EXHIBIT 10 (ak)

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is dated as of August 1, 2005
(“Effective Date”), between Combined Insurance Company of America, an Illinois
insurance corporation (the “Company”), and Richard M. Ravin (“Executive”).

 

WHEREAS, the Company seeks to continue to employ Executive as President and
Chief Executive Officer of the Company and to have him serve as senior executive
officer of one or more subsidiaries of the Company; and

 

WHEREAS, Executive desires to serve and to be employed upon the terms and
subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereby agree as follows:

 

1. Employment. The Company hereby agrees to employ Executive, and Executive
hereby agrees to be employed upon the terms and subject to the conditions
contained in this Agreement. The term of employment of Executive pursuant to
this Agreement shall commence effective as of August 1, 2005 and shall end on
March 31, 2009 or, if later, the day immediately following the date on which the
Organization and Compensation Committee (“Committee”) of Aon’s Board of
Directors (“Board”) meets in 2009 to award bonus or incentive compensation
(“Employment Period”), unless earlier terminated pursuant to Section 4 hereof.

 

2. Position and Duties; Responsibilities.

 

(a)                                  Position and Duties. Executive shall be
employed as President and Chief Executive Officer of the Company and shall,
during the Employment Period, be employed in such other positions with
subsidiaries of the Company as from time to time determined by the Board. In all
circumstances and for all purposes, Executive shall report directly to the
Board. During the Employment Period, Executive shall perform faithfully and
loyally and to the best of his abilities the duties assigned to him hereunder
and shall devote his full business time, attention and effort to the affairs of
the Company and its subsidiaries and shall use his best efforts to promote the
interests of the Company and its subsidiaries. Executive may engage in
charitable, civic or community activities and, with the prior approval of the
Board, may serve as a director of any other business corporation, provided that
(i) such activities or service do not interfere with his duties hereunder or
violate the terms of any of the covenants contained in Sections 6, 8 or 9 hereof
and (ii) such other business corporation provides Executive with director and
officer insurance coverage which, in the opinion of the Board, is adequate under
the circumstances.

 

(b)                                 Responsibilities. Executive shall have the
authority and duty to supervise and direct the business of the Company, subject
to the control and direction of the Board. Executive shall have the authority
and responsibility for and in connection with the hiring, firing,

 

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employment, supervision, discipline, duties and responsibilities of all
personnel, including direct reports employed by the Company or any Subsidiary.
Executive shall use his best efforts to support the development of policies and
services of Aon as deemed appropriate by the Board and to develop a succession
plan for the Company; provided, however, that Executive’s bonus under
Section 3(b) shall not in any respect be based on the success or failure of any
such succession plans. As of the Effective Date and continuing for the
Employment Period, Executive shall also have other executive administrative
duties and responsibilities on behalf of the Company and its subsidiaries as
may from time to time be authorized or directed by the Board; provided that
Executive shall not, without his consent, be assigned tasks that would be
inconsistent or interfere with those of President and Chief Executive Officer of
the Company.

 

3. Compensation.

 

(a)                                  Salary. During the Employment Period, the
Company shall pay to Executive a base salary payable in accordance with the
Company’s payroll policy (“Salary”) at the rate of no less than $800,000 per
annum.

 

(b)                                 Annual Bonus. For each calendar year of the
Employment Period beginning with 2006,  Executive shall be eligible for payment
of an annual cash bonus under the Senior Officer Incentive Compensation Plan, as
approved by Aon’s stockholders in 2001 and as amended or replaced from time to
time thereafter (the “Plan”). Executive’s annual cash bonus shall be determined
in accordance with the Executive Incentive Compensation guidelines applicable to
Aon’s Chairman, CEO and members of the Aon Policy Committee (the “Guidelines”)
which provide, in part, that 50% of any bonus to which Executive is entitled is
based on the performance of Aon (“Aon Portion”) and 50% of any such bonus is
based on the performance of the Company (“Company Portion”). Notwithstanding
anything to the contrary herein, for the calendar year 2005, the maximum amount
of Executive’s annual cash bonus shall be $1,440,000 (the “Target Bonus”).
Executive shall receive up to 75% of the Target Bonus (i.e., $1,080,000) based
on the “revenue”, “GAAP pre-tax profit” and “Bonus as % Salary” values set forth
in the document entitled “Richard Ravin: Incentive Plan 2005.”  Executive shall
be eligible to receive the remaining 25% of his 2005 Target Bonus (i.e., up to
$360,000) based on the performance of Aon and other personal and discretionary
objectives as determined by Aon’s CEO. Annual cash bonuses shall be paid to
Executive no later than the date on which bonuses are typically paid to Aon’s
Chairman, CEO and members of Aon’s Policy Committee.

 

(c)                                  Restricted Stock Units. There shall be
granted to Executive an award of 33,500 restricted stock units of Aon common
stock (“RSUs”), subject to approval by the Committee at its regular meeting at
which such matters are considered,  in March 2006 (“Grant Date”). The RSUs will
be granted pursuant to the Aon Stock Incentive Plan (“Incentive Plan”); provided
that, notwithstanding anything to the contrary in the Incentive Plan, the RSUs
shall vest over a three-year period as follows, if Executive is employed by the
Company on the applicable date: 20% to vest on the first anniversary of the
Grant Date, 20% to vest on the second anniversary of the Grant Date and 60% to
vest on the third anniversary of the Grant Date. The RSUs shall be appropriately
adjusted for any stock splits or stock

 

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dividends affecting Aon common stock after the Effective Date.

 

(d)                                 Other Benefits. During the Employment
Period, Executive shall be entitled to participate in the Company’s employee
benefit plans generally available to executives of the Company (“Employee
Benefits”). Executive shall be entitled to take paid time off for vacation or
illness in accordance with the Company’s policy for executives and to receive
all other fringe benefits as are from time to time made generally available to
executives of the Company.

 

(e)                                  Expense Reimbursement. During the
Employment Period the Company shall reimburse Executive in accordance with the
Company’s policies and procedures, for all proper expenses incurred by him in
the performance of his duties hereunder.

 

(f)                                    Pension. Executive shall be entitled to a
Pension from the Company or any successor thereto upon his termination of
employment for any or no reason, subject to the following:

 

(i)  The Pension shall be paid monthly to Executive for life commencing as of
the first day of the calendar month following his termination of employment in
an amount equal to one-twelfth (1/12) of .5% of Executive’s final average pay
multiplied by his aggregate number of years of service with the Company (or any
affiliate or subsidiary thereof) up to 20. The first monthly payment shall
include an additional amount equal to the maximum amount that would be paid
under the Aon Severance Plan (currently 30 weeks) regardless of whether
Executive otherwise qualifies for such amount.

 

(ii)  Executive’s final average pay is equal to the average of Executive’s five
highest consecutive calendar years of earnings (Salary and bonus) out of his
last 10 calendar years of earnings.

 

(iii)  The Pension shall be in addition to, and not in lieu of, Executive’s
rights to pension or other retirement benefits under any employee 401(k),
pension or other retirement plan that is tax-qualified under Code
Section 401(a) or any nonqualified deferred compensation plan or supplemental
executive retirement plan maintained by the Company. The Pension provided under
this Section shall not in any way affect Executive’s rights with respect to such
other plans and benefits.

 

4. Termination.

 

(a)                                  Death. Upon the death of Executive during
the Employment Period, this Agreement shall automatically terminate and
Executive’s executor, administrator or designated beneficiary shall be entitled
to receive Executive’s Base Salary which shall have accrued to the date of such
death.

 

(b)                                 Disability. The Company may, at its option,
terminate this Agreement upon written notice to Executive if Executive, because
of physical or mental incapacity or disability, fails to perform the essential
functions of his position, with reasonable accommodation if relevant, required
of him hereunder for a continuous period of 120 days or any 180 days within any
12-month period. Upon such termination, Executive or his legal representative

 

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shall be entitled to receive the Base Salary which shall have accrued to the
date of termination. In the event of any dispute regarding the existence of
Executive’s incapacity or disability hereunder, the matter shall be resolved by
the determination of an independent physician agreed upon between Executive and
the Board specializing in the claimed area of incapacity or disability.
Executive shall submit to appropriate medical examinations for purposes of such
determination.

 

(c)                                  Cause. (i) The Company may at any time, at
its option, terminate Executive’s employment under this Agreement immediately
for Cause (as hereinafter defined). The Company’s decision in this regard shall
be taken by the Board. Executive shall be given at least seven days advanced
written notice of any meeting at which the Board proposes to put forward for a
vote a decision on whether or not to terminate Executive for Cause and the
written notice shall describe in reasonable detail the basis on which the Board
may conclude that Cause exists. Executive shall have the opportunity to appear
in person and to make such written and/or oral presentation to such meeting of
the Board as Executive thinks necessary. If a majority of the Board authorizes
by affirmative vote a termination for Cause at such meeting (whether or not
Executive makes any oral or written presentations at such meeting) such
determination shall be final and binding upon the Company and Executive once
such decision is confirmed in writing and communicated to Executive.

 

(ii) As used in this Agreement, the term “Cause” shall mean any one or more of
the following:

 

(A)  any failure or inability (other than by reason of physical or mental
disability determined in accordance with Section 4(b)) of Executive to
perform his material duties under this Agreement to the satisfaction of at least
a majority of the members of the Board, including, without limitation, any
refusal by Executive to perform such duties or to perform such specific
directives of the Board which are consistent with the scope and nature of
Executive’s duties and responsibilities under this Agreement;

 

(B)  any intentional act of fraud, embezzlement or theft by Executive in
connection with his duties hereunder or in the course of his employment
hereunder or Executive’s admission or conviction of, or plea of nob contendre
to, a felony or of any crime involving moral turpitude, fraud, embezzlement,
theft or misrepresentation;

 

(C)  any gross negligence or willful misconduct of Executive in connection with
his duties hereunder or during the course of his employment that results in a
monetary loss to the Company, or damage to the reputation of the Company;

 

(D)  any breach by Executive of any one or more of the covenants contained in
Section 6, 8 or 9 hereof or

 

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(E)  any violation of any statutory or common law duty of loyalty to the Company
or any of its subsidiaries in connection with his duties hereunder or during the
course of his employment.

 

(iii) The exercise of the right of the Company to terminate this Agreement
pursuant to this Section 4(c) shall not abrogate the rights or remedies of the
Company in respect of the breach giving rise to such termination.

 

(iv) If the Company terminates Executive’s employment for Cause, as defined in
Section 4(c)(ii)(B), (C), (D) or (E), he shall be entitled to:

 

(A)  accrued Base Salary through the date of the termination of his employment;
and

 

(B) other accrued and unpaid Employee Benefits to which Executive is entitled
upon his termination of employment with the Company, including regular and
supplemental retirement and disability benefits, in accordance with the terms of
the plans and programs of the Company.

 

(v) if the Company terminates Executive’s employment for Cause, as defined in
Section 4(c)(ii)(A), he shall be entitled to:

 

(A) the payments specified by Sections 4(c)(iv)(A) and (B); and

 

(B) the continuation of the Base Salary, at the rate in effect at the date of
such termination of employment, for a period of one year from the date of such
termination of employment.

 

(d)                                 Termination Without Cause. If, during the
Employment Period, the Company terminates the employment of Executive hereunder
for any reason other than a reason set forth in Section 4(a), (b) or (c), the
Company shall give Executive 30 days’ prior written notice of such termination,
and:

 

(i)  Upon such termination, Executive shall be entitled to receive the payments
and benefits specified by Sections 4(c)(iv)(A) and (B);

 

(ii)  The Company shall continue to pay Executive, through the remainder of the
Employment Period, his Base Salary at the rate in effect at the date of such
termination of employment.

 

(e)                                  Voluntary Termination. Executive
may voluntarily terminate his employment with the Company prior to the end of
the Employment Period for any reason. If Executive voluntarily terminates his
employment pursuant to this Section 4(e), Executive shall give the Company 12
months prior written notice and shall be entitled to the payments specified by
Sections 4(c)(iv)(A) and (B).

 

5. Federal and State Withholding. The Company shall deduct from the amounts
payable to Executive pursuant to this Agreement the amount of all required
federal, state and local

 

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withholding taxes in accordance with Executive’s Form W-4 on file with the
Company, and all applicable federal employment taxes.

 

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6. Noncompetition; Nonsolicitation.

 

(a)                                  General. Executive acknowledges that in the
course of his employment with the Company, he has and will become familiar with
trade secrets and other confidential information concerning the Company and its
subsidiaries, and that his services will be of special, unique and extraordinary
value to the Company and its subsidiaries.

 

(b)                                 Noncompetition. Executive agrees that during
the period of his employment with the Company and for a period of two years
thereafter (“Noncompetition Period”) he shall not in any manner, directly or
indirectly, through any person, firm or corporation, alone or as a member of a
partnership or as an officer, director, stockholder, investor or employee of or
consultant to any other corporation or enterprise or otherwise, engage or be
engaged, or assist any other person, firm, corporation or enterprise in engaging
or being engaged, in any business in which Executive was involved or had
knowledge, being conducted by, or contemplated by, the Company or any of its
subsidiaries, as of the termination of Executive’s employment in any geographic
area in which the Company or any of its subsidiaries is then conducting such
business.

 

(c)                                  Nonsolicitation. Executive further agrees
that during the Noncompetition Period he shall not in any manner, directly or
indirectly, induce or attempt to induce any agent or employee of the Company or
any of its subsidiaries to terminate or abandon his or her employment for any
purpose whatsoever.

 

(d)                                 Exceptions. Nothing in this Section shall
prohibit Executive from being (i) a stockholder in a mutual fund or a
diversified investment company or (ii) a passive owner of not more than 2% of
the outstanding stock of any class of a corporation, any securities of which are
publicly traded, so long as Executive has no active participation in the
business of such corporation.

 

(e)                                  Reformation. It at any time of enforcement
of this Section, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law. This Agreement shall not
authorize a court to increase or broaden any of the restrictions in this
Section.

 

7. Consideration; Breach. The Company and Executive agree that the payments to
be made, and the benefits to be provided, by the Company to Executive shall be
made and provided in consideration of Executive’s agreements contained in
Section 6. In the event that Executive shall breach any provision of Section 6,
the Company shall be entitled immediately to terminate making all remaining
payments and providing all remaining benefits pursuant to Section 3 and upon
such termination the Company shall have no further liability to Executive under
this Agreement.

 

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8. Confidentiality. Executive shall not, at any time during the Employment
Period or thereafter, make use of or disclose, directly or indirectly, any
(i) trade secret or other confidential or secret information of the Company or
of any of its subsidiaries, or (ii) other technical, business, proprietary or
financial information of the Company or of any of its subsidiaries not available
to the public generally or to the competitors of the Company or to the
competitors of any of its subsidiaries (“Confidential Information”), except to
the extent that such Confidential Information (a) becomes a matter of public
record or is published in a newspaper, magazine or other periodical available to
the general public, other than as a result of any act or omission of Executive,
(b) is required to be disclosed by any law, regulation or order of any court or
regulatory commission, department or agency, provided that Executive gives
prompt notice of such requirement to the Company to enable the Company to seek
an appropriate protective order, or (c) is necessary to perform properly
Executive’s duties under this Agreement. Promptly following the termination of
the Employment Period, Executive shall surrender to the Company all records,
memoranda, notes, plans, reports, computer tapes and software and other
documents and data which constitute Confidential Information which he may then
possess or have under his control (together with all copies thereof).

 

9. Inventions. Executive hereby assigns to the Company his entire right, title
and interest in and to all discoveries and improvements, patentable or
otherwise, trade secrets and ideas, writings and copyrightable material, which
may be conceived by Executive or developed or acquired by him during the
Employment Period, which may pertain directly or indirectly to the business of
the Company or any of its subsidiaries. Executive agrees to disclose fully all
such developments to the Company upon its request, which disclosure shall be
made in writing promptly following any such request. Executive shall, upon the
Company’s request, execute, acknowledge and deliver to the Company all
instruments and do all other acts which are necessary or desirable to enable the
Company or any of its subsidiaries to file and prosecute applications for, and
to acquire, maintain and enforce, all patents, trademarks and copyrights in all
countries.

 

10. Enforcement. The parties hereto agree that the Company and its subsidiaries
would be damaged irreparably in the event that any provision of Sections 6, 8 or
9 were not performed in accordance with its terms or were otherwise breached and
that money damages would be an inadequate remedy for any such nonperformance or
breach. Accordingly, the Company and its successors and permitted assigns shall
be entitled, in addition to other rights and remedies existing in their favor,
to an injunction or injunctions to prevent any breach or threatened breach of
any of such provisions and to enforce such provisions specifically (without
posting a bond or other security). Executive agrees that he will submit himself
to the personal jurisdiction of the courts of the State of Illinois in any
action by the Company to enforce any provision of Sections 6, 8 or 9.

 

11. Survival. Sections 6, 8, 9 and 10 shall survive and continue in full force
and effect in accordance with their respective terms, notwithstanding any
termination of the Employment Period.

 

12. Waiver of Breach. No waiver by either party hereto of a breach of any
provision of this Agreement by the other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any

 

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subsequent breach by such other party of any similar or dissimilar provisions
and conditions at the same or any prior or subsequent time. The failure of
either party hereto to take any action by reason of such breach will not deprive
such party of the right to take action at any time while such breach continues.

 

13. Successors. This Agreement shall be binding upon, and inure to the benefit
of, the Company and its successors and assigns and upon any person acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or
substantially all of the Company’s assets and business, and the successor shall
be substituted for the Company under this Agreement. The Company will require
any successor to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform it if no such assignment or succession had taken place.

 

14. Notices. Notices and all other communications provided for in this Agreement
shall be in writing and shall be delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid (provided that
international mail shall be sent via overnight or two-day delivery), or sent by
facsimile or prepaid overnight courier to the parties at the addresses set forth
below (or such other addresses as shall be specified by the parties by like
notice). Such notices, demands, claims and other communications shall be deemed
given:

 

(a)                                  in the case of delivery by overnight
service with guaranteed next day delivery, the next day or the day designated
for delivery;

 

(b)                                 in the case of certified or registered U.S.
mail, five days after deposit in the U.S. mail; or

 

(c)                                  in the case of facsimile, the date upon
which the transmitting party received confirmation of receipt by facsimile,
telephone or otherwise;

 

provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service or two-day delivery
service are to be delivered to the addresses set forth below:

 

to the Company:

 

Combined Insurance Company of America

1000 Milwaukee Avenue

Northbrook, Illinois 60025

Attention: Corporate Secretary

 

with copies to:

 

Aon Corporation

200 East Randolph

Chicago, Illinois 60601

Attention: Chief Executive Officer

 

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Aon Corporation

200 East Randolph

Chicago, Illinois 60601

Attention: Executive Vice President and General Counsel

 

or to Executive:

 

815 Croft Ridge Road

Highland Park, Illinois 60035

 

Each party, by written notice furnished to the other party, may modify the
applicable delivery address, except that notice of change of address shall be
effective only upon receipt.

 

15. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under applicable law or rule in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Agreement or the
validity, legality or enforceability of such provision in any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

 

16. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
(excluding the Severance Agreement between Aon Corporation and Executive) by or
between the parties, written or oral, which may have related in any manner to
the subject matter hereof

 

17. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Illinois without
regard to principles of conflict of laws.

 

18. Amendment. The provisions of this Agreement may be amended only by the
written agreement of the Company and Executive, and no course of conduct or
failure or delay in enforcing the provisions of this Agreement shall affect the
validity, binding effect or enforceability of this Agreement.

 

19. Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed to be an original and both of which together shall
constitute one and the same instrument.

 

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Executive has executed, and the Company has caused this agreement to be executed
in its name and on its behalf, all as of November 10, 2005.

 

 

/s/ Richard M. Ravin

 

/s/ Gregory C. Case

 

Richard M. Ravin

Gregory C. Case

 

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