EXHIBIT 99.3
STOCKHOLDER AGREEMENT
This STOCKHOLDER AGREEMENT, dated as of October 29, 2003 (the
"Agreement"), between Country Life Insurance Company, an Illinois corporation
("Purchaser") and Shield Insurance Company, a stockholder of Cotton States Life
Insurance Company ("Stockholder").
R E C I T A L S:
WHEREAS, concurrently with 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, on the other (collectively,
"Cotton States"), are entering 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 an inducement and a condition 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 required that
Stockholder agrees 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
record and 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.
(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.
(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.
(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 on Exhibit A 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 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.
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. 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.
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
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 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.
[this portion of page intentionally left blank]
(n) Except as otherwise provide herein, each party shall
pay its, his or her own expenses incurred in connection with this
Agreement.
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: Chief Executive Officer
COUNTRY
On behalf of certain companies of
COUNTRY Insurance & Financial Services
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chief Executive Officer
STOCKHOLDER
SHIELD INSURANCE COMPANY
By: /s/ J. Xxxxxx Xxxxxx
------------------------------------
Name: J. Xxxxxx Xxxxxx
Title: Chairman, President and CEO
Schedule I
SHARES
Number of Shares Owned 2,102,385
Name in Which Shares Held Shield Insurance Company
Address: 000 Xxxxxxxxx Xxxxxx Xxxxxxx, X.X.
Xxxxxxx, XX 00000
