STOCKHOLDER AGREEMENT dated as of December 1, 1998 between X.L. America,
Inc. ("Emerald"), and the undersigned holder of shares of common stock, par
value $1.00 per share (the "Common Stock"), of Intercargo Corporation, a
Delaware corporation (the "Company") for and on behalf of itself and each of its
affiliates which is a holder of Common Stock (the undersigned holder, the
"Stockholder" and, where the content requires, all such holders, the
"Stockholders" or each A "Stockholder").
WHEREAS, Emerald and the Company propose to enter into an Agreement and
Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement"; capitalized terms used but not defined
herein shall have the meanings set forth in the Merger Agreement) providing for
the merger of the Company with and into Emerald (the "Merger"), upon the terms
and subject to the conditions set forth in the Merger Agreement;
WHEREAS, each Stockholder owns the number of shares of Common Stock set
forth opposite its name on the signature page of this Agreement (such shares of
Common Stock, the "Existing Shares" and, together with any other shares of
capital stock of the Company acquired by such Stockholder after the date hereof
and during the term of this Agreement, being collectively referred to herein as
the "Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Emerald has requested that Stockholder enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. Stockholder hereby
represents and warrants to Emerald as of the date hereof as follows:
(a) Stockholder has all requisite legal capacity, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly authorized, executed and delivered by the
Stockholder and constitutes a valid and binding obligation of the Stockholder
enforceable in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the terms hereof will not, conflict with, or result in any
breach or violation of, or default (with or without notice or lapse of time or
both) under any provision of, any Stockholder's charter or by-laws. The Existing
Shares are not subject to any lien, pledge or encumbrance of any kind other than
the Stockholder's Agreement with the Company with respect to the Existing
Shares.
(b) Stockholder is the record holder or beneficial owner of the number of
the Existing Shares as is set forth on the signature page hereto. On the date
hereof, the Existing Shares set forth on the signature page hereto constitute
all of the outstanding shares of Common Stock owned of record or beneficially by
Stockholder. Stockholder does not have record or beneficial ownership of any
shares of Common Stock not set forth on the signature page hereto. Stockholders
have, collectively, sole power of disposition with respect to all of the
Existing Shares set forth on the signature page hereto and sole voting power
with respect to the matters set forth in Section 3 hereof and sole power to
demand dissenter's or appraisal rights, in each case with respect to all of the
Existing Shares set forth on the signature page hereto, with no restrictions on
such rights, subject to applicable insurance laws and regulations in the case of
Subject Shares owned of record by an insurance subsidiary stockholder and to the
terms of this Agreement.
(c) Stockholder's Shares and the certificates representing such Subject
Shares are now and at all times during the term hereof will be held by
Stockholder, or by a nominee or custodian for the benefit of Stockholder, free
and clear of all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances whatsoever,
except for any such encumbrances or proxies arising hereunder.
2. Representations and Warranties of Emerald. Emerald hereby represents and
warrants to Stockholder that Emerald has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Emerald,
and the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporation action on the part of Emerald. This
Agreement has been duly --------------------------------------------------
executed and delivered by Emerald and constitutes a valid and binding obligation
of Emerald enforceable in accordance with its terms.
3. Covenants of Stockholder. From and after the date hereof and until the
termination of this Agreement in accordance with Section 6, Stockholder agrees
as follows: ---------------------------------
(a) At any meeting of stockholders of the Company called to vote upon the
Merger or the Merger Agreement or any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger or the Merger Agreement is sought, Stockholder shall vote (or cause to be
voted) the Subject Shares in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the terms thereof.
(b) At any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which the Stockholder's vote, consent
or other approval is sought, the Stockholder shall vote (or cause to be voted)
the Subject Shares against (i) any merger agreement or merger (other than the
Merger Agreement and the Merger), consolidation, combination, sale of assets,
reorganization, recapitalization, dissolution, liquidation or winding-up of or
by the Company or any other takeover proposal (collectively, "Takeover
Proposal"), (ii) any action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or this Agreement or (iii) (x) any material
amendment of the Company's certificate of incorporation or by-laws, (y) any
change in a majority of the persons who constitute the Board of Directors of the
Company or (z) any other proposal or transaction involving the Company, which is
intended by Stockholder to, or which Emerald notifies Stockholder that Emerald
reasonably believes will, impede, frustrate, prevent, delay or nullify (A) the
ability of the Company to consummate the Merger or (B) any of the transactions
contemplated by this Agreement or the Merger Agreement.
(c) Stockholder agrees not to (i) offer to sell, sell, transfer, encumber,
pledge, assign or otherwise dispose of (including by gift) (collectively,
"Transfer"), or enter into any contract, option or other arrangement with
respect to or consent to the Transfer of, the Subject Shares or any interest
therein to any person other than pursuant to the terms of the Merger, (ii)
except as contemplated hereby, grant any proxies or powers of attorney with
respect to the Subject Shares, deposit any Subject Shares into a voting trust or
enter into any voting arrangement with respect to the Subject Shares, or any
interest in the foregoing, except with Emerald, (iii) take any action that would
make any representation or warranty of Stockholder contained herein untrue or
incorrect to have the effect of preventing or disabling the Stockholder from
performing Stockholder's obligations under this Agreement or (iv) commit or
agree to take any of the foregoing actions; provided, however, that, for a
period equal to the shorter of (A) 360 days after Stockholder elects to
terminate this Agreement pursuant to Section 3(f) or (B) the payment by the
Company to Emerald of the Termination Fee, Stockholder may transfer the Subject
Shares to the proponent of a Superior Proposal upon the same terms and
conditions and at the same time as available to all other shareholders of the
Company.
(d) Stockholder hereby irrevocably waives any rights of appraisal or rights
to dissent from the Merger that the Stockholder may have.
(e) Stockholder agrees with, and covenants to, Emerald that the Stockholder
shall not request that the Company register the transfer (book-entry or
otherwise) of any certificate or uncertificated interest representing any of the
Subject Shares, unless such transfer is made in compliance with this Agreement.
(f) Stockholder will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to the sale, voting or other disposition of the Existing
Shares or a business combination transaction involving the Company. Stockholder
shall not directly or indirectly, through any officer, director, employee,
representative, agent or other person, solicit or encourage the initiation or
submission of any direct or indirect inquiries, proposals or offers regarding
any acquisition, merger, takeover bid or sale of all or any of the assets or any
shares of capital stock of the Company, whether or not in writing and whether or
not delivered to the Company or to the stockholders of the Company generally
(including, without limitation, by way of a tender offer) by any party other
than Emerald or its affiliates (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal") provided, however, that
nothing contained in this Agreement shall prevent the Board of Directors of
Stockholder from referring any third party to this Section 3(f). Nothing
contained in this Section 3(f) or any other provision of this Agreement shall
prevent the Board of Directors of Stockholder from considering or negotiating an
unsolicited bona fide Acquisition Proposal. If the Board of Directors of
Stockholders, after duly considering written advice of counsel to Stockholder,
determines in good faith that it would be likely to be a violation of its
fiduciary responsibilities (assuming such fiduciary responsibilities of
Stockholder's Board of Directors vis-a-vis the shareholders of Stockholder are
those of the Board of Directors of the Company vis-a-vis the shareholders of the
Company) to not participate in a Superior Proposal (as defined below), then (i)
the Stockholder shall not enter into any agreement with respect to the Superior
Proposal and (ii) any other obligation of Stockholder under this Agreement shall
not be affected, unless this Agreement is terminated pursuant to Section 6
hereof prior to or simultaneously with the decision of Stockholder's Board of
Directors to participate in such Superior Proposal. As used herein the term
"Superior Proposal" means an unsolicited bona fide proposal publicly made by a
third party to acquire the Company pursuant to a tender or exchange offer, a
merger, a sale of all or any significant portion of its assets or otherwise that
the Stockholder's Board of Directors determines in its good faith judgment to be
a proposal which, if accepted (x) is reasonably likely to be consummated, taking
into account, without limitation, all legal, financial and regulatory aspects of
such proposal and person or persons making such proposal and (y) would, if
consummated, result in a more favorable transaction to the holders of the Common
Stock than the transaction contemplated by the Merger Agreement. Stockholder
will immediately notify Emerald, orally and in writing, of any direct or
indirect contact related in any way to an Acquisition Proposal, including the
identity of the person involved in such contact, or on whose behalf such contact
is made, and the terms and conditions of any proposal made.
(g) Stockholder agrees that, until this Agreement is terminated, neither
Stockholder nor any of its affiliates will, without the prior written consent of
Emerald: (i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights to acquire any voting securities of the Company or any
subsidiary thereof, or of any successor to or person in control of the Company,
or any assets of the Company or any subsidiary or division thereof or of any
such successor or controlling person; (ii) other than as contemplated hereby,
make, directly or indirectly, any "solicitation" of "proxies" (as such terms are
used in the rules of the Securities and Exchange Commission) to vote, or seek to
advise or influence any person or entity with respect to the voting of, any
voting securities of the Company; (iii) make any public announcement with
respect to, or submit a proposal for, or offer of (with or without conditions)
any extraordinary transaction involving the Company or its securities or assets;
and (iv) form, join or in any way participate in a "group" (as defined in
Section 13 (d)(3) of the Securities Exchange Act of 1934, as amended) in
connection with any of the foregoing.
(h) THE STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS EMERALD AND ANY DESIGNEE
OF EMERALD, EACH OF THEM INDIVIDUALLY, STOCKHOLDER'S IRREVOCABLE (UNTIL THE
TERMINATION OF THIS AGREEMENT) PROXY AND ATTORNEY-IN-FACT WITH FULL POWER OF
SUBSTITUTION TO VOTE THE SUBJECT SHARES OF STOCKHOLDER AS INDICATED IN SECTION
3(A) AND 3(B) ABOVE. THE STOCKHOLDER INTENDS THIS PROXY TO BE IRREVOCABLE (UNTIL
THE TERMINATION OF THIS AGREEMENT) AND COUPLED WITH AN INTEREST AND WILL TAKE
SUCH FURTHER ACTION TO REVOKE AND HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY
STOCKHOLDER WITH RESPECT TO SUCH STOCKHOLDER'S SUBJECT SHARES.
4. Further Assurances. The Stockholder will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further
consents, documents and other instruments as Emerald may reasonably request for
the purpose of effectively carrying out the transactions contemplated by this
Agreement. ---------------------------
5. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that any Stockholder may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to any direct or indirect wholly owned subsidiary of such Stockholder;
provided that both such transferor and transferee shall continue to be bound by
all the provisions hereof. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successor and assigns.
6. Termination. This Agreement shall terminate, and no party shall have any
rights or obligations hereunder and this Agreement shall become null and void
and have no further effect upon the earlier of (a) the Effective Time, (b) the
date on which the Merger Agreement is terminated pursuant to Section 8.1 thereof
and (c) five (5) business days after Emerald's receipt of a written notice form
Stockholder declaring its intention to terminate this Agreement in order to
participate in a Superior Proposal and a certificate signed by Stockholder's
Chairman of the Board attesting that the requirements for termination specified
in Section 3(f) have been satisfied; provided, however, that a termination
pursuant to this clause (c) shall not, for a period equal to the shorter of (A)
360 days following such termination or (B) the payment by the Company to Emerald
of the Termination Fee, relieve Stockholder of the duty to sell only in the
manner set forth in the concluding proviso of Section 3(c). Nothing in this
Section 6 shall relieve any party of liability for breach of this Agreement.
7. Costs and Expenses. All costs and expenses incurred in connection with
this agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses. ---------------------------
8. General Provisions.
(a) Amendments. This Agreement may not be amended except by an instrument
in writing signed by each of the parties hereto.
(b) Notice. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or sent by overnight
courier (providing proof of delivery) to Emerald in accordance with Section 9.2
of the Merger Agreement and to Stockholder at its address set forth on the
signature page of this Agreement (or at such other address for a party as shall
be specified by like notice).
(c) Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section to this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Wherever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Severability. If any term or other provision of this Agreement is
invalid illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the one party, it being understood that
each party need not sign the same counterpart.
(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and (ii) is not intended to confer upon any Person other than the parties hereto
any rights or remedies hereunder.
(g) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
9. Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court; (iii) agrees that such party will not
bring any action relating to this Agreement or the transactions contemplated
hereby in any court other than a Federal court sitting in the state of Delaware
or a Delaware state court and (iv) waives any right to trial by jury with
respect to any claim or proceeding related to or arising out of this Agreement
or any of the transactions contemplated hereby. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
IN WITNESS WHEREOF, Emerald has caused this Agreement to be signed by its
officer thereunto duly authorized and Stockholder has caused this Agreement to
be signed by its officer thereunto duly authorized, all as of the date first
written above.
X.L. AMERICA, INC.
By: /s/Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President
and General Counsel
Number of Subject Shares: 1,899,223 SECURITY INSURANCE COMPANY OF HARTFORD
By: /s/Xxxx X. XxXxxx
Name: Xxxx X. XxXxxx
Title: Executive Vice
President
Address: 0 Xxxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
