EXHIBIT 99.4
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of November 11, 2003 (the
"Agreement"), between Country Life Insurance Company, an Illinois corporation
("Purchaser") and PSCO Partners Limited Partnership, a stockholder of Cotton
States Life Insurance Company ("Stockholder").
RECITALS:
WHEREAS, prior to the execution and delivery of this Agreement,
certain companies of COUNTRY Insurance & Financial Services ("COUNTRY"),
including Purchaser, on the one hand, and Cotton States Mutual Insurance
Company, Shield Insurance Company, Cotton States Life Insurance Company (the
"Company") and their affiliates (collectively, "Cotton States"), on the other,
have entered into a letter of intent agreement dated October 29, 2003 (as such
agreement may hereafter be amended, restated or renewed from time to time, the
"Letter Agreement"), which provides, among other things, for an exclusivity
period with respect to the Transaction (as defined therein) providing for the
acquisition of Cotton States by COUNTRY (the "Acquisition"); and
WHEREAS, as a further inducement to COUNTRY and Purchaser
devoting personnel and other resources to the Transaction, expending amounts for
legal, investment banking, accounting and other services, suffering the
resulting disruption of business and incurring costs and expenses related to due
diligence, negotiation and preparation of definitive transactional agreements
and necessary regulatory filings, COUNTRY and Purchaser have requested that
Stockholder agrees to enter into this Agreement, and, being desirous of COUNTRY
and Purchasers continuing to devote personnel and other resources to the
Transactions, expend amounts for legal, investment banking, accounting and other
services, suffer the resulting disruption of business and incur costs and
expenses related to due diligence, negotiation and preparation of definitive
transactional agreements and necessary regulatory filings, to induce COUNTRY and
Purchasers to continue such devotion, expenditures, suffering and incurrences,
has agreed to enter into this agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Acquisition Proposal" shall mean any proposal or
offer, made by any person or group other than COUNTRY or Purchaser
(in each case, whether or not in writing and whether or not
delivered to the stockholders of the Company generally) relating
to (i) any direct or indirect acquisition or purchase which is
structured to permit such person or group to acquire beneficial
ownership of at least 10% of the assets of the Company or any of
its subsidiaries or of over 10% of any class of equity securities
of the Company or any of its subsidiaries, (ii) any tender offer
or exchange offer that, if consummated, would result in any
person, other than COUNTRY, Purchaser, their affiliates or any
group of which any of them is a member beneficially owning 10% or
more of any class of equity securities of the Company or any of
its subsidiaries, or (iii)
any merger, consolidation, business combination, sale of
substantially all the assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of
its subsidiaries.
(b) "beneficially owned" or "beneficial ownership" with
respect to any securities shall mean having "beneficial ownership"
of such securities (as determined pursuant to Rule 13d-3 under the
Exchange Act of 1934, as amended (the "Exchange Act")), including
pursuant to any agreement, arrangement or understanding, whether
or not in writing.
(c) "Shares" shall mean the shares in the Company set forth
on Schedule I hereto with respect to which Stockholder is the
beneficial owner.
(d) Terms used and not defined herein, but defined in the
Letter Agreement, shall have the respective meanings ascribed to
them in the Letter Agreement.
2. Option.
(a) Stockholder hereby grants to Purchaser an irrevocable
option (the "Option") to purchase all of the Shares or a portion
thereof beneficially owned by Stockholder at a price per Share
equal to $20.25. The Option may be exercised in whole or part at
any time after the occurrence of any Acquisition Proposal or after
the occurrence of any event entitling COUNTRY or Purchaser to the
break-up fee described in the Letter Agreement. In the event the
Option is not fully exercised, the Option shall remain in effect
through the Option Term (as defined below) with respect to those
Shares covered by the Option for which the Option has not been
previously exercised.
(b) The Option shall remain exercisable for the term
beginning on the date hereof until the earliest of (i) the date
that is 365 days after the expiration of the Exclusivity Period,
(ii) the date that is thirty (30) days after the later of the date
that all approvals to the Transaction required under applicable
insurance regulatory laws have been obtained or a final
non-appealable determination or order has been made that such
approvals will not be granted; all waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX
Xxx") required for the purchase of the Shares upon such exercise
shall have expired or been terminated or a final non-appealable
determination or order has been made that such approval will not
be granted; and all other conditions to Closing have been
satisfied, and (iii) a final non-appealable order of a federal or
state court in effect preventing the exercise of the Option or
consummation of the Transaction or any law or order enacted,
promulgated or issued or deemed applicable to the Option or the
Transaction by any governmental entity that would make exercise of
the Option or consummation of the Transaction illegal (the "Option
Term"). In the event that Purchaser wishes to exercise all or part
of the Option, Purchaser shall send a written notice to
Stockholder identifying the place and date (not less than two (2)
nor more than ten (10) business days from the date of the notice)
for the closing of such purchase (an "Option Closing"). At each
Option Closing Purchaser shall deliver in immediately available
funds the aggregate exercise price due for the Shares to be
purchased at such Option Closing, against delivery of such Shares.
2
(c) If transfer of the Shares upon exercise of the Option
(i) requires approval of a governmental agency under
insurance regulatory laws and such approval has not been
obtained, and
(ii) either (a) a third party has commenced a tender
offer or exchange offer that, if consummated, would result
in any third-party beneficially owning 10% or more of any
class of equity securities of the Company or any of its
subsidiaries and fewer than five (5) business days remain
before expiration of the tender offer period or (b) the
stockholders of the Company have approved a merger,
consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving
the Company,
then Purchaser may elect (in its sole discretion) to have
Stockholder tender the Shares (or a portion thereof) and
receive the consideration therefore, or, in the event of a
merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar
transaction, take the actions necessary to receive the
consideration to which the holder of the Shares is entitled
and have Stockholder hold the proceeds in trust to be
delivered to Purchaser upon payment of the applicable
aggregate Option exercise price; provided, however,
Purchaser in making such election may require (and
Stockholder shall take all reasonable steps to ensure) that
payment with respect to the Shares (the "Applicable Share
Payment") is made to Purchaser and in such event Purchaser
shall pay by wire transfer in immediately available funds
to Stockholder the applicable aggregate exercise price
within three (3) business days after Purchaser's receipt of
the Applicable Share Payment.
3. Additional Agreements.
(a) During the Option Term, Stockholder shall, at any
meeting of the stockholders of the Company, however called, or in
connection with any written consent of the stockholders of the
Company, vote (or cause to be voted) all Shares then held of
record or beneficially owned by Stockholder, (i) in favor of the
Transaction, the execution and delivery by the Company of the
agreements related to the Transaction and the approval of the
terms thereof and each of the other actions contemplated by such
agreements and this Agreement and any actions required in
furtherance thereof and hereof, and (ii) against any proposal
relating to an Acquisition Proposal and against any action or
agreement that would impede, frustrate, prevent or nullify this
Agreement or result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of
the Company under the Letter Agreement or the definitive
agreements with respect to the Transaction.
Stockholder shall continue to have the right to vote in its sole
discretion at an annual meeting on all matters not involving or
related to the Transaction or an Acquisition Proposal; but
Stockholder shall refrain from voting its Shares on any matters
involving or related to the Transaction or an Acquisition
Proposal.
3
(b) Stockholder hereby covenants and agrees that, except as
contemplated by this Agreement, Stockholder shall not (i) offer to
transfer (which term shall include, without limitation, any sale,
tender, gift, pledge, assignment or other disposition), transfer
or consent to any transfer of, any or all of the Shares
beneficially owned by Stockholder or any interest therein, (ii)
enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such
Shares or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization or consent in or with
respect to such Shares, (iv) deposit such Shares into a voting
trust or enter into a voting agreement or arrangement with respect
to such Shares or (v) take any other action that would make any
representation or warranty of Stockholder contained herein untrue
or incorrect or in any way restrict, limit or interfere with the
performance of its obligations hereunder or the transactions
contemplated hereby.
(c) Subject to any regulatory approval, if any, required to
be obtained from a governmental agency under insurance regulatory
laws, Stockholder hereby irrevocably grants to, and appoints,
Purchaser and any designee of Purchaser, and each of them
individually, Stockholder's proxy and attorney-in-fact (with full
power of substitution), for and in the name, place and stead of
Stockholder, to vote the Shares beneficially owned by Stockholder,
or grant a consent or approval in respect of such Shares, in the
manner specified in Section 3(a). Stockholder represents that any
proxies previously given in respect of Shares beneficially owned
by Stockholder are not irrevocable and that any such proxies are
hereby revoked. Stockholder hereby affirms that the irrevocable
proxy set forth in this Section 3(c) is given in connection with
the execution of the Letter Agreement and that such irrevocable
proxy is given to secure the performance of the duties of
Stockholder under this Agreement. Stockholder hereby further
affirms that the irrevocable proxy is coupled with an interest and
may under no circumstances be revoked. Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Without limiting the generality
of the foregoing, such irrevocable proxy is executed and intended
to be irrevocable in accordance with the provisions of Section
14-2-722 of the Georgia Business Corporation Code and to be valid
during the Option Term.
(d) Stockholder hereby agrees that during the Option Term,
Stockholder, shall not directly or indirectly:
(i) solicit, encourage, or initiate inquiries,
offers or proposals from, or participate in any
discussions or negotiations with, any person or
entity concerning any Acquisition (as defined in the
Letter Agreement); or
(ii) except as required by law, disclose any
information not customarily disclosed to any person
or entity concerning the business and properties of
any of the companies in Cotton States or any of
their affiliates, or afford to any person or entity
access to the properties, books or records of any of
the companies in Cotton States or any of their
affiliates or otherwise assist or encourage any
person or entity in connection with the foregoing.
4
(e) Subject to the terms and conditions of this Agreement,
each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable
laws to consummate and make effective the transactions
contemplated by this Agreement. Each party shall promptly consult
with the other and provide any necessary information and material
prior to any filings made by such party with any governmental
entity in connection with this Agreement and the transactions
contemplated hereby.
(f) Stockholder hereby waives any rights of appraisal or
rights to dissent from any merger effected as part of the
Transaction that it may have.
4. Representations and Warranties of Stockholder. Except as set
forth under Schedule I hereto Stockholder hereby represents and warrants
to Purchaser as follows:
(a) Stockholder is the record and beneficial owner of the
Shares set forth on Schedule I. Such Shares constitute all of the
Shares owned of record or beneficially owned by Stockholder on the
date hereof. Stockholder has sole voting power and sole power to
issue instructions with respect to the matters set forth in
Sections 2 and 3 hereof, sole power of disposition, sole power to
demand and waive appraisal rights and sole power to agree to all
of the matters set forth in this Agreement, in each case with
respect to all of such Shares with no limitations, qualifications
or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Stockholder has the power and authority to enter into
and perform all of Stockholder's obligations under this Agreement.
This Agreement has been duly and validly executed and delivered by
Stockholder and constitutes a legal, valid and binding agreement
of Stockholder, enforceable against Stockholder in accordance with
its terms, except that such enforceability may be limited by
bankruptcy, insolvency and similar laws affecting creditors'
rights generally and by general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in
equity). There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which Stockholder is
a trustee, or any party to any other agreement or arrangement,
whose consent is required for the execution and delivery of this
Agreement or the consummation by Stockholder of the transactions
contemplated hereby.
(c) Except for filings and consents under the HSR Act, the
Exchange Act and applicable state insurance company laws (i) no
filing with, and no permit, authorization, consent or approval of,
any governmental entity is necessary for the execution and
delivery of this Agreement by Stockholder, the consummation by
Stockholder of the transactions contemplated hereby and the
compliance by Stockholder with the provisions hereof and (ii) none
of the execution and delivery of this Agreement by Stockholder,
the consummation by Stockholder of the transactions contemplated
hereby or compliance by Stockholder with any of the provisions
hereof, except in cases in which any conflict, breach, default or
violation described below would not interfere with the ability of
Stockholder to perform Stockholder's obligations hereunder, shall
(A) conflict with or result in any breach of any organizational
documents applicable to Stockholder, (B) result in a violation or
breach of, or constitute (with or without notice or lapse of time
or both) a
5
default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under, any of the
terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any
kind, including, without limitation, any voting agreement, proxy
arrangement, pledge agreement, stockholders agreement or voting
trust, to which Stockholder is a party or by which it or any of
its properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or
regulation applicable to Stockholder or any of its properties or
assets.
(d) Except as permitted by this Agreement, the Shares
beneficially owned by Stockholder and the certificates
representing such 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,
proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such
liens or proxies arising hereunder. Subject to regulatory
approval, if any, that is required to be obtained from a
governmental agency under insurance regulatory laws, the transfer
by Stockholder of the Shares to Purchaser hereunder shall pass to
and unconditionally vest in Purchaser good and valid title to all
Shares, free and clear of all liens, proxies, voting trusts or
agreements, understandings or arrangements or any other rights
whatsoever.
(e) No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated under this Agreement based upon
arrangements made by or on behalf of Stockholder, except for the
Retainer Agreement between Xxxxx Xxxxx Capital Corporation and
COUNTRY Mutual Insurance Company, dated April 29, 2003.
5. Stop Transfer. Stockholder shall request that the Company not
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares beneficially owned
by Stockholder, unless such transfer is made in compliance with this
Agreement.
6. Termination. This Agreement shall terminate with respect to
Stockholder upon the expiration of the Option Term.
7. No Limitation. Nothing in this Agreement shall be construed to
prohibit Stockholder, or any officer or affiliate of Stockholder who is
or has designated a member of the Board of Directors of the Company, from
taking any action solely in his or her capacity as a member of the Board
of Directors of the Company or from exercising his or her fiduciary
duties as a member of such Board of Directors to the extent specifically
permitted, or not prohibited by an agreement to which COUNTRY or any of
its affiliates is a party, or from exercising any fiduciary duty it has
as a General Partner in a Limited Partnership to the Partnership and its
Limited Partners. Stockholder signs solely in his or her capacity as the
record and beneficial owner of, or the trustee of a trust whose
beneficiaries are the beneficial owners of, Stockholder's Shares.
6
8. Miscellaneous.
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.
(b) This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of Stockholder (in the case
of any assignment by Purchaser) or Purchaser (in the case of an
assignment by a Stockholder), provided that Purchaser may assign its
rights and obligations hereunder to any direct or indirect affiliate of
Purchaser, but no such assignment shall relieve COUNTRY and Purchaser of
their obligations hereunder.
(c) Without limiting any other rights Purchaser may have hereunder
in respect of any transfer of the Shares, Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Shares
beneficially owned by Stockholder and shall be binding upon any person to
which legal or beneficial ownership of such Shares shall pass, whether by
operation of law or otherwise, including, without limitation,
Stockholder's heirs, guardians, administrators or successors.
(d) This Agreement may not be amended, changed, supplemented or
otherwise modified with respect to Stockholder except by an instrument in
writing signed on behalf of Stockholder and Purchaser.
(e) All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if given) by hand delivery or
by facsimile transmission with confirmation of receipt, as follows:
If to a Stockholder:
To the address set out on Schedule I hereto.
If to COUNTRY or Purchaser:
Country Life Insurance Company
0000 X. Xxxxxxx Xxx.
Xxxxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attn: President
7
Copy to:
Office of General Counsel
ILLINOIS AGRICULTURAL ASSOCIATION
0000 X. Xxxxxxx Xxx.
Xxxxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attn: General Counsel
or to such other address or facsimile number as the person to whom notice
is given may have previously furnished to the others in writing in the
manner set forth above.
(f) Whenever possible, each provision or portion of any provision
of this Agreement will be interpreted in such manner as to be effective
and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction such invalidity, illegality or unenforceability will not
affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(g) 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.
(h) The failure of any party hereto to exercise any rights, power
or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a
waiver by such party of its right to exercise any such or other right,
power or remedy or to demand such compliance.
(i) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, 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.
(j) This Agreement shall be governed and construed in accordance
with the laws of the State of Georgia, without giving effect to the
principles of conflicts of law thereof.
(k) 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
8
enforce specifically the terms and provisions of this Agreement in any
Georgia state court or any Federal court located in such State, 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 itself to the personal jurisdiction of any Georgia state court or
any Federal court located in such State in the event any dispute arises
out of this Agreement or any transaction contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement
or any transaction contemplated by this Agreement in any court other than
any such court and (iv) waives any right to trial by jury with respect to
any action related to or arising out of this Agreement or any transaction
contemplated by this Agreement. The parties irrevocably and
unconditionally waive any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in any such court, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has
been brought in an inconvenient forum. Notwithstanding the foregoing,
COUNTRY and Purchaser acknowledge and agree that such consent to
jurisdiction is solely for the purpose referred to in this paragraph (k)
and shall not be deemed to be a general submission to the jurisdiction of
said courts in the State of Georgia other than for such purposes.
(l) The descriptive headings used herein are inserted for
convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(m) This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same agreement. This Agreement shall not be
effective as to any party hereto until such time as this Agreement or a
counterpart thereof has been executed and delivered by each party hereto.
(n) Except as otherwise provide herein, each party shall pay its,
his or her own expenses incurred in connection with this Agreement.
[this portion of page intentionally left blank]
9
IN WITNESS WHEREOF, Purchaser, COUNTRY and Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
PURCHASER
COUNTRY Life Insurance Company
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: CEO
COUNTRY
On behalf of certain companies of
COUNTRY Insurance & Financial Services
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: CEO
STOCKHOLDER
PSCO Partners Limited Partnership
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: XXXXX XXXXX
Title: General Partner
10
EXHIBIT 99.4
Schedule I
SHARES
Number of Shares Owned 55,000
---------------------------------------
Name in Which Shares Held PSCO Fund Limited
---------------------------------------
Address: c/o Xxxxx Xxxxx Capital Corporation
---------------------------------------
000 Xxxx Xxxx Xxxxxx
---------------------------------------
Xxxxxxxx, XX 00000
---------------------------------------
