Exhibit 99.3
STOCKHOLDERS AGREEMENT AND IRREVOCABLE PROXY
--------------------------------------------
STOCKHOLDERS AGREEMENT AND IRREVOCABLE PROXY dated May 25,
2000 among Leucadia National Corporation, a New York corporation ("Parent") and
the other parties signatory hereto (individually and collectively, the
"Stockholder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently herewith, Parent, Leucadia
Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary
of Parent ("Sub"), and Reliance Group Holdings, Inc., a Delaware corporation
(the "Company"), are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement";
capitalized terms used and not defined herein have the respective meanings
ascribed to them in the Merger Agreement), pursuant to which Sub will be merged
with and into the Company, or such other form of transaction as may result
pursuant to the terms of the Merger Agreement (the "Merger"); and
WHEREAS, as an inducement and a condition to entering into
the Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Company Common Stock" shall mean at any time the
common stock, $.10 par value, of the Company.
(b) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. PROVISIONS CONCERNING COMPANY COMMON STOCK. (a) The
Stockholder hereby agrees that during the period commencing on the date hereof
and continuing until the first to occur of the Effective Time or termination of
the Merger Agreement in accordance with its terms, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, the Stockholder shall vote (or
cause to be voted) the shares of Company Common Stock beneficially owned by the
Stockholder (such shares the "Existing Shares", and together with any shares of
Company Common Stock acquired by the Stockholder after the date hereof and prior
to the termination of this Agreement, whether upon the exercise of options,
NY2:\913428\11\JKT011!.DOC\76830.0001
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warrants or rights, the conversion or exchange of convertible or exchangeable
securities, or by means of purchase, dividend, distribution or otherwise the
"Shares"): (i) in favor of the Merger, the execution and delivery by the Company
of the Merger Agreement and the Stock Option Agreement and the approval of the
terms thereof and each of the other actions contemplated by the Merger
Agreement, the Stock Option Agreement and this Agreement and any actions
required in furtherance thereof and hereof; (ii) against any action or agreement
that would result in a breach in any respect of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger
Agreement or the Stock Option Agreement (after giving effect to any materiality
or similar qualifications contained therein) or of the Stockholder under this
Agreement; and (iii) except as otherwise agreed to in writing in advance by
Parent, against the following actions (other than the Merger and the
transactions contemplated by the Merger Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries (as defined in the Merger
Agreement); (B) a sale, lease or transfer of a material amount of assets of the
Company or its subsidiaries, or a reorganization, recapitalization, dissolution
or liquidation of the Company or its subsidiaries; (C)(1) any change in the
present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or Bylaws; (2) any other material change in the
Company's corporate structure or business; or (3) any other action involving the
Company or its subsidiaries which is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by this Agreement, the Stock Option
Agreement and the Merger Agreement. The Stockholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be to violate the provisions and agreements contained in this Section 2.
(b) In order to permit Parent to exercise voting rights
hereto, the Stockholder hereby grants to Parent an irrevocable proxy coupled
with an interest to vote all or any part of the Shares and to exercise all other
rights, powers, privileges and remedies to which the Stockholder as holder of
the Shares is entitled with respect to the matters contained in Section 2(a)
hereof (including giving or withholding written consents of shareholders,
calling special meetings of shareholders, and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Shares on the record books of the Company) by any
other person (including the Company or any officer or agent thereof), and which
proxy shall only terminate upon the first to occur of the Effective Time or the
termination of the Merger Agreement in accordance with its terms. The grant to
Parent of the irrevocable proxy is subject to the satisfaction of the conditions
in Section 5 hereof.
3. GRANT OF OPTION. The Stockholder hereby grants Parent an
irrevocable option (the "Stock Option") to purchase up to the number of shares
of common stock, $.10 par value per share, of the Company (the "Company Common
Stock") set forth opposite such Stockholder's name on Schedule I hereto, or such
other greater number of shares of Company Common Stock equal to all of the
issued and outstanding shares of Company Common Stock beneficially owned by the
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Stockholder at the time of exercise of the Stock Option, in the manner set forth
below, at a price of $2.50 per share (the "Exercise Price"), payable in cash.
If the Stock Option is exercised and Parent acquires shares
of Company Common Stock hereunder, the stockholder shall be entitled to receive
upon any disposition or sale to an unaffiliated party within one year after
exercise ("Sale") of such share, an amount equal to 50% of the difference
between the proceeds received in the Sale (net of selling expenses, if any) and
the Exercise Price. Parent shall pay such amount to the Stockholder in cash not
later than one business day after receipt by Parent of all proceeds from any
such Sale.
4. EXERCISE OF OPTION. (a) The Stock Option may be
exercised by Parent, in whole or in part, at any time or from time to time after
(i) the Merger Agreement is terminated in accordance with any of the following
Sections of the Merger Agreement: 8.2(b); 8.3(a); 8.4(a), (ii) the Company is in
material breach of Section 6.5 of the Merger Agreement or (iii) Stockholder is
in material breach of Section 7(g) of this Agreement (a "Triggering Event").
In the event Parent wishes to exercise the Stock Option,
Parent shall deliver to the Stockholder a written notice (an "Exercise Notice")
specifying the total number of shares of Company Common Stock it wishes to
purchase. If the Stock Option is exercised by Parent in part, each Stockholder
shall be required to sell and deliver its pro rata portion of Company Common
Stock, based on the amount set forth opposite each Stockholder's name on
Schedule I hereto. Each closing of a purchase of shares of Company Common Stock
(a "Closing") shall occur at a place, on a date and at a time designated by
Parent in an Exercise Notice delivered at least two business days prior to the
date of the Closing.
(b) The Stock Option shall terminate upon the earlier of:
(i) the Effective Time, (ii) the termination of the Merger Agreement for reason
other than a termination as a result of a Triggering Event, (iii) 186 days
following the occurrence of a Triggering Event, or if, at the expiration of such
186 day period the Stock Option cannot be exercised by reason of any applicable
judgment, decree, order, law or regulation (including, without limitation, the
need for any consent, approval, exemption, waiting period expiration or similar
authorization required under the insurance laws or regulations of any
jurisdiction), or because the applicable waiting period under the HSR Act has
not expired or been terminated (so long as such failure to expire or terminate
is not a result of Parent having withdrawn its HSR filing and not resubmitting
such filing), 10 business days after such impediment to exercise shall have been
removed or shall have become final and not subject to appeal, or (iv) the
approval and adoption of the Merger Agreement by the Company Requisite Vote.
5. CONDITIONS TO CLOSING. The obligation of the Stockholder
to sell shares of Company Common Stock to Parent hereunder is subject to the
conditions that (i) all waiting periods, if any, under the HSR Act applicable to
the purchase of shares of Company Common Stock hereunder shall have expired or
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have been terminated, and all authorizations of or filings with any Governmental
Entity set forth on Schedule 7.1 of the Merger Agreement shall have been
obtained or made, as the case may be; (ii) Parent and Merger Sub are not in
material breach of the Merger Agreement; and (iii) no preliminary or permanent
injunction or other order by any court of competent jurisdiction prohibiting or
otherwise restraining such sale shall be in effect.
6. CLOSING. At any Closing:
(a) the Stockholder will deliver to Parent certificates in
definitive form representing the number of shares of the Company Common Stock
designated by Parent in its Exercise Notice, such certificates to be registered
in the name of Parent, Sub or such other affiliate of Parent as Parent shall
designate in the Exercise Notice, and
(b) Parent will deliver to the Stockholder the aggregate
Exercise Price for the shares of the Company Common Stock so designated and
being purchased at such Closing by wire transfer of immediately available funds.
7. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder represents and warrants to Parent that:
(a) the Stockholder is the record or beneficial holder of
the number of Existing Shares set forth opposite such Stockholder name on
Schedule I hereto, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrance whatsoever, except as set forth on Schedule I. On the date
hereof, the number of Existing Shares set forth opposite such Stockholder's name
on Schedule I hereto constitute all the Shares owned of record or beneficially
by such Stockholder. The Stockholder has voting power and power to issue
instructions, power of disposition, power of conversion, power to demand
appraisal rights and power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Shares set forth
opposite Stockholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
and insurance holding company law and the terms of this Agreement and except as
set forth on Schedule I.
(b) the Stockholder has the legal capacity, power and
authority to enter into and perform all of the Stockholder's obligations under
this Agreement, the execution and delivery of this Agreement by the Stockholder
and the consummation by the Stockholder of the transactions contemplated hereby
have been duly authorized by all necessary Stockholder action on the part of the
Stockholder and no other actions on the part of the Stockholder are necessary to
authorize this Agreement or any of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding obligation of the
Stockholder, and, assuming this Agreement constitutes a valid and binding
obligation of Parent, is enforceable against the Stockholder in accordance with
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its terms, except to the extent that (a) enforcement may be limited by or
subject to any bankruptcy, insolvency, fraudulent conveyance, rehabilitation,
reorganization, moratorium and similar Laws now or hereafter in effect relating
to or affecting creditors' rights generally and (b) the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other similar
person before which any proceeding therefor may be brought.
(d) the Stockholder's Shares and the certificates
representing such Shares are now, and at all times during the term hereof will
be, held by such Stockholder, or by a nominee or custodian for the benefit of
such Stockholder, free and clear of all liens, claims, security interests,
proxies, voting trusts or agreements, understandings or arrangements or any
other encumbrances whatsoever (except as set forth on Schedule I), and upon
delivery of such shares of Company Common Stock to Parent upon exercise of the
Stock Option, Parent will acquire valid title to all of such shares, free and
clear of any and all Liens of any nature whatsoever;
(e) the execution and delivery of this Agreement by the
Stockholder does not, and the performance of this Agreement by the Stockholder
will not (1) violate any agreement to which the Stockholder is a party or by
which it or its assets are bound, including without limitation, any voting
agreement, stockholders agreement or voting trust or the governing documents, if
any, of any Stockholder, (2) conflict with or violate any statute, rule,
regulation, order, judgment or decree applicable to the Stockholder or by which
it or any of its assets or properties is bound or affected other than any
insurance holding company laws, or (3) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
lien or other encumbrance on any of the property or assets of the Stockholder
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, or other instrument or obligation to which the Stockholder is a party
or by which the Stockholder or any of its assets or properties is bound or
affected;
(f) the execution and delivery of this Agreement by the
Stockholder does not, and the performance of this Agreement by the Stockholder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority except for
pre-merger notification requirements of the HSR Act and filings with insurance
departments required in connection with the sale of Shares of Company Common
Stock hereunder and applicable filings under the Exchange Act;
(g) until the earlier of the Effective Time or termination
of the Merger Agreement in accordance with its terms, the Stockholder shall not
directly or indirectly, solicit (including by way of furnishing information) or
respond to any inquiries or the making of any proposal by any person or entity
(other than Parent or any affiliate of Parent) with respect to the Company that
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constitutes an Acquisition Proposal, except that if the Stockholder is a
director of the Company, he may take actions in such capacity to the extent
permitted by Section 6.5 of the Merger Agreement;
(h) beginning on the date hereof and ending on the last
date the Stock Option is exercisable pursuant to Section 4 hereof, the
Stockholder shall not (i) directly or indirectly, offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Stockholder's Shares or
any interest therein, or borrow any additional sums against any Shares
identified as being subject to this Agreement; (ii) except as contemplated by
this Agreement, grant any proxies or powers of attorney, deposit any Shares into
a voting trust or enter into a voting agreement with respect to any Shares or,
if Parent has delivered an Exercise Notice with respect to shares of Company
Common Stock, without the written consent of Parent, vote such Shares; or (iii)
take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling the Stockholder from performing the Stockholder's
obligations under this Agreement. Notwithstanding the foregoing, Stockholder
shall be permitted hereunder to grant a revocable proxy to management solely for
the purpose of voting for the election of directors at an annual meeting of
stockholders of the Company, provided that such vote is consistent with the
terms and purpose of this Agreement;
(i) the Stockholder hereby waives any rights of appraisal
or rights to dissent from the Merger that the Stockholder may have;
(j) the Stockholder understands and acknowledges that
Parent is entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this Agreement; and
(k) from time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
represents and warrants to the Stockholder that:
(a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder;
(b) the execution and delivery of this Agreement by Parent
and the consummation by Parent of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Parent and no
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other corporate proceedings on the part of Parent are necessary to authorize
this Agreement or any of the transactions contemplated hereby;
(c) this Agreement has been duly executed and delivered by
Parent and constitutes a valid and binding obligation of Parent, and, assuming
this Agreement constitutes a valid and binding obligation of the Stockholder, is
enforceable against Parent in accordance with its terms subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles;
(d) the execution and delivery of this Agreement by Parent
does not, and the performance of this Agreement by Parent will not (1) violate
the certificate of incorporation or by-laws of Parent, (2) subject to HSR and
insurance department filings required in connection with the sale of Shares of
Company Common Stock hereunder, conflict with or violate any statute, rule,
regulation, order, judgment or decree applicable to Parent or by which it or any
of its properties or assets is bound or affected or (3) result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any of the property or assets of Parent pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, or other
instrument or obligation to which Parent is a party or by which Parent or any of
its properties or assets is bound or affected; and
(e) the execution and delivery of this Agreement by Parent
does not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except for pre-merger notification
requirements of the HSR Act and filings with insurance departments required in
connection with the sale of Shares of Company Common Stock hereunder;
(f) any shares of the Company Common Stock acquired upon
exercise of the Stock Option will be, and the Stock Option is being, acquired by
Parent for its own account and not with a view to the public distribution or
resale thereof in any manner which would be in violation of applicable United
States securities laws.
9. STOP TRANSFER; CHANGES IN SHARES. The Stockholder agrees
with, and covenants to, Parent that beginning on the date hereof and ending on
the last date the Stock Option is exercisable pursuant to Section 4 hereof, 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 Stockholder's Shares, unless such transfer is made in compliance with this
Agreement. In the event of a stock dividend or distribution, or any change in
the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall be deemed to refer to and include the Shares as well as all such stock
dividends and distributions and any shares into which or for which any or all of
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the Shares may be changed or exchanged. Stockholder shall be entitled to receive
any dividend paid by the Company during the term of this Agreement until Shares
are purchased hereunder.
10. FIDUCIARY DUTIES. Notwithstanding anything in this
Agreement to the contrary, the covenants and agreements set forth herein shall
not prevent any of the Stockholders or Stockholder's designees serving on the
Company's Board of Directors from taking any action, subject to the applicable
provisions of the Merger Agreement, while acting in such person's capacity as a
director of the Company.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event
of any change in Company Common Stock by reason of stock dividends, stock
splits, mergers (other than the Merger), recapitalizations, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the Stock Option, and the Exercise Price per share, shall be adjusted
appropriately.
12. BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as expressly provided in this
Agreement, neither this Agreement nor the rights or the obligations of either
party hereto are assignable, except by operation of law, or with the written
consent of the other party, except that Parent may assign its rights hereunder
to any wholly-owned subsidiary of Parent. Nothing contained in this Agreement,
express or implied, is intended to confer upon any person other than the parties
hereto and their respective permitted assigns any rights or remedies of any
nature whatsoever by reason of this Agreement.
13. SPECIFIC PERFORMANCE. The parties recognize and agree
that if for any reason any of the provisions of this Agreement are not performed
in accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to other
remedies, the other party shall be entitled to an injunction restraining any
violation or threatened violation of the provisions of this Agreement. In the
event that any action should be brought in equity to enforce the provisions of
the Agreement, neither party will allege, and each party hereby waives the
defense, that there is an adequate remedy at law.
14. ENTIRE AGREEMENT. This Agreement and the Registration
Rights Agreements (together with the other documents and instruments referred to
in the Merger Agreement, and the exhibits and disclosure schedules thereto)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof.
15. FURTHER ASSURANCES. Each party will execute and deliver
all such further documents and instruments and take all such further action as
may be necessary in order to consummate the transactions contemplated hereby.
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16. NO REMEDY IN CERTAIN CIRCUMSTANCES. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Agreement or makes the Agreement impossible to perform in which case this
Agreement shall terminate. Except as otherwise contemplated by this Agreement,
to the extent that a party hereto took an action inconsistent herewith or failed
to take action consistent herewith or required hereby pursuant to an order or
judgment of a court or other competent authority, such party shall incur no
liability or obligation unless such party did not in good faith seek to resist
or object to the imposition or entering of such order or judgment.
17. NOTICES. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be given, dated and received when so delivered
personally, telegraphed or telecopied (answerback received) or, if mailed, five
business days after the date of mailing, to the following address or telecopy
number, or to such other address or addresses as such person may subsequently
designate by notice given hereunder:
(a) if to Parent, to:
Leucadia National Corporation
315 Park Avenue South
New York, New York 10010
Attn: President
Facsimile: (212) 598-3241
with copies (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Stephen E. Jacobs, Esq.
Telecopy: (212) 310-8007
Telephone: (212) 310-8000
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(b) if to the Stockholder, to the addresses set forth in
Schedule I hereto:
with a copy (which shall not constitute notice) to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attn: Jonathan L. Freedman, Esq.
Facsimile: (212) 259-6333
18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
19. DESCRIPTIVE HEADINGS. The descriptive headings 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.
20. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed to be an original, but all
of which, taken together, shall constitute one and the same instrument.
21. AMENDMENTS; WAIVER. This Agreement may be amended by
the parties hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto, or, in the
case of a waiver, by an instrument signed on behalf of the party waiving
compliance.
[signature page follows]
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IN WITNESS WHEREOF, Parent and each Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
LEUCADIA NATIONAL CORPORATION
By: /s/ Joseph A. Orlando
-----------------------------------------
Name: Joseph A. Orlando
/s/ Saul P. Steinberg
-----------------------------------------
Name: Saul P. Steinberg
Individually and on behalf of
Steinberg Family Partners, L.P.
/s/ Robert M. Steinberg
-----------------------------------------
Name: Robert M. Steinberg
/s/ Lynda Jurist
-----------------------------------------
Name: Lynda Jurist
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SCHEDULE I
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<TABLE>
<CAPTION>
Name of No. of Pledged
Shareholder Shares Shares Pledgee Amount
----------- ------ ------ ------- ------
<S> <C> <C> <C> <C>
1. Saul P. Steinberg, on behalf 26,275,053 8,700,000 Provident $5 mm
of Steinberg Family Partners, L.P.
3,000,000 8,000,000 Bear Stearns $5 mm
-----------
29,275,053 6,710,000 Smith Barney $4,072,107
2. Robert M. Steinberg 4,838,840 4,838,840 M&T Bank $7,000,000
3. Lynda Jurist 4,125,684 2.3 million M&T Bank $3,000,000
38,239,577 33.33%
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</TABLE>
