or at the Effective Time, the Companies will deliver or make available to Aon copies of all relevant records pertaining to such bank accounts. SCHEDULE 3.20 sets forth an accurate and complete list (separately identifying each Investment and indicating the financial institution, account information, and the interest rate and the current balance) of all certificates of deposit, debt securities and other investments owned, beneficially or of record, by the Companies ("INVESTMENTS"). The Companies have good and marketable title to all of the Investments, free and clear of any Liens. SCHEDULE 3.20 also sets forth an accurate and complete list of all amounts owed by the Companies to third parties (such amount being all of the liabilities of the Companies set forth on the Most Recent Balance Sheets) (the "LOANS"), separately identifying each loan and indicating the financial institution, account information, and the current interest rate and outstanding balance). There is no penalty for early repayment of any of the Loans. SECTION 3.21. REAL ESTATE; PERSONAL PROPERTY. Neither Company owns or leases any real property. Neither Company owns or leases any personal property, except to the extent set forth on the Most Recent Balance Sheets. SECTION 3.22. NAMES. RHC has never operated under any name other than Ryan Holding Corporation of Illinois and since December 23, 1981 REC has not operated under any name other than Ryan Enterprises Corporation of Illinois. Prior to December 23, 1981, REC operated under the name "PGR Investment Corporation." SECTION 3.23. DISCLOSURE. To the Knowledge of the Companies and the Ryan Family Members, (a) all documents, agreements and other papers and materials delivered by or on behalf of the RHC, REC or the Ryan Family Members in connection with this Agreement, the Additional Agreements and the transactions contemplated hereby and thereby are true, complete and accurate in all material respects, (b) all documents referred to in this Agreement, including in the Schedules or Exhibits, and the corporate minute books of the Companies have been delivered 14 or made available to Aon, (c) the corporate minute books contain all of the minutes of meetings of stockholders, board of directors, and any committees of the board of directors of the Companies that have been held and all of the written consents to action executed in lieu thereof, (d) none of the representations warranties or statements of the Companies or the Ryan Family Members contained in this Agreement, in the Schedules or Exhibits hereto, or in any other agreement, instrument or document executed or delivered by or on behalf of any of such Persons in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary to make the representations, warranties or statements made, in the context in which made, not false or misleading, and (e) there is no fact that the Companies and the Ryan Family Members have not disclosed to Aon and the Subs in writing that causes a material adverse effect on the business, financial condition or results of operations of the Companies or that reasonably could be expected to have such a material adverse effect. The Companies and each Ryan Family Member acknowledge that the statements contained in this Section shall not be deemed to limit or qualify any of the other representations or warranties contained in this Agreement, in the Schedules or Exhibits hereto or in any agreement or document delivered in connection herewith. The Companies will deliver their respective minute books to Aon at the Effective Time. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE RYAN FAMILY MEMBERS The Ryan Family Members hereby jointly and severally represent and warrant to each of Aon, RHC Sub and REC Sub as of the date hereof and as of the Effective Time as set forth below. The information disclosed on any Schedule attached hereto shall be deemed to relate solely to the section of this Article IV to which such Schedule relates and shall not be deemed made by other sections to which such discloses may apply unless such disclosure is cross-referenced in the Schedule(s) relating to such other section(s), and only to the extent that the applicable information or risk is described. SECTION 4.1. AUTHORIZATION. Each of the Ryan Family Members that is not a natural person is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, with full power and authority to enter into, execute and deliver this Agreement and the Additional Agreements to which it is a party and to perform and observe fully its obligations hereunder and thereunder and to perform the transactions contemplated hereby and thereby. Each Ryan Family Member that is a natural person has the legal capacity to enter into this Agreement and the Additional Agreements to which such Person is a party and to consummate the transactions contemplated hereby and thereby. Each Ryan Family Member has taken all action required by law, such Person's organizational or governing documents (if applicable), or otherwise to authorize the execution, delivery and performance of this Agreement and the Additional Agreements to which such Person is a party and the consummation by such Ryan Family Member of the transactions contemplated hereby and thereby. This Agreement and the Additional Agreements to which such Person is a party have been duly and validly executed and delivered by each Ryan Family Member and, assuming due authorization, execution and delivery by Aon and the Subs, constitute valid and binding legal obligations of the Ryan Family Members, enforceable against each Ryan Family Member in accordance with their terms. 15 SECTION 4.2. NO VIOLATION. Neither the execution, delivery or performance of this Agreement or the Additional Agreements by the Ryan Family Members nor the consummation of the transactions contemplated hereby or thereby will (a) violate, conflict with or result in any breach of any provision of the organizational or governing documents of any of the Ryan Family Members, (b) violate, conflict with or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination of, or require any notice under, or require the consent of any other party to, or result in the acceleration of, or entitle any party to accelerate (whether as a result of a change in control of the Companies or otherwise) any obligation or agreement, or result in the loss of any benefit or the imposition of any fee or penalty, or give rise to the creation of any Lien upon any of the respective properties or assets of the Companies or any of the Ryan Family Members, in each case under any of the terms, conditions or provisions of any debt, note, bond, mortgage, indenture, deed of trust, license, lease, permit, agreement or other instrument or obligation to which any of the Ryan Family Members is a party or by which they or any of their respective properties or assets may be bound or affected or (c) violate any Rules (including foreign, federal and state securities laws) of any Governmental Authority applicable to any of the Ryan Family Members or any of their respective properties, assets or operations. SECTION 4.3. CONSENTS AND APPROVALS. Except (a) for the filing with the FTC and the DOJ of the notification form and other information required under the HSR Act, (b) for the filing with the Delaware Authority of certificates of merger pursuant to the DGCL, as contemplated by Section 1.6, and (c) as set forth on SCHEDULE 3.8, no filing or registration with, no notice to and no permit, authorization, consent or approval of, any Person or any Governmental Authority is necessary for the consummation by the Ryan Family Members of the transactions contemplated by this Agreement or the Additional Agreements. SECTION 4.4. INVESTMENT REPRESENTATION. The Stockholders are accepting the Merger Consideration for their own account and not for any other Person and for investment purposes only and without any view to distribute, resell or otherwise transfer the same. The Stockholders represent, warrant and acknowledge that they have such knowledge and experience in business and financial matters as to be capable of evaluating the merits and risks of the investment contemplated to be made hereunder and that they have sufficient financial strength to hold the same as an investment and to bear the economic risks of such investment (including possible loss of such investment) for an indefinite period of time. The Ryan Family Members acknowledge that they are fully informed that the Merger Consideration is being issued pursuant to a private offering exemption of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and is not being registered under the Securities Act or under the securities or blue sky laws of any state or foreign jurisdiction; will constitute "restricted securities" within the meaning of Rule 144 under the Securities Act, that such securities must be held indefinitely unless they are subsequently registered under the Securities Act and any applicable state securities or blue sky laws, or unless an exemption from registration is available thereunder; and that Aon has no obligation to register such securities. The Ryan Family Members acknowledge that all documents filed by Aon with the Securities and Exchange Commission ("SEC FILINGS") pursuant to the Securities Act or the Securities Exchange Act of 1934 since January 1, 1995 have been made available or delivered to them; that they have had an opportunity to ask questions of and receive answers from Aon concerning the terms and conditions of this Agreement and the Additional Agreements and to obtain additional information, to the extent that Aon possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information contained in such SEC Filings. Each Ryan Family Member hereby represents, warrants and 16 acknowledges that such Person is an "accredited investor" as defined in Rule 501(a) under the Securities Act SECTION 4.5. WAIVER OF NOTICE OF APPRAISAL RIGHTS. Each Stockholder has been advised of such Stockholder's right to assert appraisal rights pursuant to Sections 251 and 262 of the DGCL in connection with the Mergers, has discussed such rights with such Stockholder's financial and legal advisers, and has made an informed decision to not exercise such rights and instead receive the Merger Consideration which such Stockholder is entitled to receive hereunder. Each Stockholder understands that it is a condition to Aon's obligation to consummate the Mergers that no Stockholder has asserted such appraisal rights and hereby waives, in accordance with Section 229 of the DGCL any formal notice requirement relating to such appraisal rights (including any notice contemplated by Sections 251 and 262 of the DGCL or the Certificate of Incorporation or Bylaws of either of the Companies). SECTION 4.6. TAX MATTERS. As of the date hereof, none of the Ryan Family Members has taken or agreed to take any action, nor do any of them have any Knowledge of any fact or circumstance, that would prevent the Mergers from qualifying as "reorganizations" within the meaning of Section 368(a) of the Code. ARTICLE V REPRESENTATIONS AND WARRANTIES OF Aon AND THE SUBS Aon and the Subs hereby jointly and severally represent and warrant to the Companies and the Ryan Family Members that: SECTION 5.1. ORGANIZATION AND QUALIFICATION. Each of Aon, RHC Sub and REC Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. SECTION 5.2. AUTHORIZATION. Aon, RHC Sub and REC Sub each have full corporate power and authority to execute and deliver this Agreement and the Additional Agreements to which it is a party and to perform and observe fully its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. Each of Aon, RHC Sub and REC Sub has taken all corporate action required to authorize the execution, delivery and performance by it of this Agreement and the Additional Agreements to which it is a party and the consummation by it of the transactions contemplated hereby and thereby. This Agreement and the Additional Agreements to which Aon, RHC Sub or REC Sub is a party have been duly and validly executed and delivered by Aon or such Sub, as applicable, and, assuming due authorization, execution and delivery by the Companies and the Ryan Family Members, will constitute a valid and binding obligation of Aon, RHC Sub or REC Sub, as applicable. SECTION 5.3. NO VIOLATION. Neither the execution and delivery of this Agreement by Aon and the Subs and the performance by Aon and the Subs of their obligations hereunder nor the consummation by Aon and the Subs of the transactions contemplated hereby will (a) violate, conflict with or result in any breach of any provision of the Certificate of Incorporation or Bylaws of Aon, RHC Sub or REC Sub, (b) violate, conflict with or result in a violation or breach of, or constitute a default (with or without due notice or lapse of time or both) under, or permit the termination of, or result in the acceleration of, any of the terms, conditions or provisions of 17 any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Aon, RHC Sub or REC Sub is a party or by which they or any of their respective properties or assets may be bound or affected or (c) violate any Rule of any Governmental Authority applicable to Aon, RHC Sub or REC Sub or any of their respective properties, assets or operations, excluding from the foregoing clauses (b) and (c) violations, conflicts, breaches or defaults which, in the aggregate would not have a material adverse effect on the business, properties, operations or condition (financial or otherwise) of Aon, RHC Sub or REC Sub. SECTION 5.4. CAPITALIZATION OF AON. The authorized capital stock of Aon consists of 750,000,000 shares of Aon Common Stock and 25,000,000 shares of preferred stock, par value $1.00 per share ("AON PREFERRED STOCK"). As of March 31, 2001, there were issued and outstanding 261,860,632 shares of Aon Common Stock and 1,000,000 shares of Aon Preferred Stock designated Series C Cumulative Preferred Stock. The shares of Aon Common Stock to be issued pursuant to this Agreement will upon issuance be validly issued, fully paid, non-assessable and free of preemptive rights and will be free and clear of all Liens except for applicable Liens under this Agreement and the Additional Agreements, applicable Rules of any Governmental Authority (including the Securities Act) and as may arise from any action taken by the Companies prior to the Effective Time or the Ryan Family Members prior to or after the Effective Time. SECTION 5.5. CONSENTS AND APPROVALS. Except (a) for the filing with the FTC and the DOJ of the notification form and other information required under the HSR Act, (b) for the filing with the Delaware Authority of certificates of merger pursuant to the DGCL, as contemplated by Section 1.6, and (c) for post-Closing filing requirements of federal and state securities laws, no filing or registration with, no notice to and no permit, authorization, consent or approval of, any Governmental Authority is necessary for the consummation by Aon, RHC Sub or REC Sub of the transactions contemplated by this Agreement. Aon has caused to be filed with the FTC and the DOJ the notifications and other information required to be filed under the HSR Act with respect to the transactions contemplated hereby. All such filings were, as of the date filed, true and accurate in all material respects and in accordance with the HSR Act. The waiting period under the HSR Act with respect to the transactions expired on July 12, 2001. ARTICLE VI COVENANTS SECTION 6.1. REPRESENTATIONS AND WARRANTIES; CONDUCT OF BUSINESS OF THE COMPANIES PRIOR TO THE EFFECTIVE TIME. From the execution and delivery hereof through the Effective Time, the Companies agree that, except to the extent that Aon shall otherwise consent in writing, the Companies will not conduct any business or effect any transactions of any kind whatsoever. From the execution and delivery hereof through the Effective Time, (a) the Companies and the Ryan Family Members shall use their best efforts to cause the representations and warranties contained in Article III hereof to continue to be true and correct as of the Closing as if made again by the Companies and the Ryan Family Members at the Closing, (b) the Ryan Family Members shall use their best efforts to cause the representations and warranties contained in Article IV hereof to continue to be true and correct as of the Closing as if made again by the Ryan Family Members at the Closing, and (c) Aon and the Subs shall use their best efforts to 18 cause the representations and warranties contained in Article V hereof to continue to be true and correct as of the Closing as if made again by Aon and the Subs at the Closing. SECTION 6.2. ALL REASONABLE EFFORTS. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done as promptly as practicable, all things necessary, proper and advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. If at any time after the date hereof any further action is necessary or desirable to carry out the purposes of this Agreement, including the execution of additional instruments, each party to this Agreement shall take all such necessary action. SECTION 6.3. CONSENTS AND APPROVALS. The Companies and the Ryan Family Members shall (a) use their best efforts to obtain all necessary permits, consents, waivers, approvals, orders and authorizations of all Governmental Authorities and other Persons required to be obtained by the Companies and Ryan Family Members in connection with the execution, delivery and performance of this Agreement, the Additional Agreements and the consummation of the transactions contemplated hereby and thereby by each such party, (b) diligently assist and cooperate with Aon in preparing and filing all documents required to be submitted by Aon to any Governmental Authority in connection with the execution, delivery and performance of this Agreement, the Additional Agreements and the consummation of the transactions contemplated hereby and thereby (which assistance and cooperation shall include timely furnishing to Aon of all information concerning the Companies or the Ryan Family Members which, in the opinion of counsel to Aon, is required to be included in such documents), and in obtaining any permits, consents, waivers, approvals, orders and authorizations which may be required to be obtained by Aon in connection therewith and (c) keep Aon apprised of the status of any inquiries made of such party by any Governmental Authority with respect to this Agreement, the Additional Agreements or the transactions contemplated hereby and thereby. SECTION 6.4. PUBLIC ANNOUNCEMENTS. Aon shall determine when and the extent to which it is desirable or necessary to issue any press release or other public statements with respect to the transactions contemplated by this Agreement, including the Merger. Aon shall not issue any such press release or make any such public statement without consulting with the Representative and providing the Representative with a copy of any such written press release, except as may be required by applicable law or by obligations pursuant to any listing agreement with any securities market or any securities market regulations. SECTION 6.5. DISCLOSURE SUPPLEMENTS. Between the date hereof and the Distribution Date (as defined in the Escrow Agreement attached as an Exhibit hereto), the Ryan Family Members shall promptly deliver to Aon in writing any information which, if existing, occurring or Known at the date of this Agreement, would have been required to be set forth or described in any Schedule hereto or which is necessary to correct any information in any Schedule which has been rendered inaccurate thereby. SECTION 6.6. PAYMENT OF TRANSACTION EXPENSES. Except to the extent set forth on the Most Recent Balance Sheets, prior to the Effective Time the Companies shall have paid in full all transaction expenses, including any legal, accounting, appraisal, financial advisor and other expenses which have been incurred or will be incurred by the Companies in connection with the transactions contemplated hereby ("TRANSACTION EXPENSES"), invoiced prior to the Effective Time as well as all other Transaction Expenses which the Companies reasonably estimate shall 19 be incurred through the Effective Time. Except to the extent set forth on the Most Recent Balance Sheets, the Ryan Family Members agree to pay any and all Transaction Expenses billed to the Surviving Corporations following the Mergers which relate to fees and expenses incurred by the Companies prior to the Effective Time. SECTION 6.7. SPECIFIC PERFORMANCE. Each of the parties hereto hereby acknowledges and agrees that the other parties would be damaged irreparably in the event that any of the material provisions of this Agreement are not substantially performed in accordance with their specific terms or are otherwise breached. Accordingly, each of the parties hereto hereby agrees that the other parties shall be entitled to an injunction or injunctions to prevent breaches of the material provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in addition to any other remedy to which they may be entitled pursuant hereto. SECTION 6.8. TAX-FREE REORGANIZATION. Except as otherwise required by law, Aon, and each of the Subs, the Ryan Family Members, and the Companies, agree to file all Tax Returns in a manner that is consistent with the Mergers qualifying as tax-free reorganizations within the meaning of Section 368(a) of the Code. None of the Ryan Family Members, the Companies, Aon or the Subs shall take or cause to be taken any action outside the ordinary course of business that would disqualify the Mergers as "reorganizations" within the meaning of Section 368(a) of the Code. SECTION 6.9. TAX MATTERS. The following provisions shall govern the allocation of responsibility as between Aon and the Ryan Family Members for certain Tax matters following the Effective Time: (a) TAX PERIODS ENDING ON OR BEFORE THE EFFECTIVE TIME. Aon shall cause Ernst & Young LLP to prepare and shall file or cause to be filed all Tax Returns for the Surviving Companies for all periods ending on or prior to the Effective Time which are filed after the Effective Time. Aon shall notify the Ryan Family Members at the time of completion of each such income tax return and shall permit the Ryan Family Members to review and comment on each such Tax Return described in the preceding sentence prior to filing. The Ryan Family Members shall reimburse Aon for Taxes of the Surviving Corporations with respect to such periods within 15 days after payment by Aon or the Surviving Corporations of such Taxes to the extent such Taxes are not reflected in the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) shown on the face of the Most Recent Balance Sheet. Aon or the Surviving Corporations shall pay to the Representative any refund of Taxes of the Surviving Corporations with respect to such periods within 15 days after receipt by Aon or the Surviving Corporations of such refund. (b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE EFFECTIVE TIME. Aon shall cause Ernst & Young LLP to prepare and shall file or cause to be filed any Tax Returns of the Surviving Companies for Tax periods that begin before the Effective Time and end after the Effective Time. Aon shall permit the Ryan Family Members to review and comment on each such Tax Return prior to filing. The Ryan Family Members shall pay to Aon within 15 days after the date on which Taxes are paid with respect to such periods an amount equal to the portion of such Taxes which relates to the portion of such Taxable period ending on the Effective Time, determined as set forth below, to the extent such Taxes are not reflected in the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences 20 between book and Tax income) shown on the face of the Most Recent Balance Sheets. In the event Aon or the Surviving Corporations receive any refund of Taxes of the Surviving Corporations with respect to such periods, Aon or the Surviving Corporations shall pay to the Representative an amount equal to the portion of such refund which relates to the portion of such Taxable period ending on the Effective Time, determined as set forth below, within 15 days after receipt by Aon or the Surviving Corporations of such refund. For purposes of this Section 6.9(b), in the case of any Taxes that are imposed on a periodic basis and are payable for a Taxable period that includes (but does not end on) the Effective Time, the portion of such Tax which relates to the portion of such Taxable period ending at the Effective Time shall (i) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of such Tax for the entire Taxable period multiplied by a fraction the numerator of which is the number of days in the Taxable period ending at the Effective Time and the denominator of which is the number of days in the entire Taxable period, and (ii) in the case of any Tax based upon or related to income or receipts be deemed equal to the amount which would be payable if the relevant Taxable period ended at the Effective Time. All determinations necessary to give effect to the foregoing allocations shall be made in a manner consistent with prior practice of the Surviving Corporations for Tax periods prior to the Effective Time. Aon agrees that it will not cause the Surviving Corporations to take any actions on the Closing Date other than transactions comparable to those occurring in the ordinary course of business of the Companies prior to the Closing (it being agreed that distributions of cash in connection with the repayment, including prepayment, of indebtedness in part or in whole is in the ordinary course of business). (c) CARRYFORWARDS FROM PRIOR TAX PERIODS. Within 45 days after the filing of a federal income Tax Return by Aon or a Company utilizing, to offset income or gain, any net operating loss or capital loss carryforward of a Company that arose in a period ending on or before the Effective Time, Aon shall pay, or cause to be paid, to the Representative, an amount equal to 50 percent of the federal income Tax benefit derived therefrom. In the event that a payment is made pursuant to the preceding sentence, and thereafter the utilization of some or all of such net operating loss or capital loss carryforward is disallowed by a final administrative or court decision, a binding agreement or an amended return, the Representative shall pay to Aon an amount equal to 50 percent of the disallowed federal income Tax benefit, along with 50 percent of any interest, penalties and incidental costs paid by Aon or the Company with respect to such disallowance, within 45 days after receiving written demand from Aon. (d) COOPERATION ON TAX MATTERS. (i) Aon and each of the Subs, the Ryan Family Members and Companies shall cooperate fully, as and to the extent reasonably requested by any other party, in connection with the filing of Tax Returns pursuant to this Section and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon any other party's request) the provision of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Aon and the Ryan Family Members agree (A) to retain all books and records with respect to Tax matters pertinent to the Companies relating to any Taxable period beginning before the Effective Time until the expiration of the statute of limitations (and, to the extent notified by Aon or the Ryan Family Members, any extensions thereof) of the respective Taxable periods, and to abide by all record retention agreements entered into with any Taxing authority, and (B) to give the other party reasonable written notice prior to transferring, destroying or 21 discarding any such books and records and, if the other party so requests, Aon or the Ryan Family Members, as the case may be, shall allow the other party to take possession of such books and records. (ii) Aon and the Ryan Family Members further agree, upon request, to use their best efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including with respect to the transactions contemplated hereby). (iii) Aon and the Ryan Family Members further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to the Code and all Treasury Department Regulations promulgated thereunder. SECTION 6.10 VOTING AGREEMENT. Each of the Ryan Family Members is executing and delivering the Irrevocable Stockholders' Voting Agreement and Proxy in the form attached hereto as EXHIBIT C (the "VOTING AGREEMENT") simultaneously with the Closing. ARTICLE VII CLOSING SECTION 7.1. CLOSING. The closing (the "CLOSING") of the transactions contemplated by this Agreement is taking place concurrently with the execution and delivery hereof at the offices of Sidley Austin Brown & Wood, Bank One Plaza, Chicago, Illinois 60603, at 10:00 a.m., local time, on the date hereof (the "CLOSING DATE"). (a) At the Closing, the Companies are delivering to Aon the following: (i) the Assumption Agreement in the form attached hereto as EXHIBIT D (the "ASSUMPTION AGREEMENT"), duly executed by each of the Companies and in full force and effect prior to the Effective Time; (ii) documents evidencing the release of the Bank Liens such that all of the Aon Shares are owned by the Companies free and clear of all Liens; (iii) a Certificate of Equiserv Trust Company, N.A., Aon's transfer agent and registrar, in the form attached hereto as EXHIBIT E (the "CERTIFICATE OF TRANSFER AGENT AND REGISTRAR"), executed by an authorized representative of Equiserv; (iv) Officer's Certificate signed by an officer of RHC in the form attached hereto as EXHIBIT F; (v) Officer's Certificate signed by an officer of REC in the form attached hereto as EXHIBIT G; (vi) Long-form Good Standing Certificate of each Company issued by the Secretary of State of Delaware shortly prior to the Closing; and (vii) Telegram or facsimile, dated the Closing Date, from the Secretary of State of Delaware as to each Company's due incorporation and good standing; 22 (b) At the Closing, the Ryan Family Members are delivering to Aon the following: (i) The Escrow Agreement in the form attached hereto as EXHIBIT H (the "ESCROW AGREEMENT"), duly executed by each of the Ryan Family Members; (ii) the Assumption Agreement, duly executed by each of the Ryan Family Members and in full force and effect prior to the Effective Time; (iii) the Stock Restriction Agreement in the form attached hereto as EXHIBIT I (the "STOCK RESTRICTION AGREEMENT"), duly executed by each of the Ryan Family Members; (iv) certificates representing all of the outstanding shares of RHC Common Stock, RHC Preferred Stock, REC Common Stock and REC Preferred Stock (such certificates to be delivered by the Ryan Family Members who are Stockholders), in each case properly endorsed for transfer or accompanied by duly executed stock powers executed in blank; (v) the Certificate of Transfer Agent and Registrar, duly executed by an authorized representative of Equiserv, indicating, among other things, receipt of certificates representing all of the outstanding shares of Aon Common Stock owned directly or indirectly by the Ryan Family Members other than the Aon Shares and shares held by PGR under Aon's Employee Stock Ownership Plan and Aon's 401k Plan (such certificates being delivered for the sole purpose of adding the legends set forth in Section 2.3(b) and (c) hereof). (vi) certificate of each Ryan Family Stockholder which is not a natural Person in the form attached hereto as EXHIBIT J. (c) At the Closing, the Family GST Trust Under the PGR 2000 Trust dated November 22, 2000 (the "PGR 2000 TRUST") is delivering to Aon the Escrow Agreement, duly executed by the PGR 2000 Trust and by American National Bank and Trust Company of Chicago, as escrow agent under the Escrow Agreement (the "ESCROW AGENT"). (d) At the Closing, Aon is delivering to the Companies the following: (i) the Assumption Agreement, duly executed by Aon; (ii) Officer's Certificate signed by an officer of Aon in substantially the form attached hereto as EXHIBIT K; (iii) Long-form Good Standing Certificate of Aon issued by the Secretary of State of Delaware shortly prior to the Closing; (iv) Telegram or facsimile, dated the Closing Date, from the Secretary of State of Delaware as to Aon's due incorporation and good standing; (v) Copy of all correspondence with the New York Stock Exchange relating to the Mergers, including correspondence from the NYSE confirming that Aon stockholder approval of the Mergers is not required under applicable NYSE rules. (vi) the Stock Restriction Agreement, duly executed by Aon; and 23 (vii) the Escrow Agreement, duly executed by Aon. (e) At the Closing, William Blair & Company, L.L.C., is delivering to Aon a letter addressed to the Special Committee and Board of Directors of Aon in the form set forth on EXHIBIT L attached hereto to the effect that the consideration to be paid by Aon in the Mergers is fair, from a financial point of view, to Aon. (f) At the Closing, Ernst & Young LLP, is delivering to Aon a letter, addressed to Aon, in the form set forth on EXHIBIT M attached hereto advising Aon of the effect on Aon's financial statements (including the absence of an adverse effect on earnings and earnings per share) of the consummation of the transactions contemplated by this Agreement. (g) At the Closing, Ernst & Young LLP, is delivering to Aon and the Ryan Family Members, an opinion letter, addressed to the Special Committee and Board of Directors of Aon and the Boards of Directors of each of the Companies, in the form set forth on EXHIBIT N attached hereto regarding certain tax matters. (h) At the Closing, Sidley Austin Brown & Wood is delivering to Aon, an opinion letter, addressed to Aon and dated as of the Closing Date, in the form set forth on EXHIBIT O attached hereto: (i) Promptly following the Closing, Aon shall deliver to the Stockholders one or more certificates, registered in the name of the applicable Stockholder evidencing the number of shares of Aon Common Stock to be received by each such Stockholder at the Effective Time pursuant to Sections 2.1 and 2.2 hereof, which certificates will be duly issued and registered in the name of each such Stockholder and contain all of the legends contained in Section 2.3 hereof. (j) Promptly following the Closing, Aon shall deliver to the Ryan Family Members one or more certificates, registered in the name of the applicable Ryan Family Members and containing the legends set forth in Sections 2.3(b) and (c) hereof and, if the certificate delivered by such Person pursuant to Section 7.1(b)(iv)(B) hereof included a comparable legend, the legend set forth in Section 2.3(a) hereof, evidencing the number of shares of Aon Common Stock delivered by such Person pursuant to Section 7.1(b)(iv)(B) hereof (k) Promptly following the Closing, the PGR 2000 Trust shall deliver to the Escrow Agent a certificate received pursuant to Section 7.1(i) evidencing 583,942 shares of Aon Common Stock accompanied by a duly executed stock power executed in blank, which shares shall simultaneously with the Closing and without any further action by any Person, become subject to the terms and conditions of, the Escrow Agreement. Such shares shall be registered in the name of the Escrow Agent promptly following the Closing. ARTICLE VIII SURVIVAL AND INDEMNIFICATION SECTION 8.1. SURVIVAL AND REMEDIES. All representations and warranties of each of the parties hereto contained in this Agreement or the Additional Agreements, including all statements contained in any certificate, schedule, document or other writing delivered pursuant hereto or in connection with the transactions contemplated hereby, shall be deemed to be representations and warranties within the meaning of this Section 8.1, shall be deemed to be 24 material and to have been relied upon by Aon or the Ryan Family Members, as the case may be, and shall survive the Closing and the Effective Time, and claims for indemnification relating to a breach of any such representation and warranty may be made at any time. All of the covenants and agreements of each of the parties hereto contained in this Agreement or in any document delivered pursuant to this Agreement shall survive the Closing and the Effective Time, and claims for indemnification relating to a breach of any such covenant or agreement may be made at any time. In the event of a breach of any of such representations, warranties, covenants and agreements, the party to whom such representation, warranty, covenant or agreement has been made shall have all rights and remedies for such breach available to it under the provisions of this Agreement or otherwise, whether of law or in equity, regardless of any disclosure to, or investigation made by or on behalf of such party on or before the Closing Date. The rights and remedies of any party based upon, arising out of or otherwise in respect of any inaccuracy in or breach of any representation, warranty, covenant or agreement contained in this Agreement or any Additional Agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement contained in this Agreement or any Additional Agreement as to which there is no inaccuracy or breach. SECTION 8.2. INDEMNIFICATION OF AON. Each Ryan Family Member agrees, jointly and severally, to indemnify and defend Aon, its past, present and future Subsidiaries (including the RHC Surviving Corporation and the REC Surviving Corporation), Affiliates, officers, directors, employees, agents and other representatives, the past, present and future officers, directors, employees, agents and other representatives of its Subsidiaries and Affiliates and any person who during the past, present or future "CONTROLS" (within the meaning of Rule 405 promulgated under the Securities Act of 1933, as amended) any of the foregoing, (each of such parties is referred to herein individually as an "INDEMNIFIED PARTY" and collectively as the "INDEMNIFIED PARTIES") against, and hold the Indemnified Parties harmless from, all damages, costs, losses, claims, suits, Liabilities, obligations, deficiencies, fees and expenses, including court costs, amounts paid in settlement, attorneys fees, expenses of investigation and expenses incurred in defending any Indemnified Party against the assertion of any claim with respect to such damages, costs, losses, claims, suits, Liabilities, obligations, deficiencies, fees and expenses (collectively, the "DAMAGES"), related to, resulting from, caused by, based upon, or arising out of: (a) any inaccuracy or misrepresentation or breach of and representation or warranty made by any Ryan Family Member set forth in this Agreement (it being understood and agreed to that, for the purposes of this Article VIII, all such representations or warranties shall be interpreted without giving effect to any qualifications, limitations or exceptions therein, including the words "ADVERSE EFFECT," "MATERIAL ADVERSE EFFECT," "MATERIALITY," "MATERIAL," "KNOWLEDGE," "KNOWN," "KNOWS" or variations of such terms or similar terms or qualifications, limitations or exceptions based on any such terms); (b) any breach or violation of any agreement, covenant or obligation of RHC, REC, or any Ryan Family Member set forth in this Agreement; (c) any inaccuracy or misrepresentation or breach of and representation or warranty made by RHC, REC or any Ryan Family Member set forth in any Additional Agreement to which such Person is a party (it being understood and agreed to that, for the purposes of this Article VIII, all such representations or warranties shall be interpreted without giving effect to any qualifications, 25 limitations or exceptions therein, including the words "ADVERSE EFFECT," "MATERIAL ADVERSE EFFECT," "MATERIALITY," "MATERIAL," "KNOWLEDGE," "KNOWN," "KNOWS" or variations of such terms or similar terms or qualifications, limitations or exceptions based on any such terms); (d) any breach or violation of any agreement, covenant or obligation of RHC, REC or any Ryan Family Member set forth in any Additional Agreement to which such Person is a party; (e) any claim made in good faith based upon facts alleged that, if true, would have constituted any such inaccuracy, misrepresentation, breach or violation under clause (a), (b), (c) or (d) above; (f) any Liability or obligation of RHC or REC or any of their past or present Subsidiaries or Affiliates, whether known or unknown, fixed, contingent or otherwise, relating to, or arising out of, acts or omissions that occurred or states of fact that existed prior to the Effective Time, except for Liabilities set forth on the Most Recent Balance Sheets; (g) any Tax attributable to RHC or REC or any of their past or present Subsidiaries or Affiliates for taxable periods ending on or prior to the Effective Time, and any Tax attributable to the portion of the taxable period subsequent to the last of said periods and ending at the Effective Time as determined in a manner as set forth in Section 6.9(b), including any Tax resulting from the consummation of the Mergers; (h) the Mergers and any other transactions contemplated by this Agreement and the Additional Agreements, other than transaction expenses (provided that the term "transaction expenses" does not include any expenses, costs, fees, or liabilities related to the indemnification of any representative of Aon or Aon's officers or directors arising out of the actions taken in connection with the Mergers) incurred by Aon prior to the Closing; (i) any assertion of appraisal rights pursuant to Section 251 and 262 of the DGCL by any of the stockholders of RHC or REC; and (j) any of the acts or omissions of, or states of fact relating to RHC or REC or their officers, directors, stockholders, employees, agents, Subsidiaries or Affiliates or any officers, directors, stockholders, employees or agents of such Subsidiaries or Affiliates, which acts or omissions occurred, or states of fact existed, prior to the Effective Time. Aon agrees that notwithstanding any provision herein to the contrary, prior to any distribution in satisfaction of a claim for Damages which are Applicable Damages (as defined in the Escrow Agreement) pursuant to the Escrow Agreement, Aon will provide, or request that the Escrow Agent provide, each Stockholder with written notice of such planned distribution (the "NOTICE") and will provide the Stockholders with a period of ten business days following delivery of the Notice to satisfy such claim from other assets. If no Stockholder has satisfied such claim within such period, Aon may, in addition to all of its rights and remedies under this Agreement or otherwise (whether of law or in equity), satisfy any claim for Damages which are Applicable Damages by withdrawing from the Escrow Fund (as defined in the Escrow Agreement), in accordance with the terms of the Escrow Agreement, that number of shares of Aon Common Stock determined by dividing the amount of the claim by the closing price of Aon Common Stock as reported on the New York Stock Exchange for the tenth business day following delivery of the Notice Subject to and in accordance with the Escrow Agreement, the balance, if any, of the Escrow Fund remaining on the Distribution Date (as defined in the Escrow Agreement) 26 shall be distributed to the Stockholder or Stockholders contributing to the Escrow Fund. Each Ryan Family Member agrees and acknowledges that (x) it has discussed with its counsel and understands the joint and several nature of the indemnification obligations hereunder, (y) the right of indemnification of the Indemnified Parties hereunder is not limited to the Escrow Fund, and (z) the Indemnified Parties are not obligated to seek satisfaction of a claim for indemnification pursuant to this Agreement from the Escrow Fund established pursuant to the Escrow Agreement prior to seeking satisfaction of such a claim from any Ryan Family Member personally and individually. SECTION 8.3. NOTICE OF CLAIM. Any Indemnified Party making a claim for indemnification pursuant to this Agreement must give the party from whom indemnification is sought (an "INDEMNIFYING PARTY") written notice of such claim (an "INDEMNIFICATION CLAIM NOTICE") promptly after the Indemnified Party (i) receives any written notice of any action, lawsuit, proceeding, investigation, tax audit, demand, assessment, enforcement action or other claim (a "PROCEEDING") against or involving the Indemnified Party by any third party or (ii) otherwise discovers the liability, obligation or facts giving rise to such claim for indemnification; provided that the failure to notify or delay in notifying an Indemnifying Party will not relieve the Indemnifying Party of its obligations pursuant this Agreement, except to the extent that such failure actually and materially harms the Indemnifying Party. SECTION 8.4. INDEMNIFICATION PROCEDURES; CONDITIONS. With respect to the defense of any Proceeding against or involving an Indemnified Party in which the third party in question seeks only the recovery of a sum of money for which indemnification is provided in this Agreement, at its option an Indemnifying Party may appoint as lead counsel of such defense any legal counsel selected by the Indemnifying Party (and reasonably satisfactory to the Indemnified Party); PROVIDED that before the Indemnifying Party assumes control of such defense it must first enter into an agreement with the Indemnified Party (in form and substance reasonably satisfactory to the Indemnified Party) pursuant to which the Indemnifying Party agrees to be fully responsible (with no reservation of any rights) for all Damages relating to such Proceeding and unconditionally guarantees the payment and performance of any liability or obligation which may arise with respect to such Proceeding or the facts giving rise to such claim for indemnification; PROVIDED, HOWEVER, that the Indemnified Party may, at the Indemnifying Party's cost, participate in such investigation, trial and defense of such Proceeding and any appeal arising therefrom; and PROVIDED FURTHER, that the Indemnifying Party shall have an obligation to keep the Indemnified Party apprised of the status of the Proceeding, to furnish the Indemnified Party with all documents and information that the Indemnified Party shall reasonably request in connection therewith, and to consult with the Indemnified Party prior to acting on major matters involved in such Proceeding. The Indemnifying Party must obtain the prior written consent of the Indemnified Party (which the Indemnified Party will not unreasonably withhold) prior to entering into any settlement of such claim or Proceeding or ceasing to defend such claim or Proceeding. The Indemnified Party shall be entitled to defend, settle or proceed in such other manner as it deems fit, in its sole discretion, in connection with any Proceeding as to which the Indemnifying Party has not acknowledged its obligations in writing in accordance with the foregoing sentence; and no actions taken by the Indemnified Party in connection therewith shall affect or limit the obligations of the Indemnifying Party pursuant to this Agreement. 27 SECTION 8.5. TREATMENT OF INDEMNIFICATION PAYMENTS. Amounts paid to an Indemnified Party as indemnification hereunder shall be treated as adjustments to the Merger Consideration. If any Tax authority asserts that an indemnification payment is not an adjustment to the Merger Consideration and the Indemnified Party has not received a corresponding Tax deduction for the entire amount of Damages incurred by the Indemnified Party in connection with the matter underlying such indemnification payment, the Indemnifying Party shall indemnify the Indemnified Party for any Tax imposed upon the Indemnified Party in connection with its receipt of any portion of such indemnification payment with respect to which the Indemnified Party has not received a corresponding Tax deduction. ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 9.1. AMENDMENT AND MODIFICATION. This Agreement may be amended only pursuant to a written instrument signed on behalf of RHC, REC, the Representative, Aon and the Subs. SECTION 9.2. WAIVER OF COMPLIANCE; CONSENTS. Any failure of Aon, RHC Sub or REC Subs, on the one hand or the Companies or Ryan Family Members, on the other hand, to comply with any obligation, covenant, agreement or condition contained herein may be waived only in writing by the Companies and the Representative or Aon and the Subs, respectively, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party to enforce any such provision. Any amendment or waiver effected in accordance with Section 9.1 or this Section 9.2 shall be binding upon each of the Ryan Family Members. SECTION 9.3. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. SECTION 9.4. EXPENSES AND OBLIGATIONS. All costs and expenses incurred by Aon and the Subs prior to the Effective Time in connection with the consummation of the transactions contemplated by this Agreement shall be paid by Aon. All costs and expenses incurred by the Companies and the Ryan Family Members in connection with the consummation of the transactions contemplated by this Agreement shall be paid by the Companies (subject to Section 6.6 hereof) and the Ryan Family Members, respectively. SECTION 9.5. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and, nothing in this Agreement except as set forth in Article IX hereof, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement. SECTION 9.6. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon the earlier of delivery thereof if by hand or upon receipt if sent by mail (registered or certified mail, postage prepaid, return receipt requested) or on the next business day after deposit if sent by a recognized overnight delivery service or upon 28 transmission if sent by telecopy or facsimile transmission (with request of assurance of receipt in a manner customary for communication of such type) as follows (or at such other address for a party as shall be specified by like notice): (a) If to Aon or the Subs, or to the Surviving Corporations after the Effective Time, to: Aon Corporation 123 North Wacker Drive Chicago, Illinois 60606 Attn: Raymond Skilling, Chief Counsel Telecopy: (312) 701-2348 with a copy to: Sonnenschein Nath & Rosenthal 8000 Sears Tower 233 S. Wacker Drive Chicago, Illinois 60606 Attn: Donald G. Lubin, Esq. Telecopy: (312) 876-7934 (b) if to the Companies prior to the Effective Time or to the Ryan Family Members, to the Representative: Patrick G. Ryan 123 North Wacker Drive, Suite 900 Chicago, Illinois 60606 Telecopy: (312) 701-3030 with a copy to: Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Attn: Dennis V. Osimitz Telecopy: (312) 853-7036 SECTION 9.7. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without regard to the conflicts-of-laws rules thereof, except to the extent that the laws of the State of Delaware are mandatorily applicable to the Mergers. SECTION 9.8. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. This Agreement may be executed by facsimile signature and a facsimile signature shall constitute an original signature for all purposes. 29 SECTION 9.9. HEADINGS. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.10. CERTAIN DEFINITIONS. For purposes of this Agreement, the term: (a) "ADDITIONAL AGREEMENTS" shall mean the Assumption Agreement, the Escrow Agreement, the Stock Restriction Agreement, the Voting Agreement and all other agreements and documents contemplated by this Agreement. (b) "AFFILIATE" shall mean (i) a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, another Person and (ii) any parent, spouse, lineal descendant or adopted child of a Person specified in clause (i), any spouse or adopted child of any such descendant or any child of such spouse, the executors, administrators, conservators or personal representatives of any Person referred to in this clause (ii) and any Person which, directly or indirectly, is owned or controlled by one or more of the Persons referred to in this clause (ii). For purposes of this definition, "CONTROL" (including, with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY," or and "UNDER COMMON CONTROL WITH"), as used with respect to any person or entity, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person or entity, whether through the ownership of voting securities or interests, by agreement or otherwise; PROVIDED, HOWEVER, that record or beneficial ownership of 10% or more of the voting stock or interests of a Person shall be deemed control; FURTHER PROVIDED, that record or beneficial ownership of less than 10% of the voting stock or interest of a Person shall not raise a presumption that such Person is not an Affiliate. (c) "AFFILIATED GROUP" shall mean any affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group under state, local or foreign income Tax law) of which Aon or any of its Affiliates is or has been a member. (d) "AON COMMON STOCK" shall mean the common stock, par value $1.00 per share, of Aon. (e) "CLAIMS" shall mean all pending and threatened claims, actions, causes of action, demands, orders, notices, suits, grievances, proceedings, disputes, arbitrations and investigations. (f) "ENVIRONMENTAL CLAIM" shall mean any Claim (written or oral) by any Person or any Governmental Authority alleging potential Liability or obligations (including potential Liability or obligations for or requirement to incur investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (i) the presence, release or threatened release into the environment, of any Materials of Environmental Concern at any location, whether or not owned or operated by the Companies, or (ii) circumstances forming the basis of any violation, potential violation or alleged violation, or Liability, potential Liability or alleged Liability, under any Environmental Law. (g) "ENVIRONMENTAL LAWS" shall mean all Rules and permit conditions relating to pollution or protection of human health or the environment (including ambient air, indoor air, surface water, ground water, land surface or subsurface strata), including Rules relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or 30 otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern. (h) "ERISA AFFILIATE" shall mean any corporation or other Person which is a member of the same controlled group (within the meaning of Section 414(b) of the Code) of corporations or other Persons as either of the Companies, or which is under common control (within the meaning of Section 414(c) of the Code) with either of the Companies, or any corporation or other Person which is a member of an affiliated service group (within the meaning of Section 414(m) of the Code) with either of the Companies, or any corporation or other Person which is required to be aggregated with either of the Companies pursuant to Section 414(o) of the Code or the regulations promulgated under Sections 414(b), (c), (m) or (o) of the Code. (i) "GOVERNMENTAL AUTHORITY" shall mean any court or judicial authority (whether federal, national, state, local, domestic, foreign or otherwise), any arbitration or other alternative dispute mechanism (whether federal, national, state, local, domestic, foreign or otherwise), any government or governmental department, legislature, executive branch, agency, board, body, office, commission, bureau or instrumentality or other regulatory authority (whether federal, national, state, local, domestic, foreign or otherwise) or any Person or organization lawfully empowered by any of the foregoing to enforce or seek compliance with any Rule. (j) "KNOWLEDGE" (or any form of such term, such as "Knows", "Known", etc.) as used in this Agreement with respect to a party's awareness of the presence or absence of a fact, event or condition shall mean (i) the actual knowledge of such Person after due inquiry, and in the case of any Person other than an individual, any director, officer, shareholder (beneficial or of record), managing director, partner, trustee or similar individual of such Person plus (ii) the knowledge that should be obtained by a party conducting itself reasonably and with sound discretion in the management of its own affairs. (k) "LIABILITY" shall mean any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes. (l) "LIENS" shall mean all title defects, charges, claims, restrictions, liens, pledges, security interests, mortgages, tenancies and other possessory interests, conditional sale or other title retention agreements, assessments, easements, rights of way, covenants, restrictions, rights of first refusal, encroachments and other burdens, options, restrictions or encumbrances of any kind. (m) "MATERIALS OF ENVIRONMENTAL CONCERN" shall mean chemicals or other substances subject to regulation pursuant to Environmental Laws, including pollutants, contaminants, wastes, by products, toxic substances, radionuclides, polychlorinated biphenyls, asbestos, petroleum (including crude oil or any fraction thereof) and petroleum products. (n) "PERSON" shall mean an individual, corporation, limited liability company, partnership, joint venture, association, trust, unincorporated organization or, as applicable, any other entity. (o) "PLAN" shall mean each bonus, pension, stock option, stock purchase, stock bonus, benefit, welfare, profit sharing, retirement, disability, vacation, severance, hospitalization, 31 insurance, incentive, deferred compensation and other similar fringe or compensation agreements, written or oral, and all collective bargaining agreements and each other "employee benefit plan" (within the meaning of Section 3(3) of ERISA), in each of the foregoing cases which cover, are maintained for the benefit of, or relate to any or all employees employee benefit plans, funds, programs or arrangements, all employment contracts or executive (regardless whether such employees' regular place of employment is within or without the United States) or terminated employees of RHC, REC or any ERISA Affiliate. (p) "REC COMMON STOCK" shall mean, collectively, the REC Class A Common Stock and the REC Class B Common Stock. (q) "REC CLASS A COMMON STOCK" shall mean the Class A Common Stock, par value $.01 per share, of REC. (r) "REC CLASS B COMMON STOCK" shall mean the Class B Common Stock, par value $.01 per share, of REC. (s) "REC PREFERRED STOCK" shall mean, collectively, the REC Convertible Preferred Stock and the REC Senior 9% Preferred Stock. (t) "REC CONVERTIBLE PREFERRED STOCK" shall mean the Convertible Preferred Stock, par value $.01 per share, of REC. (u) "REC SENIOR 9% PREFERRED STOCK" shall mean the Senior 9% Cumulative Preferred Stock, par value $.01 per share, of REC. (v) "REORGANIZATION" shall mean the transactions described in SCHEDULE 9.10. (w) "REPRESENTATIVE" shall mean the Person appointed pursuant to the Stock Restriction Agreement to act on behalf of each Stockholder and all of the Stockholders. (x) "RHC COMMON STOCK" shall mean, collectively, the RHC Class A Common Stock and the RHC Class B Common Stock. (y) "RHC CLASS A COMMON STOCK" shall mean the Class A Common Stock, par value $.01 per share, of RHC. (z) "RHC CLASS B COMMON STOCK" shall mean the Class B Common Stock, par value $.01 per share, of RHC. (aa) "RHC PREFERRED STOCK" shall mean, collectively, the RHC Series A Preferred Stock, the RHC Series B Preferred Stock, the RHC Series C Preferred Stock, and the RHC Series D Preferred Stock. (bb) "RHC SERIES A PREFERRED STOCK" shall mean the Series A 10% Preferred Stock, par value $1.00 per share, of RHC. (cc) "RHC SERIES B PREFERRED STOCK" shall mean the Series B 8% Preferred Stock, par value $1.00 per share, of RHC. 32 (dd) "RHC SERIES C PREFERRED STOCK" shall mean the Series C 7% Preferred Stock, par value $1.00 per share, of RHC. (ee) "RHC SERIES D PREFERRED STOCK" shall mean the Series D 7% Preferred Stock, par value $.01 per share, of RHC. (ff) "RULES" shall mean any federal, state, local or foreign statute, law, code, ordinance, rule, regulation, judgment, writ, decree, injunction, order, concession, grant, franchise, permit or license or other governmental or regulatory authorization, consent or approval applicable to RHC, REC, or any of the Ryan Family Members or any of their respective assets, properties, operations or any Plan or Aon, RHC Sub or REC Sub, in each case as applicable. (gg) "SPECIAL COMMITTEE" shall mean the Special Committee of the Aon Board of Directors of Aon formed to consider, evaluate and negotiate the transactions contemplated by this Agreement. (hh) "SUBSIDIARY" shall mean a Person with respect to which another specified Person has the power to vote or direct the voting of sufficient securities or interests to elect a majority of the board of directors or comparable governing body (E.G. general partners or managers). SECTION 9.11. ENTIRE AGREEMENT. This Agreement (including all Exhibits and Schedules attached hereto and incorporated by reference herein) and the Additional Agreements embody the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein or therein. This Agreement (including all Exhibits and Schedules attached hereto and incorporated by reference herein), and the Additional Agreements supersede all prior agreements and understandings between the parties with respect to such subject matter, including the nonbinding letter of intent dated June 8, 2001. SECTION 9.12. INTERPRETATION OF CERTAIN TERMS. Any words herein used in the singular shall denote the plural as the context so requires and, when used herein in the plural shall denote the singular as the context so requires. Pronouns used herein, whether masculine, feminine, or neuter, shall be interpreted as the context so requires. The word "including" shall mean "including, without limitation," and thus indicate part of a larger whole; but shall not be interpreted as indicating the stated limits or extremes. Any reference to any federal, state, or local law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. SECTION 9.13. ASSIGNMENT. This Agreement shall not be assigned by operation of law or otherwise, except that it may be assigned (other than the obligations in Article II) by Aon, RHC Sub or REC Sub to one or more of their Affiliates who agree in writing to be bound by the provisions hereof; PROVIDED, that Aon remains obligated under this Agreement. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns. SECTION 9.14. NO STRICT CONSTRUCTION. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any Person. 33 SECTION 9.15. DISPUTE RESOLUTION. (a) The parties agree that any and all disputes, claims or controversies arising out of or relating to this agreement that are not resolved by their mutual agreement shall be submitted to final and binding arbitration before JAMS, or its successor, pursuant to the United States Arbitration Act, 9 U.S.C. Sec. 1 et seq. Any party may commence the arbitration process called for in this Agreement by filing a written demand for arbitration with JAMS, with a copy to the other party. The arbitration will be conducted in accordance with the provisions of JAMS' Comprehensive Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties will cooperate with JAMS and with one another in selecting an arbitrator who has previously served as judge in a federal court from JAMS' panel of neutrals, and in scheduling the arbitration proceedings. The parties covenant that they will participate in the arbitration in good faith, and that they will share equally in its costs. The provisions of this Section may be enforced by any court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys fees, to be paid by the party against whom enforcement is ordered. (b) NOTICE: BY SIGNING THIS AGREEMENT, EACH PARTY IS AGREEING TO HAVE ALL DISPUTES, CLAIMS OR CONTROVERSIES ARISING OUT OF OR RELATING TO THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION, AND EACH PARTY IS GIVING UP ANY RIGHTS SUCH PARTY MIGHT POSSESS TO HAVE THOSE MATTERS LITIGATED IN A COURT OR JURY TRIAL. BY SIGNING THIS AGREEMENT, EACH PARTY IS GIVING UP SUCH PARTY'S JUDICIAL RIGHTS TO DISCOVERY AND APPEAL EXCEPT TO THE EXTENT THAT THEY ARE SPECIFICALLY PROVIDED FOR UNDER THIS AGREEMENT. IF ANY PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE UNDER FEDERAL OR STATE LAW. EACH PARTY'S AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. * * * The Remainder of this Page Intentionally Left Blank * * * 34 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be signed as of the day and year first above written. RYAN HOLDING CORPORATION OF ILLINOIS Aon CORPORATION By: /s/ Patrick G. Ryan, Jr. By: /s/ Michael D. O'Halleran ------------------------------------ ------------------------------------ Name: Patrick G. Ryan, Jr. Name: Michael D. O'Halleran Title: President Title: President and Chief Operating Officer RYAN ENTERPRISES CORPORATION OF ILLINOIS HOLDCO #1, INC. By: /s/ Patrick G. Ryan, Jr. By: /s/ Richard E. Barry ------------------------------------ ------------------------------------ Name: Patrick G. Ryan, Jr. Name: Richard E. Barry Title: President Title: Vice President and Assistant Secretary HOLDCO #2, INC.. /s/ Patrick G. Ryan - --------------------------------------- By: /s/ Richard E. Barry Patrick G. Ryan ------------------------------------ Name: Richard E. Barry Title: Vice President and Assistant Secretary /s/ Shirley W. Ryan - --------------------------------------- Shirley W. Ryan RHC STOCKHOLDERS: PATRICK G. RYAN LIVING TRUST SHIRLEY W. RYAN LIVING TRUST DATED JULY 10, 2001 DATED JULY 10, 2001 By: /s/ Patrick G. Ryan By: /s/ Shirley W. Ryan ------------------------------------ ------------------------------------ Name: Patrick G. Ryan Name: Shirley W. Ryan Its: Trustee Its: Trustee By: /s/ Patrick G. Ryan ----------------------------------- Name: Patrick G. Ryan Its: Trustee 2001 RYAN ANNUITY TRUST DATED APRIL 20, 2001 By: /s/ Shirley W. Ryan ------------------------------------ Name: Shirley W. Ryan Its: Trustee 1 OF 2 SIGNATURES PAGES TO AGREEMENT AND PLAN OF MERGER REC STOCKHOLDERS: PATRICK G. RYAN LIVING TRUST SHIRLEY W. RYAN LIVING TRUST DATED JULY 10, 2001 DATED JULY 10, 2001 By: /s/ Patrick G. Ryan By: /s/ Shirley W. Ryan ------------------------------------ ------------------------------------ Name: Patrick G. Ryan Name: Shirley W. Ryan Its: Trustee Its: Trustee By: /s/ Patrick G. Ryan ----------------------------------- Name: Patrick G. Ryan Its: Trustee FAMILY GST TRUST UNDER PGR /s/ Patrick G. Ryan, Jr. 2000 TRUST DATED NOVEMBER 22, 2000 - -------------------------------------- Patrick G. Ryan, Jr. By: /s/ Shirley W. Ryan ----------------------------------- Name: Shirley W. Ryan Its: Trustee /s/ Patrick J.W. Ryan - -------------------------------------- CORBETT M.W. RYAN LIVING TRUST DATED July 13, 2001 Patrick J.W. Ryan By: /s/ Shirley W. Ryan ----------------------------------- Name: Shirley W. Ryan Its: Trustee
2 OF 2 SIGNATURE PAGES TO AGREEMENT AND PLAN OF MERGER EX-99.3 4 a2054372zex-99_3.txt EXHIBIT 99.3 Exhibit III STOCK RESTRICTION AGREEMENT This STOCK RESTRICTION AGREEMENT (this "AGREEMENT") is made and entered into this 16th day of July, 2001, among (i) Aon Corporation, a Delaware corporation (the "COMPANY"), and (ii) Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001 and the Family GST Trust under the PGR 2000 Trust dated November 22, 2000 (each such person or entity listed in this clause (ii) a "RYAN FAMILY MEMBER" and collectively, the "RYAN FAMILY MEMBERS"). RECITALS A. The Company, Holdco #1, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company ("RHC SUB"), Holdco #2, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company ("REC SUB"), Ryan Holding Corporation of Illinois, a Delaware corporation ("RHC"), Ryan Enterprises Corporation of Illinois, a Delaware corporation ("REC"), and the Ryan Family Members are parties to that certain Agreement and Plan of Merger dated July 16, 2001 (the "MERGER AGREEMENT"); B. Section 7.1(b)(iii) of the Merger Agreement, requires that and each Ryan Family Member execute and deliver this Agreement concurrently with the execution and delivery of the Merger Agreement; and C. The Company would not be willing to enter into the Merger Agreement and consummate the Mergers and would not be willing to cause RHC Sub or REC Sub to enter into the Merger Agreement or consummate the Mergers (as defined in the Merger Agreement) unless each Ryan Family Member agreed to restrict the Transfer (as defined below) of the Company's common stock, $1.00 par value per share ("COMMON STOCK"), owned or hereafter acquired by such Ryan Family Member in accordance with the terms, provisions and conditions of this Agreement. AGREEMENT NOW, THEREFORE, in consideration of the recitals, which are deemed part of this Agreement, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement do hereby agree as follows: Section 1. DEFINITIONS. As used in this Agreement, initially capitalized terms shall have the following meanings: (a) "BUSINESS DAY" means for all purposes, a day other than Saturday or Sunday on which banks are open for business in Chicago, Illinois. (b) "CHARITABLE ORGANIZATIONS" means an organization that qualifies as a tax exempt organization pursuant to 501(c)(3) of the Code. (c) "CODE" means the Internal Revenue Code of 1986, as it may be amended from time to time. (d) "COMMISSION" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. (e) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute, and the rules and regulations thereunder, all as the same shall be in effect at the time. (f) "FAMILY TRANSFEREE" shall mean Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan Jr., Robert J. W. Ryan, Corbett M. W. Ryan, and any descendants or spouses of the foregoing and the spouses of any such descendants. (g) "PERMITTED TRANSFEREE" shall mean (i) a Family Transferee, (ii) the custodian under any Uniform Transfers to Minors Act or similar law for a minor who is a Family Transferee, (iii) a trust (including a voting trust) of which one or more Family Transferees and Charitable Organizations are the primary beneficiaries, (iv) a corporation of which one or more Family Transferees or such Family Transferees' Permitted Transferees (as determined under this subsection 1(g)) collectively beneficially own a majority of the combined voting power of the outstanding capital stock entitled to vote for the election of directors, a partnership of which one or more Family Transferees or such Family Transferees' Permitted Transferees (as determined under this subsection 1(g)) collectively beneficially own a majority of the partnership interests entitled to participate in the management of the partnership, a member managed limited liability company of which one or more Family Transferees or such Family Transferees' Permitted Transferees (as determined under this subsection 1(g)) collectively beneficially own a majority of the outstanding member interests entitled to participate in the management of the limited liability company, or a manager managed limited liability company of which a majority of the managers entitled to participate in decisions with respect to the voting or disposition by the limited liability company of the Restricted Shares are either Family Transferees or such Family Transferees' Permitted Transferees (as determined under this subsection 1(g)), (v) the estate of a Family Transferee, or the executor, administrator or personal representative of the estate of a Family Transferee, (vi) the guardian, conservator, or custodian of any Family Transferee adjudged disabled by a court of competent jurisdiction, (vii) a nominee of a Family Transferee, provided such Family Transferee possesses the power to direct the voting and disposition of the Restricted Shares placed in the nominee's name, (viii) the Company or any subsidiary of the Company (herein collectively referred to sometimes as the "Company") and (ix) if the Company's rights with respect to any Restricted Shares not issued by the Company have been assigned to the issuer of such Restricted Shares, the issuer of such Restricted Shares or any subsidiary of such issuer. For purposes of this definition of "PERMITTED TRANSFEREE": (i) The relationship of any person that is derived by or through legal adoption shall be considered a natural one. (ii) Each joint owner of Restricted Shares shall be considered a holder of such shares who must qualify as a Permitted Transferee. (iii) Unless otherwise specified, the term "person" means both natural persons and legal entities. (iv) Each reference to a corporation (including the Company) or limited liability company shall include any successor corporation or limited liability company resulting from merger, consolidation, reorganization or recapitalization; each reference to a partnership shall include any successor partnership resulting from the death or withdrawal of a partner; each reference to a trustee, executor or any other personal representative shall include any successor trustee, successor executor or successor personal representative. 2 (h) "RESTRICTED HOLDER" shall mean (i) a Ryan Family Member or (ii) any person or legal entity which from time to time becomes, whether pursuant to the terms of this Agreement or otherwise, subject to any of the restrictions on transfer of Restricted Shares set forth in this Agreement. (i) "RESTRICTED SHARES" shall mean all shares of Common Stock now owned or hereafter acquired by a Restricted Holder, all shares of capital stock or other securities, whether issued by the Company or otherwise, issued or paid as dividends or other distributions on such shares of Common Stock or other shares of capital stock or securities constituting Restricted Shares, including any shares of Common Stock received by a Restricted Holder upon consummation of the Mergers and any shares of Common Stock held pursuant to the Escrow Agreement (as defined in the Merger Agreement) or subsequently distributed pursuant to the terms thereof. (j) "RULE 144" shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. (k) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any similar successor federal statue, and the rules and regulations thereunder, all as the same shall be in effect at the time. (l) "TRANSFER" shall mean any sale, transfer, conveyance, grant, encumbrance, pledge, hypothecation, gift, donation, bequest, devise or other disposition, whether direct or indirect, whether or not for value, and shall include any disposition of the economic or other risks of ownership of Restricted Shares, including (i) a liquidation, dissolution or winding up of the Restricted Holder, (ii) an acquisition (whether by share exchange, merger, reorganization, tender offer or otherwise) of the Restricted Holder or (iii) the sale, transfer, conveyance, grant, encumbrance, pledge, hypothecation, gift, donation, bequest, devise or other disposition, whether direct or indirect, whether or not for value, of options, warrants, rights or other securities convertible into Restricted Shares, in which case the number of shares of Restricted Shares into which such options, warrants, rights or other securities are convertible shall be deemed to have been Transferred. Section 2. RESTRICTIONS ON TRANSFER AND SALE OF RESTRICTED SHARES. Each Restricted Holder hereby agrees that no Restricted Shares now owned or hereafter acquired by such Restricted Holder will be Transferred by such Restricted Holder, either directly or indirectly, except as follows: (a) A Restricted Holder may Transfer Restricted Shares to any other Restricted Holder or a Permitted Transferee; provided that in the case of a Transfer to a Permitted Transferee that is not a Restricted Holder, the Permitted Transferee agrees in writing, a copy of which is delivered to the Company and any other issuer of Restricted Shares, to be bound, with respect to the Restricted Shares so Transferred, by the provisions of this Agreement; (b) A Restricted Holder may Transfer Restricted Shares as a donation to a Charitable Organization; (c) A Restricted Holder may Transfer Restricted Shares by sale on a national securities exchange or by means of an inter-dealer quotation system maintained by a registered securities association, but only to the extent such sales made by each Restricted Holder, together with sales by such Restricted Holder's Permitted Transferees of Restricted Shares transferred by such Restricted Holder to such Permitted Transferees, do not exceed the amount which would be permitted to be sold by each such Restricted Holder under Rule 144; PROVIDED, that prior to the fifth anniversary of the date of this Agreement (i) each Restricted Holder shall be deemed to be an "affiliate" (within the meaning of Rule 3 144) of the Company regardless of whether or not such Restricted Holder is in fact an "affiliate" (within the meaning of Rule 144) of the Company or otherwise subject to the provisions of Rule 144 and (ii) such Restricted Holder, the other Restricted Holders and all of such Restricted Holders' Permitted Transferees shall be deemed to be the same "person" (within the meaning of Rule 144) regardless of whether or not such Restricted Holder, the other Restricted Holders and all of such Restricted Holders' Permitted Transferees are in fact the same "person" (within the meaning of Rule 144); (d) A Restricted Holder may Transfer Restricted Shares to a person other than a Permitted Transferee in a transaction effected without registration under the Securities Act or applicable state securities laws on terms and under circumstances corresponding to those terms and circumstances on and under which exempt private placements may be made by the Company pursuant to Section 4(2) of the Securities Act; PROVIDED that the Restricted Holder complies with the terms and provisions of Section 3 below; (e) A Restricted Holder may pledge, hypothecate or encumber Restricted Shares, to the extent such pledge, hypothecation or encumbrance is made to a party pursuant to a bona fide pledge, hypothecation or encumbrance of such Restricted Shares as collateral security for indebtedness due to such party (the "BONA FIDE PLEDGEE"), PROVIDED that (i) upon any release or termination of such pledge, hypothecation or encumbrance, such shares shall continue to constitute Restricted Shares and the holder of such Restricted Shares shall be subject to the terms of this Agreement, (ii) in the event of foreclosure or other similar action (including, with respect to indebtedness incurred pursuant to a loan agreement or credit facility entered into on or prior to the date of this Agreement, any other sale or transfer of such shares at a time when the lender is entitled to exercise its right to foreclose and sell such pledged shares under the terms and conditions of the pledge, security or similar agreement related to such loan agreement or credit facility where the proceeds therefrom will be used to satisfy such indebtedness (and costs and expenses payable by the borrower pursuant to such loan agreement or credit facility) upon a default of the borrower's obligations under the terms of such loan agreement or credit facility) by the Bona Fide Pledgee, any such pledged shares may be transferred in any manner permitted by law free and clear of all terms, conditions and restrictions contained in this Agreement and (iii) with respect to any bona fide pledge, hypothecation or encumbrance of Restricted Shares granted or executed pursuant to a credit facility or loan agreement entered into after the date of this Agreement, the Bona Fide Pledgee agrees to notify the Company in writing, and in the manner specified in Section 13 of this Agreement, at least 3 business days prior to any foreclosure or similar action or any transfer by the Bona Fide Pledgee; (f) A Restricted Holder may Transfer Restricted Shares pursuant to the terms of any tender offer made pursuant to Regulation 14D promulgated under the Exchange Act or exchange offer pursuant to a registration statement filed under the Securities Act to purchase or acquire any portion of the outstanding securities constituting the same class of securities as the Restricted Shares being transferred pursuant to this Section 2(f) which is extended equally to all holders of securities of such class and which is approved by the board of directors of the issuer of such class of securities, PROVIDED that (i) the per share consideration offered in such transaction to the Restricted Holders for their Restricted Shares is the same as the per share consideration offered to the other holders of securities of the same class and (ii) if, following completion of any such offer, the holders of securities of such class immediately prior to such offer, in their capacity as such holders, received capital stock of the entity making such offer having 50% or more of the combined voting power of the capital stock of such entity, then the provisions of this Agreement shall remain in effect with respect to the capital stock of such entity received by the Restricted Holders pursuant to such offer; (g) A Restricted Holder may Transfer Restricted Shares pursuant to any merger or consolidation involving the issuer of Restricted Shares which is approved by the board of directors of such issuer, PROVIDED that (i) the per share consideration offered in such transaction to the Restricted 4 Holders for their Restricted Shares is the same as the per share consideration offered to the other holders of securities constituting the same class of securities as the Restricted Shares being transferred pursuant to this Section 2(g) and (ii) if, following such merger or consolidation, the holders of securities of such class immediately prior to such merger or consolidation, in their capacity as such holders, received capital stock of an entity involved in such merger or consolidation having 50% or more of the combined voting power of the capital stock of such entity, then the provisions of this Agreement shall remain in effect with respect to the capital stock of such entity received by the Restricted Holders pursuant to such offer. (h) A Restricted Holder may Transfer Restricted Shares in connection with any recapitalization, reorganization, reclassification, change of domicile merger or other similar transaction (i) which is approved by the board of directors of the issuer of such Restricted Shares and (ii) in which there is no change in the relative percentages of ownership among the holders of the capital stock of the resulting or surviving entity, except for changes resulting from cash payment in lieu of fractional shares, from the percentages of ownership of the class of securities of which such Restricted Shares are a part which existed immediately prior to such transaction, PROVIDED that the provisions of this Agreement shall remain in effect with respect to the capital stock of such surviving or resulting entity. Section 3. COMPANY'S RIGHT OF FIRST REFUSAL. (a) If a Restricted Holder desires to Transfer any or all of such Restricted Holder's Restricted Shares (the "TRANSFER SHARES") pursuant to subsection 2(d) and such Restricted Holder (the "SELLING STOCKHOLDER") receives a bona fide offer therefor from a person, such Selling Stockholder shall provide a written notice (a "TRANSFER NOTICE") to the Company. Each Transfer Notice shall set forth (i) the identity and mailing address of the prospective purchaser (the "PROSPECTIVE PURCHASER"), (ii) the number of Restricted Shares proposed to be sold, (iii) the price per share to be received therefor, including any provisions regarding adjustments to such price per share, (iv) the Prospective Purchaser's financial ability to complete the proposed transaction, including any financing conditions, and (v) all other material terms and conditions of the proposed transaction. Any Transfer of such Transfer Shares shall be made in accordance with the provisions of this Section 3 and shall be consummated within 90 days after the expiration of the Company Election Period (as defined below); provided that if such Transfer is not so consummated within such 90 day period, then such Transfer cannot be made unless a new notice is given under this Section. (b) Following receipt of a Transfer Notice, the Company shall be entitled for a period of (i) 3 Business Days, in the event the Aggregate Offered Shares Price (as defined below) on the date of such receipt is $75 million or less, (ii) 10 Business Days, in the event the Aggregate Offered Shares Price on the date of such receipt is more than $75 million but less than $400 million or (iii) 20 Business Days in the event the Aggregate Offered Shares Price on the date of such receipt is $400 million or more, after the date such notice is effectively given (the "COMPANY ELECTION PERIOD"), at the price and upon the terms set forth in such notice, to elect to purchase the Transfer Shares proposed to be sold by the Selling Stockholder; PROVIDED that solely for the purposes of determining the length of the Company Election Period, the aggregate purchase price shall be calculated as if the Transfer is to be consummated on the date the Company receives the Transfer Notice. The Company's failure to exercise the right granted under this subsection 3(b) by delivery of a written notice delivered to the Selling Stockholder prior to expiration of the Company Election Period shall constitute a waiver of the Company's right to purchase the Transfer Shares. The determination of whether the Company elects to exercise its right of first refusal pursuant to this subsection 3(b) shall be made by the Company without the participation of (i) any person who is or is the designee of the Selling Stockholder or an Affiliate (as defined in the Merger Agreement) of the Selling Stockholder and (ii) any person who has a financial interest in the proposed transaction involving the Transfer Shares or is a director, officer, general partner, manager or Affiliate of the Prospective Purchaser. The term "AGGREGATE OFFERED SHARES PRICE" on a particular date shall mean the 5 aggregate purchase price of all Transfer Shares with respect to which the Company then currently has a right to purchase pursuant to this Section 3, plus the aggregate purchase price of all Restricted Shares which the Company has elected to purchase pursuant to this Section 3 during the three calendar months preceding such date. Section 4. STOCK SPLITS AND DIVIDENDS. If there is any increase or decrease in the number of issued and outstanding Restricted Shares following the original date of this Agreement resulting from a subdivision or consolidation of shares or the payment of a stock dividend or any other increase or decrease in the number of issued and outstanding Restricted Shares effected without receipt of consideration by the Company or the issuer thereof, as applicable, the shares resulting from such subdivision or consolidation or issued as such dividend shall be subject to the provisions of this Agreement to the same extent as were the shares as to which such subdivision or consolidation occurred or the shares with respect to which such dividend was distributed. Section 5. CHANGES IN OWNERSHIP OF CERTAIN ENTITIES. If, by reason of any proposed change in the ownership of the stock, partnership interests or member interests, or the identity or ownership interests of the managers of a Permitted Transferee under the provisions of subsection 2(a), such corporation, partnership or limited liability company would no longer qualify as a Permitted Transferee under clause (iv) of subsection 1(g), then the event by which such proposed change of ownership shall occur shall be deemed to be a Transfer of all of the Restricted Shares previously transferred to such corporation, partnership or limited liability company pursuant to the provisions of subsection 2(a) hereof then held by such corporation, partnership or limited liability company, which Transfer must comply with the provisions of this Agreement; PROVIDED, HOWEVER, that (i) pledges, hypothecations and encumbrances may be made of the stock, partnership interests or member interests in, or the ownership interests in the managers of a Permitted Transferee which has qualified as a Permitted Transferee under the provisions of clause (iv) of subsection 1(g) to the extent such pledge, hypothecation or encumbrance is made pursuant to a bona fide pledge, hypothecation or encumbrance of such shares as collateral security for indebtedness due to a Bona Fide Pledgee and (ii) with respect to any bona fide pledge, hypothecation or encumbrance of such stock, partnership interests or member interests in, or ownership interests in the managers of a Permitted Transferee which has qualified as a Permitted Transferee under the provisions of clause (iv) of subsection 1(g) after the date of this Agreement, the Bona Fide Pledgee agrees to notify the Company in writing, and in the manner specified in Section 13 of this Agreement, at least 3 business days prior to any foreclosure or similar action or any transfer by the Bona Fide Pledgee. If a Transfer will be deemed to occur as a result of the application of this Section 5 and the applicable Permitted Transferee desires to utilize the provisions of Section 2(d) and Section 3 as manner of complying with the terms of this Agreement, any Restricted Shares shall be valued at the average closing price per share of such securities as reported on the national securities exchange or inter-dealer quotation system maintained by a registered securities association upon which such securities are listed for the 10 trading days immediately preceding the business day prior to the such Permitted Transferee provides notice to the Company in accordance with Section 3; PROVIDED, HOWEVER, that such method of valuation shall not apply if (i) a Selling Stockholder receives a bona fide offer to purchase all of the stock, partnership interests or member interests (the "Entity Interests") of such Permitted Transferee and (ii) the only assets of such Permitted Transferee consist of Restricted Shares, and, in such instance, the Company may elect to purchase the Entity Interests at the price and upon the terms set forth in the notice thereof in accordance with Section 3. Section 6. POWER OF ATTORNEY. Each Ryan Family Member and the Ryan Family Members as a group hereby constitute and appoint Shirley W. Ryan (the "REPRESENTATIVE") as such Ryan Family Member's true and lawful attorney-in-fact and agent with full power of substitution, for such Ryan Family Member and in such Ryan Family Member's name, place and stead, in any and all capacities, with respect to this Agreement, the Merger Agreement and the other Additional Agreements, granting power and authority to do and perform each and every act and thing requisite and necessary to be done in and 6 about the premises, as fully to all intents and purposes as such Ryan Family Member might or could do in person, hereby ratifying and confirming all that said Representative or the Representative's substitute or substitutes, may lawfully do or cause to be done by virtue thereof. The foregoing grant of authority shall include the authority to exercise the powers granted under, this Agreement, the Merger Agreement and the other Additional Agreements, to negotiate and enter into agreements with the Company with respect to, and to enforce the rights of the Ryan Family Members under this Agreement, the Merger Agreement and the other Additional Agreements, to modify or amend this Agreement, the Merger Agreement and the other Additional Agreements, and to employ agents and counsel, including attorneys, accountants and other advisors, in connection with any of the foregoing. The authority of the Representative to act on behalf of the Ryan Family Members granted pursuant to this Section (i) shall survive the disability or incapacity of such Ryan Family Member and thereafter shall, as a contract obligation, be binding upon the legal representatives and heirs of such Ryan Family Member and (ii) may be exercised by the Representative either in the Representative's own name or in the names of the Ryan Family Members. Each Ryan Family Member further irrevocably authorizes the Representative to take any and all actions necessary or desirable to reflect or effectuate the foregoing or to release from the Escrow Fund (as defined in the Escrow Agreement) to any of the Indemnified Parties entitled to indemnification under the Merger Agreement amounts which are from time to time owing to any Indemnified Party under the Merger Agreement without further notice to any Ryan Family Member or to compromise claims with respect thereto in accordance with the terms of the Escrow Agreement. All acts of the Representative in accordance with the authority granted herein shall be binding on each Ryan Family Member and each Ryan Family Member's permitted successors and assigns. If the Representative shall decline or cease to act hereunder, the Ryan Family Members shall elect from among themselves a new representative, with each Ryan Family Member having the same number of votes in such election as the number of shares of Common Stock held by such Ryan Family Member. Section 7. TERMINATION IN CERTAIN EVENTS. The provisions of this Agreement shall terminate and be of no further force and effect (i) with respect to any particular class of Restricted Shares, upon the liquidation or dissolution of the issuer of such class of Restricted Shares, (ii) with respect to any particular class of Restricted Shares, upon the occurrence of any reorganization, merger or other transaction in which holders of securities of the same class as the applicable Restricted Shares immediately prior to such event, in their capacity as such holders, receive less than 50% of the combined voting power of the surviving or resulting entity, or (iii) upon the earlier of (a) 2 years after the later of the death of Patrick G. Ryan and Shirley W. Ryan and (b) the tenth anniversary of the date of this Agreement. Section 8. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Additionally the parties hereto agree that, to the extent the Company is not the issuer of a particular class of securities or Restricted Shares subject to this Agreement, the Company shall have the right to assign to the issuer of such class of securities or Restricted Shares the Company's rights under this Agreement with respect to such class of securities or Restricted Shares and any such assignment will not operate as a termination or limitation of the Company's rights under this Agreement with respect to any other class of securities or Restricted Shares. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Section 9. DISPUTE RESOLUTION AND GOVERNING LAW. (a) The parties agree that any and all disputes, claims or controversies arising out of or relating to this Agreement that are not resolved by their mutual agreement shall be submitted to final and binding arbitration before JAMS, or its successor, pursuant to the United States Arbitration Act, 9 U.S.C. 7 Sec. 1 et seq. Any party may commence the arbitration process called for in this Agreement by filing a written demand for arbitration with JAMS, with a copy to the other party. The arbitration will be conducted in accordance with the provisions of JAMS' Comprehensive Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties will cooperate with JAMS and with one another in selecting an arbitrator who has previously served as a judge in a federal court from JAMS' panel of neutrals, and in scheduling the arbitration proceedings. The parties covenant that they will participate in the arbitration in good faith, and that they will share equally in its costs. The provisions of this Section may be enforced by any court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys fees, to be paid by the party against whom enforcement is ordered. (b) NOTICE: BY SIGNING THIS AGREEMENT, EACH PARTY IS AGREEING TO HAVE ALL DISPUTES, CLAIMS OR CONTROVERSIES ARISING OUT OF OR RELATING TO THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION, AND EACH PARTY IS GIVING UP ANY RIGHTS SUCH PARTY MIGHT POSSESS TO HAVE THOSE MATTERS LITIGATED IN A COURT OR JURY TRIAL. BY SIGNING THIS AGREEMENT, EACH PARTY IS GIVING UP SUCH PARTY'S JUDICIAL RIGHTS TO DISCOVERY AND APPEAL EXCEPT TO THE EXTENT THAT THEY ARE SPECIFICALLY PROVIDED FOR UNDER THIS AGREEMENT. IF ANY PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE UNDER FEDERAL OR STATE LAW. EACH PARTY'S AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. (c) The foregoing provisions of this Section 9 notwithstanding, each Restricted Holder acknowledges and agrees that if a Restricted Holder Transfers or attempts to Transfer Restricted Shares the Company's available remedies at law may provide inadequate relief to the Company and each such Restricted Holder therefor agrees that the Company is entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. To the extent the Company seeks injunctive relief, (i) each party hereto hereby agrees that any proceeding relating to this Agreement shall be brought in a state court of Illinois or a federal court located in Illinois and (ii) each party hereto hereby consents to personal jurisdiction in any such action brought in any such Illinois or federal court, consents to service of process by registered mail made upon such party and such party's agent and waives any objection to venue in any such Illinois or federal court and any claim that any such Illinois or federal court is an inconvenient forum. (d) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT APPLICATION OF THE PRINCIPLES OF CONFLICTS OF LAWS. Section 10. COUNTERPARTS. This Agreement may be executed in one or any number of counterparts, each of which, once so executed, shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument binding on all the parties hereto. This Agreement may be executed by facsimile signature and a facsimile signature shall constitute an original signature for all purposes. Section 11. INTERPRETATION OF CERTAIN TERMS. Any words herein used in the singular shall denote the plural as the context so requires and, when used herein in the plural shall denote the singular as the context so requires. Pronouns used herein, whether masculine, feminine, or neuter, shall be interpreted as the context so requires. The word "INCLUDING" shall mean "INCLUDING, WITHOUT LIMITATION," and thus indicate part of a larger whole; but shall not be interpreted as indicating the stated limits or extremes. Any reference to any federal, state, or local law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "CLASS" when used by reference to securities or Restricted Shares shall have the meaning as set forth in Section 12 of the Exchange Act or 8 any similar successor federal statue or rule or regulations thereunder, all as the same shall be in effect at the time. Section 12. TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. Section 13. NOTICES. Any communications required or desired to be given hereunder to any Indemnified Party may be sent to the Company. Any communications required or desired to be given hereunder shall be deemed to have been properly given if sent by hand delivery or by facsimile and overnight courier to the parties hereto at the following addresses (or at such other address for a party as shall be specified by like notice): Notice to the Company: Aon Corporation 123 North Wacker Drive Chicago, Illinois 60606 Attn: Raymond Skilling, Chief Counsel Telecopy: (312) 701-2348 with a copy to: Sonnenschein Nath & Rosenthal 8000 Sears Tower 233 S. Wacker Drive Chicago, Illinois 60606 Attn: Donald G. Lubin, Esq. Telecopy: (312) 876-7934 Notice to any of the Representative or Ryan Family Members: Patrick G. Ryan 123 North Wacker Drive, Suite 900 Chicago, Illinois 60606 Telecopy: (312) 701-3030 with a copy to: Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Attn: Dennis V. Osimitz Telecopy: (312) 853-7036 Section 14. EXPENSES. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. Section 15. LEGENDS. All certificates evidencing Restricted Shares shall bear, so long as the restrictions hereunder are applicable to such shares, the legend set forth in Section 2.3(b) of the Merger 9 Agreement. To the extent Restricted Shares are not evidenced by certificates, the books and records of the Company or the applicable issuer (including those maintained by the registrar or transfer agent of such class of Restricted Shares) shall contain appropriate notation indicating that such shares and the Transfer thereof are subject to the provisions of this Agreement. Section 16. AMENDMENTS AND WAIVER. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Patrick G. Ryan Living Trust dated July 10, 2001 and each Restricted Holder affected by such amendment or waiver. Section 17. SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. *** Remainder of Page Intentionally Remains Blank, Signature Page Follows *** 10 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Aon CORPORATION By: /s/ Michael D. O'Halleran ----------------------------------- Name: Michael D. O'Halleran Title: President and Chief Operating Officer /s/ Patrick G. Ryan ------------------------------ /s/ Shirley W. Ryan Patrick G. Ryan ----------------------------- Shirley W. Ryan /s/ Patrick G. Ryan, Jr. ------------------------------ Patrick G. Ryan, Jr. CORBETT M.W. RYAN LIVING TRUST DATED JULY 13, 2001 By: /s/ Shirley W. Ryan /s/ Robert J.W. Ryan -------------------------------------- ------------------------------ Name: Shirley W. Ryan Robert J.W. Ryan Its: Trustee PATRICK G. RYAN LIVING TRUST SHIRLEY W. RYAN LIVING TRUST DATED JULY 10, 2001 DATED JULY 10, 2001 By: /s/ Patrick G. Ryan By: /s/ Patrick G. Ryan ------------------------------------ ------------------------------------- Name: Patrick G. Ryan Name: Patrick G. Ryan Title: Trustee Title: Trustee AND By: /s/ Shirley W. Ryan ------------------------------------- Name: Shirley W. Ryan Title: Trustee 2001 RYAN ANNUITY TRUST FAMILY GST TRUST UNDER THE PGR 2000 DATED APRIL 20, 2001 TRUST DATED NOVEMBER 22, 2000 By: /s/ Shirley W. Ryan By: /s/ Shirley W. Ryan ------------------------------------ ------------------------------------- Name: Shirley W. Ryan Name: Shirley W. Ryan Title: Trustee Title: Trustee
SIGNATURE PAGE TO STOCK RESTRICTION AGREEMENT EX-99.4 5 a2054372zex-99_4.txt EXHIBIT 99.4 Exhibit IV ESCROW AGREEMENT This ESCROW AGREEMENT (this "ESCROW AGREEMENT") is made and entered into this 16th day of July, 2001, by and among (i) Aon Corporation, a Delaware corporation (the "COMPANY"), (ii) Patrick G. Ryan, Shirley W. Ryan, Patrick G. Ryan, Jr., Robert J.W. Ryan, the Corbett M.W. Ryan Living Trust dated July 13, 2001, the Patrick G. Ryan Living Trust dated July 10, 2001, the Shirley W. Ryan Living Trust dated July 10, 2001, the 2001 Ryan Annuity Trust dated April 20, 2001 and the Family GST Trust under the PGR 2000 Trust dated November 22, 2000 (the "2000 TRUST") (all persons and entities listed in this clause (ii) are referred to herein collectively as the "RYAN FAMILY MEMBERS" and individually as a "RYAN FAMILY MEMBER") and (iii) American National Bank and Trust Company of Chicago, a national banking association (the "ESCROW AGENT"). RECITALS A. The Company, Holdco #1, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company ("RHC SUB"), Holdco #2, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company ("REC SUB"), Ryan Holding Corporation of Illinois, a Delaware corporation ("RHC"), Ryan Enterprises Corporation of Illinois, a Delaware corporation ("REC"), and the Ryan Family Members are parties to that certain Agreement and Plan of Merger dated July 16, 2001 (the "MERGER AGREEMENT"); B. Pursuant to Section 7.1(b)(i) of the Merger Agreement, each of the Ryan Family Members must execute and deliver this Agreement; C. Section 7.1(k) of the Merger Agreement provides that the 2000 Trust shall transfer certificates evidencing a certain number of shares of the Company's Common Stock, $1.00 par value ("COMMON STOCK"), along with a stock power executed in blank to an escrow agent and be deposited in escrow for the Escrow Period (as defined below) as a manner of securing the performance of each Ryan Family Member's obligations, duties, covenants and agreements under the Merger Agreement and the Additional Agreements (as defined in the Merger Agreement); D. The Company would not be willing to enter into the Merger Agreement and consummate the Mergers (as defined in the Merger Agreement) and would not be willing to cause RHC Sub or REC Sub to enter into the Merger Agreement or consummate the Mergers unless each Ryan Family Member agreed to the placement of a certain number of shares of Common Stock (determined under the terms of the Merger Agreement) in escrow; and E. The Escrow Agent is willing to establish an escrow account on the terms and subject to the conditions hereinafter set forth. AGREEMENT NOW, THEREFORE, in consideration of the recitals (which are deemed to be a part of this Escrow Agreement), mutual covenants, representations, warranties and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. RECEIPT AND DEPOSIT. The 2000 Trust agrees to deposit with the Escrow Agent certificates representing 583,942 shares of Common Stock (the "ESCROW SHARES"), by delivery of one or more certificates registered in the name of the 2000 Trust along with one or more stock powers executed in blank, and upon receipt the Escrow Agent agrees to acknowledge, in a customary fashion, receipt of such certificates and stock powers in escrow pursuant to this Escrow Agreement. Upon receipt of the certificates evidencing the Escrow Shares and the accompanying stock powers, the Escrow Agent will request the Company's transfer agent to re-register the Escrow Shares in the Escrow Agent's name by delivering such certificate and duly executed stock powers to the transfer agent and requesting reissuance of certificates registered in the Escrow Agent's name. The Escrow Agent agrees to hold and dispose of the Escrow Shares and any Additional Shares (as defined below) in accordance with the terms and conditions of this Escrow Agreement. Any dividend or distribution, which does not constitute Additional Shares, in respect of the Escrow Shares or the Additional Shares shall be distributed directly to the 2000 Trust, and shall not be a part of the Escrow Fund (as defined below). Section 2. ESCROW FUND. The Escrow Agent shall establish an escrow account (the "ESCROW FUND") and hold therein the Escrow Shares, all shares of capital stock or other securities (whether or not issued by the Company) issued or paid as dividends or other distributions on the Escrow Shares or other shares of capital stock or securities held in the Escrow Fund (collectively, such shares of capital stock or other securities so issued or paid referred to herein as the "ADDITIONAL SHARES") and release such Escrow Shares and Additional Shares only as set forth in Section 3 below. a. DEPOSIT OF ADDITIONAL SHARES. In the event any Additional Shares in respect of the Escrow Shares or other Additional Shares held in the Escrow Fund are delivered to the 2000 Trust rather than the Escrow Agent during the Escrow Period, the 2000 Trust agrees to immediately to take all actions to have such Additional Shares reissued in the name of the Escrow Agent and transferred to the Escrow Agent for deposit in the Escrow Fund. b. RELEASE OF DIVIDENDS AND DISTRIBUTIONS. In the event the Escrow Agent receives any dividend or distribution, which dividend or distribution does not constitute Additional Shares, in respect of the Escrow Shares or the Additional Shares, the Escrow Agent agrees to immediately take all actions to have such dividend or distribution transferred to the 2000 Trust. c. STOCK SPLITS. In the event any stock dividend, stock split or similar recapitalization with respect to the Escrow Shares or Additional Shares becomes effective during the Escrow Period, the additional securities issued as a result of such stock dividend, stock split or similar recapitalization shall be added to the Escrow Fund and shall be subject to the terms and conditions of this Escrow Agreement as if such securities were initially delivered at the Effective Time. d. LEDGER. The Escrow Agent shall maintain a ledger setting forth all Escrow Shares and Additional Shares issued in respect of such Escrow Shares and deposited in escrow. e. INVESTMENT OF CASH. Except as provided in Section 2(b) above, the Escrow Agent shall invest any cash contained in the Escrow Fund and any and all cash income produced by any investments held in the Escrow Fund ("CASH") in the One Group U.S. Treasury Securities Money Market Fund - Class I, or a successor or similar fund, or as the Representative may from time to time otherwise direct. Interest and other earnings on permitted investments shall be added to the Escrow Fund. Any loss or expense incurred as a result of an investment will be borne by the Escrow Fund. The Escrow Agent is hereby authorized to execute purchases and sales of permitted investments through the facilities of its own trading or capital markets operations or those of any affiliated entity. The Escrow Agent shall send statements to each of the parties hereto on a monthly basis reflecting activity in the Escrow Fund for the preceding month. Although each of the parties recognizes that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the parties hereby agree that confirmations of permitted investments are not required to be issued by the Escrow Agent for each month in which a monthly statement is rendered. No statement need be rendered for the Escrow Fund if no activity occurred for such month. f. TAXES. All taxable income relating to the Escrow Fund shall be taxable to the 2000 Trust. The 2000 Trust shall furnish the Escrow Agent with a completed Form W-8 or Form W-9, as -2- applicable. The Escrow Agent shall be under no obligation to invest the deposited funds or the income generated thereby until it has received a Form W-9 or W-8, as applicable, from the 2000 Trust, regardless of whether such party is exempt from reporting or withholding requirements under the Internal Revenue Code of 1986, as amended (the "CODE). The Escrow Agent shall report to the Internal Revenue Service, as of each calendar year-end, and to the 2000 Trust all income earned from the investment of any sum held in the Escrow Fund against the 2000 Trust, as and to the extent required under the provisions of the Code. The 2000 Trust is required to prepare and file any and all income or other tax returns applicable to the Escrow Fund with the Internal Revenue Service and all required state and local departments of revenue in all years income is earned in any particular tax year as to the extent required under the provisions of the Code. Any taxes payable on income earned from the investment of any sums held in the Escrow Fund shall be paid by the 2000 Trust, whether or not the income was distributed by the Escrow Agent during any particular year as and to the extent required under the provisions of the Code. Section 3. DISTRIBUTIONS FROM ESCROW FUND. The Escrow Agent shall distribute the Escrow Shares and Additional Shares and other assets held in the Escrow Fund as follows: a. TERMINATION OF ESCROW. Subject to the provisions of this Section 3, all Escrow Shares, Additional Shares and other assets held in the Escrow Fund shall be released from escrow and distributed to the 2000 Trust promptly following the fifth anniversary of the date hereof; PROVIDED if any Claim (as defined below) for which the Escrow Agent has received a Notice of Claim remains pending on the expiration of such period, the Escrow Agent shall retain Escrow Shares, Additional Shares and other assets held in the Escrow Fund having a value equal to 200% of the amount of each such Claim to the extent then currently available in the Escrow Fund (the Escrow Shares and Additional Shares being valued for such purposes at the average closing price per share of such securities as reported on the national securities exchange or inter-dealer quotation system maintained by a registered securities association upon which such securities are listed for the 10 trading days immediately preceding the date of the fifth year anniversary of the date hereof) until such Claim is resolved in accordance with the terms of this Escrow Agreement; FURTHER PROVIDED that if the Company has received a notice of any Tax (as defined in the Merger Agreement) deficiency, assessment, investigation or audit for any period or portion of a period prior to the Effective Time (as defined in the Merger Agreement) from a Governmental Authority (as defined in the Merger Agreement) or other taxing authority related to a Tax constituting Applicable Damages (a "TAX DISPUTE") and the Company has provided the Escrow Agent written notice of such Tax Dispute, the Escrow Agent shall retain Escrow Shares, Additional Shares and other assets held in the Escrow Fund having a value equal to 200% of the amount of Tax involved in each such Tax Dispute to the extent then currently available in the Escrow Fund (the Escrow Shares and Additional Shares being valued for such purposes at the average closing price per share of such securities as reported on the national securities exchange or inter-dealer quotation system maintained by a registered securities association upon which such securities are listed for the 10 trading days immediately preceding the date of the fifth year anniversary of the date hereof) until the Company provides written notice that such Tax Dispute has been resolved (such period of time referred to herein as the "ESCROW PERIOD"), at which time any remaining assets in the Escrow Fund shall promptly be distributed to the 2000 Trust. b. APPLICABLE DAMAGES. The Escrow Shares, Additional Shares and other assets held in the Escrow Fund may be distributed to a party other than the 2000 Trust only in satisfaction of a claim for indemnification under the Merger Agreement relating to Damages (as defined in the Merger Agreement) other than Damages resulting from the failure of either of the Mergers to qualify as a tax free reorganization under 368(a) of the Code (hereinafter referred to as "APPLICABLE DAMAGES"). c. AGAINST CLAIMS FOR INDEMNIFICATION. Upon the determination by the Company that it or one of the other Indemnified Parties (as defined in the Merger Agreement) has a claim for Applicable Damages (a "Claim"), the Company shall notify the Representative appointed pursuant to the Stock Restriction Agreement (as defined in the Merger Agreement) in writing of the Claim ("NOTICE OF CLAIM") -3- and shall deliver a copy of the Notice of Claim to the Escrow Agent. The Notice of Claim shall be in substantially the same form attached hereto as EXHIBIT I and shall specify the event giving rise to the Notice of Claim, a description thereof, the party making the claim and the amount of the Escrow Fund requested in satisfaction of such claim. The Escrow Agent shall distribute to the Company or its designee from the Escrow Fund, in the manner specified in Section 3(d) below, a number of shares of Common Stock, Additional Shares and other assets held in the Escrow Fund having a value of not less than the amount requested in the Notice of Claim (but not having a value of more than the amount requested in the Notice of Claim plus the value of one whole share of Common Stock) unless before the end of the 10th business day following the receipt by the Escrow Agent of a copy of such Notice of Claim, the Escrow Agent has received a notice ("NOTICE OF OBJECTION"), which Notice of Objection shall be in substantially the same form as EXHIBIT II hereto, signed by the Representative objecting to the request for distribution stated in the Notice of Claim. The Representative shall also promptly deliver a copy of such Notice of Objection to the Company. (i) OBJECTED AMOUNTS. In the event that the objection in the Notice of Objection is to less than the entire amount stated in the Notice of Claim, the Escrow Agent shall distribute to the Company or its designee a number of shares of Common Stock, Additional Shares and other assets held in the Escrow Fund having a value of not less than the amount requested in the Notice of Claim which is undisputed (but not having a value of more than the amount requested in the Notice of Claim which is undisputed plus the value of one whole share of Common Stock). The Ryan Family Members agree that they shall cause the Representative to not deliver a Notice of Objection with respect to any Notice of Claim unless the Representative has a good faith belief for disputing the validity or amount of the Claim set forth in the Notice of Claim. (ii) RELEASE OF OBJECTED AMOUNTS. If the Representative delivers a Notice of Objection to the Escrow Agent pursuant to this Section 3(c) within 10 business days following the date of delivery of the Notice of Claim, the Escrow Agent shall not deliver the disputed portion of the requested amount of the Escrow Fund set forth in the Notice of Claim to the Company or its designee, until (A) the Escrow Agent shall have received joint written instructions in substantially the form attached hereto as EXHIBIT III signed by both the Company and the Representative directing the distribution of amounts from the Escrow Fund or (B) a state court of Illinois or a federal court located in Illinois having jurisdiction has entered a final, non-appealable order requiring distribution of a number of shares of Common Stock, Additional Shares or other assets held in the Escrow Fund. (iii) RESOLUTION. The Company and the Representative agree to attempt to resolve in good faith any dispute regarding any request for funds with respect to which a Notice of Objection has been delivered within 30 business days after such Notice of Objection has been delivered to the Escrow Agent. Any dispute with respect to a Claim for which a Notice of Objection has been delivered which has not been resolved pursuant to this Section 3(c) shall be resolved as provided in Section 15(b) below and a number of shares of Common Stock, Additional Shares and other assets held in the Escrow Fund shall be distributed as determined by a final non-appealable action by such arbitrator and, if requested, each party shall execute joint written instructions in substantially the form attached hereto as EXHIBIT III directing the Escrow Agent to so distribute. (iv) OPPORTUNITY TO SATISFY. If, at any time pursuant to this Section 3, the Escrow Agent is to make a distribution from the Escrow Fund to a party other than the 2000 Trust, the Escrow Agent shall notify the Ryan Family Members in writing of the planned distribution ("DISTRIBUTION NOTICE"). The Distribution Notice shall be substantially in the same form attached hereto as EXHIBIT IV. The Ryan Family Members shall have a period of ten business days to satisfy such distribution in full with other assets. If a Ryan Family Member so satisfies such distribution, the Company and the Representative will provide the Escrow Agent with joint written instructions substantially in the form attached hereto as EXHIBIT V signed by both the Company and the Representative withdrawing the Claim. -4- If no such instructions have been received by the Escrow Agent by the end of the 10th business day following receipt by the Representative of the Distribution Notice (the "ALTERNATIVE SATISFACTION DEADLINE"), the Escrow Agent shall proceed with the distribution from the Escrow Fund specified in the Distribution Notice. d. ORDER OF DISTRIBUTION. All claims against the Escrow Fund shall be distributed out of the assets held in the Escrow Fund in the following order of priority: (i) first, shares of Common Stock, which securities for such purposes shall be valued at the closing price per share of Common Stock as reported on the New York Stock Exchange on the day of the Alternative Satisfaction Deadline or, if such day is not a business day, on the next business day; (ii) second, any marketable securities which securities shall be valued at the closing price per share of such securities as reported on the national securities exchange or inter-dealer quotation system maintained by a registered securities association upon which such securities are listed on the day of the Alternative Satisfaction Deadline or, if such day is not a business day, on the next business day; (iii) third, any Cash held in the Escrow Fund; and (iv) fourth, any assets other than Cash, marketable securities and shares of Common Stock are to be sold or liquidated for the purpose of paying such claims. In the event that assets other than Cash or marketable securities are required to be sold to pay a Claim in the amount, the Escrow Agent shall so notify both the Company and the Representative and the Representative shall have 10 business days from the time the Escrow Agent delivers notice thereof to instruct the Escrow Agent as to which non-cash assets of the Escrow Fund are to be sold or liquidated for the purpose of paying the claim. If such instructions are not given by the Representative within such period, such instructions shall be given by the Company. The Company shall provide the Escrow Agent with a calculation, made in accordance with the provisions of this Escrow Agreement, of the value of Escrow Shares and other marketable securities on the date such Escrow Shares and marketable securities are to be distributed from the Escrow Fund. Section 4. DISTRIBUTION OF THE ESCROW SHARES AND ADDITIONAL SHARES. In connection with any distribution of the Escrow Shares or Additional Shares evidenced by certificates to an Indemnified Party, the Escrow Agent shall forward the existing certificates, along with a properly executed stock power, to the transfer agent designated by the issuer for such securities with instructions that such certificates be canceled in exchange for new certificates issued in the name of the Company or its designee and the Escrow Agent, as the case may be. The Escrow Agent's sole duty with respect to the distribution of the Escrow Shares hereunder, in the event that the stock certificates are not in the proper number of shares for distribution, shall be to deliver the stock certificates and assignments to the stock transfer agent for the Company and to give proper instructions to such stock transfer agent for the re-registration and delivery of such shares. In the event that some but not all of the Escrow Shares are to be distributed, the Escrow Agent shall (i) direct the stock transfer agent to re-register in the name of and deliver the appropriate number of shares to the intended recipient, (ii) direct the stock transfer agent to re-register the remainder of the shares in the names of the Escrow Agent and return those shares to the Escrow Agent and (iii) to the extent applicable, request the 2000 Trust to deliver to the Escrow Agent new assignments duly endorsed in blank for such returned shares. The Escrow Agent shall have no responsibility or liability for any mistake, failure or delay by the stock transfer agent in registering or delivering any shares as described above. Section 5. PRIORITY AND SECURITY INTEREST. The Escrow Shares and Additional Shares to be deposited in the Escrow Fund pursuant to this Escrow Agreement are being and will be delivered as security for the performance of the indemnification provisions of the Merger Agreement (other than as provided in Section 3(b) above), and the 2000 Trust grants a first priority security interest in such shares, cash, and other assets, or proceeds thereof, to the Company and the Indemnified Parties. The Escrow Agent hereby agrees to act as the Company's and the Indemnified Parties' possessory agent to the extent possession is necessary to perfect a security interest in such assets. The Company and each Ryan Family Member hereby acknowledge that a copy of the Merger Agreement has been delivered to the Escrow Agent. Each Ryan Family Member hereby agrees to execute such financing statements and other -5- documents as the Company may deem necessary or desirable to reflect the security interest granted herein. Such grants of security interest shall be without prejudice to the Company's or the Indemnified Parties' right to argue for alternative characterizations of their interest in the Escrow Fund. The parties acknowledge that all interests of the Ryan Family Members in the Escrow Shares, Additional Shares, cash and other assets held in the Escrow Fund are subject to the rights of the Company and the Indemnified Parties to assert and obtain satisfaction for Claims against the Escrow Fund in accordance with the terms and conditions of this Escrow Agreement. Section 6. NO TRANSFERS BY THE 2000 TRUST. The 2000 Trust covenants and agrees not to or attempt to sell, transfer, convey, grant, encumber, pledge, hypothecate, gift, donate, bequest, devise or otherwise dispose of, whether direct or indirect, whether or not for value, any of the Escrow Shares or Additional Shares during the Escrow Period except in accordance with the terms of this Escrow Agreement. Section 7. VOTING OF STOCK AND OWNERSHIP. To the extent that the Escrow Shares or Additional Shares are entitled to voting rights, the 2000 Trust shall have the right to exercise all such voting rights with respect to such Escrow Shares or Additional Shares held in the Escrow Fund. All of the parties hereto acknowledge and agree that, except to the extent Escrow Shares, Additional Shares or other assets held in the Escrow Fund are distributed to an Indemnified Party, the 2000 Trust is the beneficial owner of the Escrow Shares and any Additional Shares or other assets deposited into the Escrow Fund. Section 8. ESCROW AGENT DUTIES. It is understood and agreed that the Escrow Agent shall have only those duties provided herein, which shall be deemed purely ministerial in nature. It is further agreed that: a. the Escrow Agent may conclusively rely and shall be protected in acting or refraining from acting upon any document, instrument, certificate, instruction or signature believed by it to be genuine and may assume and shall be protected in assuming that any person purporting to give any notice or instructions in accordance with this Escrow Agreement or in connection with any transaction to which this Escrow Agreement relates has been duly authorized to do so, PROVIDED, HOWEVER, that the Escrow Agent shall not be obligated to make any inquiry as to the authority, capacity, existence or identity of any person purporting to have executed any such document or instrument or have made any such signature or purporting to give any such notice or instructions; b. in the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions with respect to the Escrow Shares and Additional Shares which, in its sole opinion, are in conflict with either other instructions received by it or any provision of the Escrow Agreement, it shall, without liability of any kind, be entitled to hold the Escrow Shares and Additional Shares pending the resolution of such uncertainty to the Escrow Agent's sole satisfaction, by final judgment of a court or courts of competent jurisdiction or otherwise, or the Escrow Agent, at its option, may, in final satisfaction of its duties hereunder, deposit the relevant Escrow Shares and Additional Shares with the clerk of any court of competent jurisdiction; c. the Escrow Agent undertakes to perform only such duties as are expressly set forth herein and shall not be bound in any way by any agreement between the Company and any Ryan Family Member, including the Merger Agreement (whether or not the Escrow Agent has knowledge thereof); d. the Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the rights or powers conferred upon it by this Escrow Agreement (provided that the Escrow Agent shall be liable for its gross negligence and willful misconduct), and may consult with counsel of its own choice and shall have full and complete authorization and protection for -6- any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel; e. the Escrow Agent shall not have any right, claim or interest in any portion of the Escrow Fund; f. the Escrow Agent shall not assume any responsibility or liability for any transactions between the Company and any Ryan Family Member; g. the Escrow Agent shall have no responsibility or liability for any diminution in value of any assets held hereunder which may result from any investments or reinvestment made in accordance with any provision which may be contained herein; h. this Escrow Agreement sets forth all matters pertinent to the Escrow Fund contemplated hereunder, and no additional obligations of the Escrow Agent shall be inferred from the terms of this Escrow Agreement or any other agreement; and IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY (i) DAMAGES OR EXPENSES ARISING OUT OF THE SERVICES PROVIDED HEREUNDER, OTHER THAN DAMAGES WHICH RESULT FROM THE ESCROW AGENT'S FAILURE TO ACT IN ACCORDANCE WITH THE STANDARDS SET FORTH IN THIS ESCROW AGREEMENT, OR (ii) SPECIAL OR CONSEQUENTIAL DAMAGES, EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; and i. the Escrow Agent shall have the right to perform any of its duties hereunder through agents, attorneys, custodians or nominees. Any banking association or corporation into which the Escrow Agent may be merged, converted or with which the Escrow Agent may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Escrow Agent shall be a party, or any banking association or corporation to which all or substantially all of the corporate trust business of the Escrow Agent shall be transferred, shall succeed to all the Escrow Agent's rights, obligations and immunities hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 9. INDEMNIFICATION OF ESCROW AGENT. Each Ryan Family Member, jointly and severally, agrees to indemnify the Escrow Agent, its directors, officers, agents and employees and any person who "controls" the Escrow Agent within the meaning of Section 15 of the Securities Act of 1933, as amended against, and hold them harmless from, any and all loss, liability, cost, damage and expense, including costs of investigation and reasonable counsel fees and expenses, which any of them may suffer or incur by reason of any action, claim or proceeding brought against any of them, arising out of or relating in any way to this Escrow Agreement or any transaction to which this Escrow Agreement relates, other than any action, claim or proceeding to the extent resulting from the gross negligence or willful misconduct of such person. The provisions of this Section 9 shall survive the termination of this Escrow Agreement and resignation or removal of the Escrow Agent. Section 10. TERMINATION. This Escrow Agreement shall terminate when all Escrow Shares, Additional Shares and other assets have been distributed from the Escrow Fund. Section 11. NO LIMITATION ON RECOURSE. This Escrow Agreement does not and termination hereof will not, and shall not be interpreted to, in any way, limit or restrict the amount for or the manner in which an Indemnified Party may seek indemnification pursuant to the terms of the Merger Agreement or require -7- that an Indemnified Party seek satisfaction of a claim for indemnification under the Merger Agreement against the Escrow Fund prior to seeking satisfaction from any Ryan Family Member. Section 12. FURTHER ACTIONS. The Company and each Ryan Family Member agree that they will execute and deliver any and all documents and instruments and take such other actions as may be necessary and appropriate to effectuate and carry out the transactions contemplated by the terms of and intent of this Escrow Agreement. Section 13. AMENDMENT, SUCCESSOR ESCROW AGENT. This Escrow Agreement may be amended only pursuant to a written instrument signed on behalf of the Company, each Ryan Family Member and the Escrow Agent. If the Company and any Ryan Family Member attempt to change this Escrow Agreement in a manner which, in the Escrow Agent's sole opinion, is undesirable, the Escrow Agent may resign as Escrow Agent upon two weeks' written notice to the Company and each Ryan Family Member; otherwise, notwithstanding any provision hereof to the contrary, it may resign as Escrow Agent at any time upon 60 calendar days' written notice to the Company and each Ryan Family Member. In the case of the Escrow Agent's resignation, its only duty shall be to hold and dispose of the Escrow Shares and Additional Shares in accordance with the original provisions of this Escrow Agreement until a successor escrow agent shall be appointed by the Company and the Ryan Family Members acting by majority vote (in which each such party shall have one vote) and a written notice of the name and address of such successor escrow agent shall be given to the Escrow Agent by the Company and the Ryan Family Members, whereupon the Escrow Agent's only duty shall be to turn over, in accordance with the written instructions of the Company and the Ryan Family Members, to the successor escrow agent the Escrow Shares and Additional Shares and any documentation related thereto. In the event that a successor escrow agent shall not have been appointed and the Escrow Agent shall not have turned over to the successor escrow agent the Escrow Shares and Additional Shares within the time periods specified above, or the Escrow Agent's written notice of resignation, as the case may be, the Escrow Agent may deposit the assets held in the Escrow Fund with the clerk of any other court of competent jurisdiction, at which time the Escrow Agent's duties hereunder shall terminate. Section 14. ESCROW AGENT FEES. The Escrow Agent shall be entitled to a fee as detailed on SCHEDULE A (the "ESCROW AGENT FEES") and for reimbursement of its out-of-pocket expenses including the fees and costs of attorneys or agents which it may find necessary to engage in performance of its duties hereunder and the Escrow Agent shall have, and is hereby granted, a prior lien upon any property, cash, or assets of the Escrow Fund, with respect to its unpaid fees and nonreimbursed expenses, superior to the interests of any other persons or entities. The Escrow Agent shall be entitled and is hereby granted the right to set off and deduct any unpaid fees and/or nonreimbursed expenses from amounts on deposit in the Escrow Fund. The Ryan Family Members agree, jointly and severally, to pay the Escrow Agent Fees and all out-of-pocket expenses. Section 15. CHOICE OF LAW, JURISDICTION, VENUE. a. THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT APPLICATION OF THE PRINCIPLES OF CONFLICTS OF LAWS. b. The parties (other than the Escrow Agent) agree that any and all disputes, claims or controversies arising out of or relating to this Escrow Agreement that are not resolved by their mutual agreement shall be submitted to final and binding arbitration before JAMS, or its successor, pursuant to the United States Arbitration Act, 9 U.S.C. Sec. 1 et seq. Any party may commence the arbitration process called for in this Escrow Agreement by filing a written demand for arbitration with JAMS, with a copy to the other parties. The arbitration will be conducted in accordance with the provisions of JAMS' Comprehensive Arbitration Rules and Procedures in effect at the time of filing of the demand for -8- arbitration. The parties (other than the Escrow Agent) will cooperate with JAMS and with one another in selecting an arbitrator who has previously served as judge in a federal court from JAMS' panel of neutrals, and in scheduling the arbitration proceedings. The parties (other than the Escrow Agent) covenant that they will participate in the arbitration in good faith, and that they will share equally in its costs. The provisions of this Section may be enforced by any court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys fees, to be paid by the party against whom enforcement is ordered. C. NOTICE: BY SIGNING THIS ESCROW AGREEMENT, EACH PARTY (OTHER THAN THE ESCROW AGENT) IS AGREEING TO HAVE ALL DISPUTES, CLAIMS OR CONTROVERSIES ARISING OUT OF OR RELATING TO THIS ESCROW AGREEMENT DECIDED BY NEUTRAL ARBITRATION, AND EACH PARTY (OTHER THAN THE ESCROW AGENT) IS GIVING UP ANY RIGHTS SUCH PARTY MIGHT POSSESS TO HAVE THOSE MATTERS LITIGATED IN A COURT OR JURY TRIAL. BY SIGNING THIS ESCROW AGREEMENT, EACH PARTY (OTHER THAN THE ESCROW AGENT) IS GIVING UP SUCH PARTY'S JUDICIAL RIGHTS TO DISCOVERY AND APPEAL EXCEPT TO THE EXTENT THAT THEY ARE SPECIFICALLY PROVIDED FOR UNDER THIS ESCROW AGREEMENT. IF ANY PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE UNDER FEDERAL OR STATE LAW. EACH PARTY'S AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. Section 16. SUCCESSORS AND ASSIGNS. This Escrow Agreement shall be binding upon the parties hereto and their respective successors and assigns; provided, however, that any assignment or transfer by any party of its rights under this Escrow Agreement shall be void (as against the Escrow Agent or otherwise) unless: a. written notice thereof shall be given to the Escrow Agent, the Company and each Ryan Family Member; and b. the Escrow Agent, the Company and each Ryan Family Member shall have consented, in writing, to such assignment or transfer. Section 17. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon the earlier of delivery thereof if by hand or upon receipt if sent by mail (registered or certified mail, postage prepaid, return receipt requested) or on the next business day after deposit if sent by a recognized overnight delivery service or upon transmission if sent by telecopy or facsimile transmission (with request of assurance of receipt in a manner customary for communication of such type) as follows (or at such other address for a party as shall be specified by like notice): If to the Escrow Agent: American National Bank and Trust Company of Chicago 120 South LaSalle, 4th Floor Mail Code IL1-1250 Chicago, Illinois 60603 Attn: Kevin M. Ryan Telecopy: (312) 661-6491 Notice to the Company: Aon Corporation 123 North Wacker Drive Chicago, Illinois 60606 Attn: Raymond Skilling, Chief Counsel Telecopy: (312) 701-2348 -9- with a copy to: Sonnenschein Nath & Rosenthal 8000 Sears Tower 233 S. Wacker Drive Chicago, Illinois 60606 Attn: Donald G. Lubin, Esq. Telecopy: (312) 876-7934 Notice to any of the Representatives or any Ryan Family Member, including the 2000 Trust: Patrick G. Ryan 123 North Wacker Drive, Suite 900 Chicago, Illinois 60606 Telecopy: (312) 701-3030 with a copy to: Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Attn: Dennis V. Osimitz Telecopy: (312) 853-7036 Section 18. THIRD PARTY BENEFICIARIES. Each Indemnified Party, other than the Company, is intended to be, and shall be, a third party beneficiary of the provisions of this Escrow Agreement and shall have the right to enforce the obligations of each Ryan Family Member to such Indemnified Party under this Escrow Agreement in its own name and behalf. Section 19. SEVERABILITY. If any provision of this Escrow Agreement or the application thereof to any person or circumstance shall be determined to be invalid or unenforceable, the remaining provisions of this Escrow Agreement or the application of such provision to persons or circumstances other than those to which it is held invalid or unenforceable shall not be affected thereby and shall be valid and enforceable to the fullest extent permitted by law. Section 20. COUNTERPARTS, FACSIMILE SIGNATURES. This Escrow Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. This Escrow Agreement may be executed by facsimile signature and a facsimile signature shall constitute an original signature for all purposes. Section 21. INTERPRETATION OF CERTAIN TERMS. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the context may require. Any words herein used in the singular shall denote the plural as the context so requires and, when used herein in the plural shall denote the singular as the context so requires. Pronouns used herein, whether masculine, feminine, or neuter, shall be interpreted as the context so requires. The word "including" shall mean "including, without limitation," and thus indicate part of a larger whole; but shall not be interpreted as indicating the stated limits or extremes. Any reference to any federal, state, or local law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The term "BUSINESS DAY" means for all purposes, a day other than Saturday or Sunday on which banks are open for business in Chicago, Illinois. -10- Section 22. WAIVER OF COMPLIANCE; CONSENTS. Any failure of the parties hereto to comply with any obligation, covenant, agreement or condition contained herein may be waived in writing by the other parties hereto, respectively, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any other failure. Section 23. HEADINGS. The article and section headings contained in this Escrow Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Escrow Agreement. *** Remainder of Page Intentionally Remains Blank, Signature Page Follows *** -11- IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement as of the day and year first above written. Aon CORPORATION AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Escrow Agent By: /s/ Michael D. O'Halleran By: /s/ Kevin M. Ryan ------------------------------ --------------------------------------- Name: Michael D. O'Halleran Name: Kevin M. Ryan Title: President and Chief Title: Authorized Officer Operating Officer PATRICK G. RYAN LIVING TRUST SHIRLEY W. RYAN LIVING TRUST DATED JULY 10, 2001 DATED JULY 10, 2001 By: /s/ Patrick G. Ryan By: /s/ Patrick G. Ryan ------------------------------ -------------------------------------- Name: Patrick G. Ryan Name: Patrick G. Ryan Its: Trustee Its: Trustee AND By: /s/ Shirley W. Ryan -------------------------------------- Name: Shirley W. Ryan Its: Trustee 2001 RYAN ANNUITY TRUST /s/ Patrick G. Ryan DATED APRIL 20, 2001 ------------------------------------------ Patrick G. Ryan By: /s/ Shirley W. Ryan ----------------------------- Name: Shirley W. Ryan Its: Trustee /s/ Shirley W. Ryan ------------------------------------------ Shirley W. Ryan By: /s/ Patrick G. Ryan, Jr. By: /s/ Robert J.W. Ryan ------------------------------ -------------------------------------- Patrick G. Ryan, Jr. Robert J.W. Ryan CORBETT M. W. RYAN FAMILY GST TRUST UNDER PGR LIVING TRUST 2000 TRUST DATED NOVEMBER 22, 2000 DATED JULY 13, 2001 By: /s/ Shirley W. Ryan By: /s/ Shirley W. Ryan ------------------------------ -------------------------------------- Name: Shirley W. Ryan Name: Shirley W. Ryan Its: Trustee Trustee
SIGNATURE PAGE TO ESCROW AGREEMENT EX-99.5 6 a2054372zex-99_5.txt EXHIBIT 99.5 Exhibit V IRREVOCABLE STOCKHOLDERS' VOTING AGREEMENT AND PROXY Agreement made this 16th day of July, 2001, by and among Patrick G. Ryan, an individual ("PGR"), Shirley W. Ryan, an individual ("SWR"), Patrick G. Ryan, Jr., an individual ("PGR, JR."), Robert J.W. Ryan, an individual ("RJWR"), the Corbett M.W. Ryan Living Trust dated July 13, 2001 ("CMWR"), the Patrick G. Ryan Living Trust dated July 10, 2001 (the "PGR TRUST"), the Shirley W. Ryan Living Trust dated July 10, 2001 (the "SWR TRUST"), the 2001 Ryan Annuity Trust dated April 20, 2001 (the "2001 TRUST") and the Family GST Trust under PGR 2000 Trust dated November 22, 2000 (the "2000 TRUST"). PGR, Jr., RJWR and CMWR, together with any person who may become subject to this Agreement pursuant to SECTION 3 or SECTION 4(c), are referred to herein as the "SUBJECT STOCKHOLDERS." PGR, SWR, PGR, Jr., RJWR, CMWR, the PGR Trust, the SWR Trust, the 2001 Trust and the 2000 Trust, each as holders of common stock, par value $1.00 ("AON COMMON STOCK"), of Aon Corporation, a Delaware corporation ("AON"), are referred to in this Agreement collectively as the "RYAN FAMILY STOCKHOLDERS." RECITALS: WHEREAS, Aon, Holdco #1, Inc., a Delaware corporation and a wholly-owned subsidiary of Aon, Holdco #2, Inc., a Delaware corporation and a wholly-owned subsidiary of Aon, Ryan Holding Corporation of Illinois, a Delaware corporation, Ryan Enterprises Corporation of Illinois, a Delaware corporation, and the Ryan Family Members are parties to that certain Agreement and Plan of Merger dated July 16, 2001 (the "MERGER AGREEMENT"); WHEREAS, the Ryan Family Stockholders desire that each Subject Stockholder vote all shares of Aon Common Stock which such Subject Stockholder beneficially owns and/or over which such Subject Stockholder otherwise has voting control (the "SUBJECT SHARES"), in the same manner in which PGR votes all shares of Aon Common Stock which he at any time beneficially owns and, except for the Subject Shares, shares of Aon Common Stock over which he otherwise has voting control (the "PGR SHARES"); and WHEREAS, the Ryan Family Stockholders desire that the outstanding shares of Aon Common Stock they own (the "RYAN FAMILY SHARES") of Aon Common Stock be subject to certain transfer restrictions. NOW THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. VOTING OF SHARES AND PROXY. (a) With respect to any and all matters submitted to Aon's stockholders for approval (whether at a meeting or by written consent in lieu of a meeting) each Subject Stockholder agrees to vote or cause to be voted the Subject Shares owned or otherwise controlled by such person in the same manner in which PGR votes the PGR Shares or as otherwise directed by PGR. (b) Each of the Subject Stockholders hereby irrevocably appoints PGR, with full power of substitution, the proxy of such Subject Stockholder to vote the Subject Shares that such Subject Stockholder is entitled to vote in accordance with the voting agreements set forth in SECTION 1(a) above, for and in the name, place and stead of such Subject Stockholder, at any annual, special or other meeting of the stockholders of Aon and at any adjournments thereof or pursuant to any consent in lieu of a meeting, or otherwise, in respect of any matter that is properly brought before the stockholders of Aon for action. Each Subject Stockholder agrees that the proxy granted pursuant to this SECTION 1(b) is coupled with an interest sufficient in law to support an irrevocable power. 2. SHARES. The Ryan Family Shares shall include any shares of Aon Common Stock subsequently acquired by any Ryan Family Stockholder, however acquired, including stock splits and stock dividends. 3. ADDITIONAL SUBJECT STOCKHOLDERS. (a) If PGR ceases to be a trustee of the PGR Trust, the PGR Trust shall thereupon become a Subject Stockholder and the Ryan Family Shares owned or otherwise controlled by the PGR Trust shall become Subject Shares. As a Subject Stockholder, the PGR Trust shall be bound by the provisions of SECTIONS 1(a) and 1(b) hereof. (b) If neither PGR nor SWR continues to be is a trustee of the SWR Trust, the SWR Trust shall thereupon become a Subject Stockholder and the Ryan Family Shares owned or otherwise controlled by the SWR Trust shall become Subject Shares. As a Subject Stockholder, the SWR Trust shall be bound by the provisions of SECTIONS 1(a) and 1(b) hereof. (c) If SWR ceases to be a trustee of the 2001 Trust, the 2001 Trust shall thereupon become a Subject Stockholder and the Ryan Family Shares owned or otherwise controlled by the 2001 Trust shall become Subject Shares. As a Subject Stockholder, the 2001 Trust shall be bound by the provisions of SECTIONS 1(a) and 1(b) hereof. (d) If SWR ceases to be a trustee of the 2000 Trust, the 2000 Trust shall thereupon become a Subject Stockholder and the Ryan Family Shares owned or otherwise controlled by the 2000 Trust shall become Subject Shares. As a Subject Stockholder, the 2000 Trust shall be bound by the provisions of SECTIONS 1(a) and 1(b) hereof. (e) If the Ryan Family Shares owned or controlled by SWR (the "SWR SHARES") cease to be owned or controlled by SWR by reason of her death, thereupon SWR Shares shall thereupon become Subject Shares and the Person (as defined in SECTION 4(e)(iv) below) who becomes the beneficial owner or obtains voting control of the SWR Shares (through bequest or otherwise) shall become a Subject Shareholder. Such Person, if not already a party to this Agreement, shall be required to execute a counterpart of this Agreement and shall be bound by the provisions of SECTION 1(a) and 1(b) hereof. 4. TRANSFERS OF RIGHTS. (a) A Ryan Family Stockholder may not Transfer any of its Ryan Family Shares, directly or indirectly, except upon compliance with the terms of this SECTION 4. 2 (i) Except as provided in SECTION 4(b) or (c), if any Ryan Family Stockholder desires to Transfer any of its Ryan Family Shares (such Ryan Family Stockholder being herein referred to herein as the "RYAN FAMILY TRANSFEROR MEMBER") to any Person, the Ryan Family Transferor shall promptly furnish to all other Ryan Family Stockholders, a notice (the "NOTICE OF TRANSFER") of such desire to Transfer such Ryan Family Shares and (A) if a BONA FIDE offer has been made to purchase such Ryan Family Shares, the BONA FIDE offered price for such Ryan Family Shares proposed to be Transferred, the method of payment of such offered price, the identity of the prospective purchaser or purchasers (the "PROPOSED PURCHASER") and all other pertinent terms and conditions of such BONA FIDE offer or (B) if the proposed Transfer is to other than a Person making a BONA FIDE offer to purchase the Ryan Family Shares, the Fair Market Value of the Ryan Family Shares and the identity of the proposed transferees. (ii) For a period of 5 days commencing on the date of delivery of the Notice of Transfer, the Ryan Family Stockholders shall have the right to purchase all or any portion of the Ryan Family Shares proposed to be transferred on the same terms as set forth in the Notice of Transfer; PROVIDED, HOWEVER, that the price for such Ryan Family Shares shall be equal to the greater of (i) the Fair Market Value of such Ryan Family Shares and (ii) price set forth in the Notice of Transfer. The specific portion of such Ryan Family Shares which each Ryan Family Stockholder shall be so entitled to purchase shall be determined on a PRO RATA basis in proportion to the respective Ryan Family Shares owned by each Ryan Family Stockholder desiring to purchase the Ryan Family Shares available for purchase. If any Ryan Family Stockholder desires to purchase the Ryan Family Shares, it shall give notice of such desire to the Ryan Family Transferor and the other Ryan Family Stockholders confirming such desire. If any Ryan Family Stockholder does not purchase its full PRO RATA share of any such Ryan Family Shares proposed to be Transferred, such unpurchased Ryan Family Shares shall be offered by the Ryan Family Transferor to the Ryan Family Stockholders subscribing to purchase Ryan Family Shares on a PRO RATA basis on similar terms of purchase. (iii) If the Ryan Family Stockholders do not purchase, in accordance with the provisions of clause (ii) above, all of the Ryan Family Shares proposed to be Transferred by the Ryan Family Transferor, then for an additional period of 3 days commencing on the earlier of the date that (A) the Ryan Family Stockholders' right to purchase such Ryan Family Shares has expired or the Ryan Family Stockholders notify the Ryan Family Transferor in writing that the Ryan Family Stockholders have determined not to exercise such right or (B) the Ryan Family Stockholders each notify the Ryan Family Transferor in writing of their collective intent to exercise such right only with respect to a portion of such Ryan Family Shares, the Ryan Family Affiliates shall have the right to purchase all or any portion of the Ryan Family Shares not so purchased by the Ryan Family Stockholders on the same terms and conditions and at the same price at which the Ryan Family Stockholders were so entitled to purchase such Ryan Family Shares remaining for purchase. The specific portion of such Ryan Family Shares which 3 each Ryan Family Affiliate shall be so entitled to purchase shall be determined by SWR. If any Ryan Family Affiliate desires to purchase the Ryan Family Shares, it shall give notice of such desire to the Ryan Family Transferor and the Ryan Family Stockholders confirming such desire. (iv) The closing of any purchase by the Ryan Family Stockholders or any Ryan Family Affiliates (each a "RYAN FAMILY PURCHASER") of any offered Ryan Family Shares as provided in this SECTION 4(a) shall take place on such date as designated by such Ryan Family Purchaser occurring within 10 days after receipt by the Ryan Family Transferor of notice from such Ryan Family Purchaser of the exercise of such Ryan Family Purchaser's right to purchase hereunder. At the closing of any purchase of the Ryan Family Shares, the Ryan Family Transferor will transfer, assign and deliver, or cause to be transferred, assigned and delivered to the Ryan Family Purchaser any certificates or other evidence representing the Ryan Family Shares being purchased, duly endorsed or accompanied by transfer powers duly executed by the Ryan Family Transferor or his duly appointed legal representative or authorized agent with such signature thereon duly guaranteed. Upon the delivery of and payment for the Ryan Family Shares as contemplated in this Agreement, the Ryan Family Purchaser shall receive good title to such Ryan Family Shares free and clear of any lien, claim, equity or encumbrance of any nature whatsoever. Upon request by the Ryan Family Purchaser, the Ryan Family Transferor shall deliver an opinion of counsel, reasonably acceptable to the Ryan Family Purchaser, as to the matters contained in the preceding sentence and as to such other matters as the Ryan Family Purchaser may reasonably request. (v) If, after compliance with the foregoing provisions of this SECTION 4(a) the Ryan Family Stockholders and the Ryan Family Affiliates, taken together, fail to purchase all of the Ryan Family Shares proposed to be Transferred by the Ryan Family Transferor, then for a period of 15 days commencing on the date that none of Ryan Family Stockholders or any Ryan Family Affiliates remain entitled to exercise their respective rights to purchase any offered Ryan Family Shares in accordance with the foregoing provisions of this SECTION 4(a)(i), the Ryan Family Transferor may Transfer any of the Ryan Family Shares described in the Notice of Transfer which the Ryan Family Stockholders or any Ryan Family Affiliates are not purchasing; PROVIDED, HOWEVER, that any such Transfer must be made upon the terms and conditions set forth in the Notice of Transfer, except that the price shall be equal to the greater of (i) the Fair Market Value of such Ryan Family Shares on the date of such Transfer and (ii) price set forth in the Notice of Transfer. All Ryan Family Shares so Transferred shall no longer be subject to this Agreement. If the Ryan Family Transferor shall not consummate the Transfer of such remaining Ryan Family Shares within such 15-day period, such Ryan Family Shares shall remain subject to the provisions of this Agreement and the Ryan Family Transferor shall not thereafter Transfer any such Ryan Family Shares to any Person without again first complying with all of the provisions of this Agreement. 4 (b) Notwithstanding anything contained herein to the contrary, a Ryan Family Stockholder may Transfer Ryan Family Shares to any other Ryan Family Stockholder without complying with the provisions of SECTION 4(a). (c) Notwithstanding anything contained herein to the contrary, a Ryan Family Stockholder may Transfer Ryan Family Shares to any Ryan Family Affiliate or organization that qualifies as a tax exempt organization pursuant to 501(c)(3) of the Internal Revenue Code of 1986 without complying with the provisions of SECTION 4(a); PROVIDED, HOWEVER, that such Ryan Family Affiliate or organization shall sign a counterpart of this Agreement, agreeing to be a Subject Shareholder bound by the provisions hereof; PROVIDED, FURTHER, that if a person or entity constitutes a Ryan Family Affiliate solely because of a spousal relationship involving a lineal descendant of PGR or SWR (a "MARRIAGE AFFILIATE"), (i) such Marriage Affiliate must deliver a Notice of Transfer within 30 days (or, if such Marriage Affiliate shall fail to deliver such Notice of Transfer within such 30 day period, any Ryan Family Stockholder may deliver on such Marriage Affiliate's behalf) of (A) the death or divorce of such lineal descendant with respect to all Ryan Family Shares owned by such Marriage Affiliate immediately prior to such death or divorce and (B) the receipt of any Ryan Family Shares by such Marriage Affiliate as a result of such death or divorce with respect to such Ryan Family Shares so received, (ii) the Ryan Family Shares subject to a Notice of Transfer required by (i) shall be considered the subject of a proposed Transfer at the Fair Market Value, and (iii) SECTION 4(a) shall apply to all such Ryan Family Shares subject to a Notice of Transfer required by (i) EXCEPT that a period of 60 days shall be substituted for any reference to a period of days in such SECTION 4(a). (d) Notwithstanding anything contained herein to the contrary, a Ryan Family Stockholder may pledge, hypothecate or encumber Ryan Family Shares, to the extent such pledge, hypothecation or encumbrance is made to a party pursuant to a bona fide pledge, hypothecation or encumbrance of such Ryan Family Shares as collateral security for indebtedness due to such party (the "BONA FIDE PLEDGEE"), PROVIDED that (i) upon any release or termination of such pledge, hypothecation or encumbrance, such shares shall continue to constitute Ryan Family Shares and the holder of such Ryan Family Shares shall be subject to the terms of this Agreement and (ii) in the event of foreclosure or other similar action (including, with respect to indebtedness incurred pursuant to a loan agreement or credit facility entered into on or prior to the date of this Agreement, any other sale or transfer of such shares at a time when the lender is entitled to exercise its right to foreclose and sell such pledged shares under the terms and conditions of the pledge, security or similar agreement related to such loan agreement or credit facility where the proceeds therefrom will be used to satisfy such indebtedness (and costs and expenses payable by the borrower pursuant to such loan agreement or credit facility) upon a default of the borrower's obligations under the terms of such loan agreement or credit facility) by the Bona Fide Pledgee, any such pledged shares may be transferred in any manner permitted by law free and clear of all terms, conditions and restrictions contained in this Agreement. (e) (i) The "FAIR MARKET VALUE" of a Ryan Family Share shall be the average of the per share daily prices on the New York Stock Exchange of Aon Common Stock as reported in the New York Stock Exchange Composite Transactions (on the Transaction Reporting System operated by the Consolidated Tape Association) during the 20 consecutive trading days ending on the day prior to (i) Notice of the Transfer in the case of a Ryan Family 5 Stockholder or Ryan Family Affiliate, or (ii) consummation of a Transfer to any other Person pursuant to SECTION 4(a)(v) above. (i) "RYAN FAMILY AFFILIATE" means (A) PGR, SWR and any of the lineal descendants, spouses of lineal descendants and lineal descendants of such spouses, including adoptive children of each of such persons, of PGR or SWR, (B) the custodian under any Uniform Transfers to Minors Act or similar law for a minor who is a person described in (A), (C) a trust (including a voting trust) of which one or more persons described in (A) or organizations that qualify as a tax exempt organization pursuant to 501(c)(3) of the Internal Revenue Code of 1986 are the primary beneficiaries, (D) a corporation of which one or more Ryan Family Affiliates collectively beneficially own a majority of the combined voting power of the outstanding capital stock entitled to vote for the election of directors, a partnership of which one or more Ryan Family Affiliates collectively beneficially own a majority of the partnership interests entitled to participate in the management of the partnership, a member managed limited liability company of which one or more Ryan Family Affiliates collectively beneficially own a majority of the outstanding member interests entitled to participate in the management of the limited liability company, or a manager managed limited liability company of which a majority of the managers entitled to participate in decisions with respect to the voting or disposition by the limited liability company of the Restricted Shares (as defined in the Stock Restriction Agreement) are Ryan Family Affiliates, (E) the estate of a person described in (A), or the executor, administrator or personal representative of the estate of a person described in (A), (F) the guardian, conservator, or custodian of a person described in (A) adjudged disabled by a court of competent jurisdiction, (G) a nominee of a person described in (A), provided such person described in (A) possesses the power to direct the voting and disposition of the Restricted Shares placed in the nominee's name, and (H) any organization that qualifies as a tax exempt organization pursuant to 501(c)(3) of the Internal Revenue Code of 1986 who receives Restricted Shares. (ii) "TRANSFER" means any change in the record or beneficial ownership of any Ryan Family Share, whether made voluntarily or involuntarily by operation of law. (iii) "PERSON" means any general partnership, limited partnership, corporation, limited liability company, joint venture, trust, business trust, governmental agency, cooperative, association, individual or other entity, and the heirs, executors, administrations, legal representatives, successors and assigns of such person, as the context may require. (f) No provision of this SECTION 4 shall be interpreted in any manner to limit, restrict or curtail the rights and obligations set forth in the Stock Restriction Agreement (as defined in the Merger Agreement) of any of the parties hereto or thereto. 5. TERMINATION. This Agreement shall terminate in its entirety on the death of PGR. 6 6. LEGEND. The Ryan Family Stockholders acknowledge that the certificates representing the Ryan Family Shares shall contain the legend in Section 2.3(c) of the Merger Agreement. 7. GENERAL. (a) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. (b) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT APPLICATION TO THE PRINCIPLES OF CONFLICTS OF LAWS. (c) DISPUTE RESOLUTION. The parties agree that any and all disputes, claims or controversies arising out of or relating to this Agreement that are not resolved by their mutual agreement shall be submitted to final and binding arbitration before JAMS, or its successor, pursuant to the United States Arbitration Act, 9 U.S.C. Sec. 1 et seq. Any party may commence the arbitration process called for in this Agreement by filing a written demand for arbitration with JAMS, with a copy to the other party. The arbitration will be conducted in accordance with the provisions of JAMS' Comprehensive Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties will cooperate with JAMS and with one another in selecting an arbitrator from JAMS' panel of neutrals, and in scheduling the arbitration proceedings. The parties covenant that they will participate in the arbitration in good faith, and that they will share equally in its costs. The provisions of this Section may be enforced by any court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys fees, to be paid by the party against whom enforcement is ordered. NOTICE: BY SIGNING THIS AGREEMENT, EACH PARTY IS AGREEING TO HAVE ALL DISPUTES, CLAIMS OR CONTROVERSIES ARISING OUT OF OR RELATING TO THIS AGREEMENT DECIDED BY NEUTRAL ARBITRATION, AND EACH PARTY IS GIVING UP ANY RIGHTS SUCH PARTY MIGHT POSSESS TO HAVE THOSE MATTERS LITIGATED IN A COURT OR JURY TRIAL. BY SIGNING THIS AGREEMENT, EACH PARTY IS GIVING UP SUCH PARTY'S JUDICIAL RIGHTS TO DISCOVERY AND APPEAL EXCEPT TO THE EXTENT THAT THEY ARE SPECIFICALLY PROVIDED FOR UNDER THIS AGREEMENT. IF ANY PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, SUCH PARTY MAY BE COMPELLED TO ARBITRATE UNDER FEDERAL OR STATE LAW. EACH PARTY'S AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. (d) COUNTERPARTS. This Agreement may be executed in one or any number of counterparts, each of which, once so executed, shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument binding on all the parties hereto. This Agreement may be executed by facsimile signature and a facsimile signature shall constitute an original signature for all purposes. 7 (e) INTERPRETATION OF CERTAIN TERMS. Any words herein used in the singular shall denote the plural as the context so requires and, when used herein in the plural shall denote the singular as the context so requires. Pronouns used herein, whether masculine, feminine, or neuter, shall be interpreted as the context so requires. The word "including" shall mean "including, without limitation," and thus indicate part of a larger whole; but shall not be interpreted as indicating the stated limits or extremes. Any reference to any federal, state, or local law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. (f) TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. (g) NOTICES. Any communications required or desired to be given hereunder shall be given in writing and will be deemed to have been properly given on the date of delivery if delivered in person or on the earlier of actual receipt or three (3) business days after the date of mailing if mailed by registered or certified mail, first class postage prepaid, return receipt requested, to a party hereto at the following address, or at such other address as such party may advise the other in writing from time to time: Notice to any of the Ryan Family Stockholders: Patrick G. Ryan 123 North Wacker Drive, Suite 900 Chicago, Illinois 60606 Telecopy: (312) 701-3030 with a copy to: Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Attn: Dennis V. Osimitz Telecopy: (312) 853-7036 (h) EXPENSES. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. (i) AMENDMENTS AND WAIVER. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of PGR, PGR Trust, and a majority of the Ryan Family Stockholders affected by such amendment or waiver. (j) SEVERABILITY. If one or more provisions of this Agreement are held to be 8 unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 9 IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the day and year first above written. /s/ Patrick G. Ryan ------------------------------ PATRICK G. RYAN /s/ Shirley W. Ryan ------------------------------ SHIRLEY W. RYAN /s/ Patrick G. Ryan, Jr. ------------------------------ PATRICK G. RYAN, JR. /s/ Robert J.W. Ryan ------------------------------ ROBERT J.W. RYAN CORBETT M.W. RYAN LIVING TRUST DATED JULY 13, 2001 /s/ Shirley W. Ryan ------------------------------ Shirley W. Ryan, Trustee PATRICK G. RYAN LIVING TRUST DATED JULY 10, 2001 /s/ Patrick G. Ryan ------------------------------ Patrick G. Ryan, Trustee SHIRLEY W. RYAN LIVING TRUST DATED JULY 10, 2001 /s/ Shirley W. Ryan ------------------------------ Shirley W. Ryan, Trustee Signature page to the Voting Agreement /s/ Patrick G. Ryan ------------------------------ Patrick G. Ryan, Trustee 2001 RYAN ANNUITY TRUST DATED APRIL 20, 2001 /s/ Shirley W. Ryan ------------------------------ Shirley W. Ryan, Trustee FAMILY GST TRUST UNDER THE PGR 2000 TRUST DATED NOVEMBER 22, 2000 /s/ Shirley W. Ryan ------------------------------ Shirley W. Ryan, Trustee Signature page to the Voting Agreement -----END PRIVACY-ENHANCED MESSAGE-----