Exhibit 10.47
TRANSITION
AGREEMENT
This Transition Agreement
(the “ Agreement ”) is made by and between
AON CORPORATION, a Delaware corporation (“ Aon
” or the “ Company ”), COMBINED
INSURANCE COMPANY OF AMERICA,
an Illinois insurance corporation (“ Combined
”), and RICHARD M. RAVIN ( Mr. Ravin or
the “ Executive ”). The effective date of this
Agreement is December 13, 2007 (the “ Effective
Date ”).
WHEREAS
, Mr. Ravin is currently
employed as Chairman of Combined and the terms of his employment are described in an
Employment Agreement dated as of August 1, 2005, two side
letters dated November 10, 2005, and a letter agreement
between Mr. Ravin and Gregory C. Case, the Company’s Chief Executive
Officer (“ CEO ”), dated January 31, 2007
(collectively, the “ Employment
Agreement” ); and
WHEREAS
, the Company has announced
that it is considering strategic options for Combined and
its subsidiaries; and
WHEREAS , the
parties agree that Mr. Ravin’s employment with Combined
will terminate and that he will
subsequently be employed by the Company, on terms and
conditions described in this Transition Agreement;
NOW,
THEREFORE , in
consideration of the mutual promises and agreements set forth
herein, and other good and valuable consideration, the parties
hereby agree as follows:
1.
Termination of
Employment with Combined . As of the Effective Date, the
Executive’s employment
with Combined shall terminate and he shall resign his positions as
a director and/or
officer of Combined and all of its subsidiaries. The termination of
the Executive’s employment with Combined (and his
resignation as a director and/or officer of Combined or its
subsidiaries) shall not constitute a termination within the meaning
of any part of Section 4 or any other Section of
the Employment Agreement.
2.
Employment with the Company
. The Executive’s employment with the Company shall begin on the Effective Date
and, unless earlier terminated pursuant to Section 9
of the Agreement, shall end on
the later of (a) March 31, 2009 or (b) the day
immediately following
the date on which the Organization and Compensation Committee (the
“ Committee ”) of the Company’s Board of Directors
meets in 2009 and awards bonus or incentive compensation
(the “ Employment Period ”).
3.
Role and
Responsibilities .
(A)
During the Employment Period the Executive shall serve as Special
Advisor to the CEO. As Special
Advisor, the Executive shall have senior-level duties and
responsibilities as the CEO assigns to him from time to time, which
may include sharing his expertise with Company management upon
request, and providing general support to the CEO
in his management efforts upon
request. The Company anticipates that such duties will draw
on the Executive’s expertise in the insurance and
underwriting industry and his well- established professional relationships
with colleagues at Combined and elsewhere. Although
the
Executive’s duties will be greatly diminished as a Special
Advisor, the Executive shall be a benefits-eligible common law
employee of Aon.
(B)
The Executive and Combined agree to execute all documents and take
all other actions as may be necessary to effectuate the termination
of the Executive’s director and officer responsibilities.
(C)
On and after the Effective Date, the Executive may engage in
outside activities, including membership on boards of for-profit
entities and not-for-profit entities, and trade associations, and
employment or consulting with for-profit and not-for-profit
entities; provided, however, that such activities (i) may not
significantly interfere with the Executive’s performance of
his duties hereunder, (ii) may not violate the terms of
Section 10 (Noncompetition; Nonsolicitation) and
Section 12 (Confidentiality) of this Agreement, (iii) may
not include employment or consulting with any entity that is
interested in, or is exploring strategic options relating to, the
acquisition of Combined, either alone or in combination with other
entities; and (iv) with the exception of outside activities in
which Executive is engaged as of the Effective date, are
pre-approved in writing by the CEO and the Company’s General
Counsel as not being in violation of this Section 3(c), which
approval shall not be unreasonably withheld.
4.
Salary . During the
Employment Period, the Executive will receive a base salary that is
equal to or greater but in no event less than the amount of his
base salary as an employee of Combined as of the day prior to the
Effective Date, which is $800,000.
5.
Benefits . During the
Employment Period, the Executive will remain eligible for all
benefits under all welfare benefit plans offered to executives of
the Company during such period (including health, life and
disability insurance) on the same terms as offered to executives of
the Company generally, with COBRA continuation thereafter as
applicable. The Executive will remain eligible for benefits under
the qualified and non-qualified retirement plans of the Company in
which the Executive participates as of the Effective Date on the
same terms as offered to executives of the Company generally, and
for benefits under all other qualified and non-qualified retirement
plans of the Company. The Executive shall receive a pension from
the Company or any successor thereto, upon his termination of
employment for any or no reason, subject to the following:
(A)
the pension shall be paid monthly to the Executive for life
commencing as of the first day of the calendar month following his
termination of employment in an amount equal to one-twelfth (1/12)
of .5% of the Executive’s final average pay multiplied by his
aggregate number of years of service with the Company (or any
affiliate or subsidiary thereof, including Combined) up to 20. The
first monthly payment shall include an additional amount of
$461,538.46, which amount is equal to the maximum amount that would
be paid under the Aon Severance Plan (currently 30 weeks)
regardless of whether the Executive otherwise qualifies for such
amount;
(B)
the Executive’s final average pay is equal to the average of
the Executive’s five highest consecutive calendar years of
earnings (salary and bonus) out of his last 10 calendar years of
earnings;
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(C)
the pension shall be in addition to, and not in lieu of, the
Executive’s rights to pension or other retirement benefits
under any employee 401(k), pension or nonqualified deferred
compensation plan or supplemental executive retirement plan that
the Company maintains. The pension provided under this
Section shall not in any way affect the Executive’s
rights with respect to such other plans and benefits; and
(D)
Attached as Exhibit A to this Agreement is a spreadsheet
provided by Aon which Aon represents is a good faith estimate of
the amounts of the pension payments due to the Executive
hereunder.
6.
Bonus Payments .
(A)
For the 2007 performance year, the Executive shall be paid a bonus
of $1,350,000 and the bonus will be fully paid in cash and not
subject to the Company’s Incentive Stock Program. The Company
shall pay the bonus to the Executive on the first regularly-
scheduled pay day in January 2008.
(B)
For the 2008 calendar year, the Executive shall be paid a bonus of
$1,350,000, provided that the Company has not properly terminated
the Executive’s employment for “Cause” (as such
term is defined herein). However, if before December 31, 2008,
(i) the Executive dies, (ii) the Company terminates his
employment because of a physical or mental incapacity pursuant to
Section 9(B) of the Agreement, or (iii) the Company
terminates his employment without Cause pursuant to Section 9(D)
of this Agreement, then he shall be paid a pro rata portion
of such bonus. If the Executive voluntarily terminates his
employment before July 1, 2008, then he shall be paid a pro
rata portion of his the bonus. If the Executive voluntarily
terminates his employment on or after July 1, 2008, then he
shall be paid $1,350,000 as his bonus for 2008. The bonus will be
fully paid in cash and is not subject to the Company’s
Incentive Stock Program. The Company will pay the bonus to the
Executive on the first regularly-scheduled pay day in
January 2009.
(C)
For the portion of the 2009 calendar year that ends on March 31,
2009, the Executive shall be paid a bonus of $400,000, provided
that the Company has not properly terminated the Executive’s
employment for “Cause” (as such term is defined herein)
However, if before March 31, 2009, (i) the Executive dies, (ii) the
Company terminates his employment because of a physical or mental
incapacity pursuant to Section 9(B) of this Agreement, or (iii) the
Company terminates his employment without Cause
pursuant to Section 9(D) of this Agreement,
then he shall be paid a pro rata portion of such bonus. The bonus
will be fully paid in cash and is not subject to the
Company’s Incentive Stock Program. The Company will pay the
bonus to the Executive on the first regularly-scheduled pay day in
April 2009.
7.
Outstanding Equity Awards
.
The
transition of the Executive’s employment from Combined to the
Company as of the Effective Date shall occur without interruption
to the vesting of the Executive’s outstanding equity-based
awards, including without limitation the restricted stock units and
the performance-based award granted to the Executive pursuant to
the Employment Agreement and
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the
Company’s Leadership Performance Program, and all such awards
shall continue to be subject to the terms and conditions set forth
in the original award documentation, subject to the following
exceptions:
(A)
If Executive is employed by Company on March 31, 2009, the
Executive shall fully vest in his award under the Company’s
Leadership Performance Program for the performance period beginning
January 1, 2007 through December 31, 2009, and Executive’s
award shall equal the amount he would have received had he been
employed by the Company on December 31, 2009.
(B)
On the earlier of (i) 30 days after the closing date for the sale
(pursuant to one or more definitive purchase agreements), spin-off
or other transfer of Combined and (ii) the first regularly
scheduled pay day of January, 2009, the Company shall pay Executive
$3,500,000 in cash (in lieu of Company stock) as Executive’s
2009 Performance Award (which Award is described in the November
10, 2005 letter from the Company to the Executive), unless the
Company properly terminates Executive for Cause (as defined herein)
on or after the Effective Date and before March 31, 2009.
8.
Expense Reimbursement .
(A)
During the Employment Period, the Company shall reimburse the
Executive in accordance with the Company’s policies and
procedures for all proper expenses he incurs (including but not
limited to expenses for home offices, club memberships and
automobile) in the performance of his duties hereunder. In
addition, the Company will reimburse the Executive for reasonable
legal fees and other expenses he incurs in connection with the
negotiation and drafting of this Agreement.
(B)
The Executive agrees that as of the Effective Date he will be
required to relocate his office from Glenview, Illinois in order to
perform the duties and responsibilities set forth herein and that
the Company will allow him to maintain offices at his personal
residences in Illinois and/or Florida. The Company shall either
reimburse the Executive for all proper expenses he incurs, or pay
him directly for any such proper expenses, in order to establish
and maintain such home offices, which he shall do within a
reasonable time after the Effective Date of this Agreement.
(C)
The expenses eligible for reimbursement during any taxable year of
the Executive shall not affect the expenses eligible for
reimbursement in any other taxable year of the Executive.
(D)
Reimbursement of expenses shall be made promptly after the
Executive incurs them but in any event no later than the last day
of the taxable year of the Executive following the taxable year in
which the Executive incurs such expenses.
9.
Termination .
(A)
Death . Upon the death of the Executive during the
Employment Period, this Agreement shall automatically terminate and
the Executive’s executor, administrator or
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designated beneficiary shall receive (i) the
Leadership Performance Program award described in Section 7(A),
(ii) $3,500,000, in cash, as Executive’s 2009 Performance
Award (iii) a pro rata portion of the bonus that the Executive
would have received for the year of his death under the terms of
Section 6, (iv) the Executive’s base salary which shall have
accrued to the date of such death, and (v) other accrued and unpaid
employee benefits to which the Executive is entitled upon his
termination of employment with the Company, including regular and
supplemental retirement and disability benefits, in accordance with
the terms of the plans and programs of the Company.
(B)
Disability . The Company may, at its option, terminate this
Agreement upon written notice to the Executive if the Executive,
because of physical or mental incapacity, fails to perform the
essential functions of his position, with reasonable accommodation
if relevant, required of him hereunder for a continuous period of
120 days or for any 180 days within any 12-month period. Upon such
termination, the Executive or his legal representative shall
receive (i) the Leadership Performance Program award described in
Section 7(A), (ii) $3,500,000, in cash, as Executive’s 2009
Performance Award, (iii) a pro rata portion of the bonus that the
Executive would have received for the year of his termination of
employment under the terms of Section 6, (iv) the Executive’s
base salary which shall have accrued to the date of termination,
(v) other accrued and unpaid employee benefits to which the
Executive is entitled upon his termination of employment with the
Company, including regular and supplemental retirement and
disability benefits, in accordance with the terms of the plans and
programs of the Company. In the event of any dispute regarding the
existence of the Executive’s incapacity hereunder, a
physician specializing in the claimed area of incapacity upon whom
the Executive and the Company agree shall resolve the matter. The
Executive shall submit to appropriate medical examinations for
purposes of such determination.
(C)
Cause .
(1) The
Company may at any time, at its option, terminate the
Executive’s employment under this Agreement immediately for
Cause (as hereinafter defined). The Committee shall make the
decision in this regard. The Committee shall give the Executive at
least twenty-one days advanced written notice of any meeting at
which the Committee proposes to put forward for a vote a decision
on whether or not to terminate the Executive for Cause. The written
notice shall describe in reasonable detail the basis on which the
Committee may conclude that Cause exists. The Executive shall have
the opportunity to submit in writing to the Committee any
information the Executive thinks necessary. If a majority of the
Committee by an affirmative vote at a meeting of its members
authorizes a termination for Cause, such determination shall be
final and binding upon the Company and the Executive once such
determination is reduced to writing and communicated to the
Executive. However, the Committee’s authorization of a
termination for Cause as defined in Section 9(C)(2) shall not be
determinative unless the CEO of the Company and Patrick G. Ryan,
the Company’s Executive Chairman, agree in writing to such
determination. If Mr. Ryan is no longer serving in that capacity, a
person mutually agreed upon between the Company and the Executive,
along with the CEO, shall make such decision. In the event the
Executive and the Company are unable to affirmatively agree, within
14 days, on the person identified
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in the foregoing
sentence, the parties agree that the Company’s General
Counsel will serve in
that capacity. In the event the Company has incurred a change in
control prior to the termination of the Executive’s
employment, his employment may not be terminated
pursuant to this Section 9(C)
unless he has consented in writing to the identity of the
person(s) authorized to make
such termination decision. For purposes of this section, a
“ change in
control” means a change in the ownership or effective control
of the Company or in
the ownership of a substantial portion of the assets of the Company
within the meaning of Treasury Regulation Section
1.409A-3(i)(5).
(2)
As used in this Agreement, the
term “Cause” shall mean any one or more of the
following:
(a)
any material failure (other than by reason of physical or
mental incapacity determined
in accordance with Section 9(B)) of the Executive to perform his
material duties under this Agreement to the satisfaction of at
least a majority of the members of the Committee, including, without limitation,
any refusal by the Executive to perform such duties or to
perform such specific directives of the Committee that are
consistent with the nature and scope of the Executive’s duties and
responsibilities under this Agreement;
(b)
any intentional act of
embezzlement, fraud or theft by the Executive in connection with his duties
hereunder or in the course of his employment hereunder or the
Executive’s admission or conviction of, or plea of nolo contendere
to, a felony or of any crime involving moral turpitude, fraud,
embezzlement, theft or misrepresentation;
(c)
any gross negligence, or
intentional misconduct of the Executive in connection with
the performance of his duties hereunder or during the course of his
employment that results in a material monetary loss to the Company or
damage to the reputation of the Company;
(d)
any breach by the Executive of
any one or more of the covenants contained in Section 10 or 12
hereof; or
(e)
any material violation of any
statutory or common law duty of loyalty to the Company or any of its
subsidiaries in connection with his duties hereunder or during the
course of his employment.
(3)
Notwithstanding any other provision of this Agreement, the
definition of “Cause” is modified in accordance with
the fourth paragraph of the November 10, 2007 letter agreement
between Greg Case and Executive.
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(4)
The exercise of the right of the Company to terminate this
Agreement pursuant to this Section 9(C) shall not abrogate the
rights or remedies of the Company in respect of the breach giving
rise to such termination.
(5)
If the Company properly terminates the Executive’s employment
for Cause, as defined in Section
9(C)(2)(b), (c), (d) or (e), he shall receive the
following:
(a)
accrued base salary through the date of the termination of his
employment; and
(b)
other accrued and unpaid employee benefits to which the Executive
is entitled upon his termination of employment with the Company,
including regular and supplemental retirement and disability
benefits, in accordance with the terms of the plans and programs of
the Company.
(6)
If the Company properly terminates the Executive’s employment
for Cause, as defined in Section9(C)(2), he shall receive the
following:
(a)
the payments specified by Section 9(C)(5)(b); and
(b)
the continuation of the base salary, at the rate in effect at the
date of such termination of employment, for a period of one year
from the date of such termination of employment.
(D)
Termin
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