Exhibit II
AGREEMENT AND PLAN OF MERGER
among
Aon Corporation,
Holdco #1, Inc.,
Holdco #2, Inc.,
▇▇▇▇ Holding Corporation of Illinois,
▇▇▇▇ Enterprises Corporation of Illinois,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
and
the Stockholders of
▇▇▇▇ Holding Corporation of Illinois
and ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇.▇▇.▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ & 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 ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ (Section 7.2(h))
iv
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
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated July 16, 2001 ("AGREEMENT"), by and
among ▇▇▇▇ Holding Corporation of Illinois, a Delaware corporation ("RHC"), ▇▇▇▇
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"), ▇▇▇▇▇▇▇
▇. ▇▇▇▇ ("PGR"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("SWR") and the stockholders of the Companies
set forth on the signature pages hereto (the "STOCKHOLDERS" and collectively
with PGR and SWR, the "▇▇▇▇ 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 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 ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇ Living
Trust dated July 13, 2001 and one-half to the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 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 ▇▇▇▇ FAMILY MEMBERS
RHC, REC and each of the ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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
▇▇▇▇ 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 ▇▇▇▇ Family Members, threatened Claims, there
are no Claims pending or, to the Knowledge of the Companies and the ▇▇▇▇ Family
Members, threatened by or before any Governmental Authority or before any
arbitrator of any nature, brought by or against any ▇▇▇▇ 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 ▇▇▇▇
Family Members, is there any basis for any such Claim. None of the Companies or
the ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇
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
▇▇▇▇ Holding Corporation of Illinois and since December 23, 1981 REC has not
operated under any name other than ▇▇▇▇ 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
▇▇▇▇ Family Members, (a) all documents, agreements and other papers and
materials delivered by or on behalf of the RHC, REC or the ▇▇▇▇ 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 ▇▇▇▇ 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
▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ FAMILY MEMBERS
The ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇
Family Member and, assuming due authorization, execution and delivery by Aon and
the Subs, constitute valid and binding legal obligations of the ▇▇▇▇ Family
Members, enforceable against each ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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
▇▇▇▇ 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
▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇
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 ▇▇▇▇ 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 ▇▇▇▇ 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
▇▇▇▇ 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 ▇▇▇▇
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 ▇▇▇▇ Family Members at
the Closing, (b) the ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇
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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ Family Members at the time of completion of each such income tax
return and shall permit the ▇▇▇▇ Family Members to review and comment on each
such Tax Return described in the preceding sentence prior to filing. The ▇▇▇▇
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 ▇▇▇▇ Family Members to
review and comment on each such Tax Return prior to filing. The ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇
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 ▇▇▇▇ Family Members, as the case may be, shall allow the other
party to take possession of such books and records.
(ii) Aon and the ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, Bank ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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 ▇▇▇▇ 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 ▇▇▇▇
Family Members;
(ii) the Assumption Agreement, duly executed by each of the
▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & 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
▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ 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 ▇▇▇▇
Family Members one or more certificates, registered in the name of the
applicable ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇▇ 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.
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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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
8000 Sears Tower
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Companies prior to the Effective Time or to the ▇▇▇▇
Family Members, to the Representative:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
Bank One Plaza
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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 ▇▇▇▇ 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.
▇▇▇▇ HOLDING CORPORATION OF ILLINOIS Aon CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. Name: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇▇
Title: President Title: President and Chief Operating Officer
▇▇▇▇ ENTERPRISES CORPORATION OF ILLINOIS HOLDCO #1, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President Title: Vice President and Assistant Secretary
HOLDCO #2, INC..
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------- By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Assistant Secretary
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
RHC STOCKHOLDERS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ LIVING TRUST ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ LIVING TRUST
DATED JULY 10, 2001 DATED JULY 10, 2001
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Trustee Its: Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Trustee
2001 ▇▇▇▇ ANNUITY TRUST
DATED APRIL 20, 2001
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Trustee
1 OF 2 SIGNATURES PAGES TO AGREEMENT AND PLAN OF MERGER
REC STOCKHOLDERS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ LIVING TRUST ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ LIVING TRUST
DATED JULY 10, 2001 DATED JULY 10, 2001
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------ ------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Trustee Its: Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Trustee
FAMILY GST TRUST UNDER PGR
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. 2000 TRUST DATED NOVEMBER 22, 2000
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Trustee
/s/ ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇
-------------------------------------- ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇ LIVING TRUST DATED July 13, 2001
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Trustee
2 OF 2 SIGNATURE PAGES TO AGREEMENT AND PLAN OF MERGER
