Exhibit 99.3
CONFORMED COPY
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (this "Agreement") dated as of August 15, 1999, by and
among Markel Corporation, a Virginia corporation ("VA"), Terra Nova (Bermuda)
Holdings Ltd., a Bermuda corporation ("BB"), and the other parties signatory
hereto (each a "Stockholder" and together, the "Stockholders").
RECITALS
A. Simultaneously herewith VA and BB are entering into an Agreement and Plan
of Merger and Scheme of Arrangement between VA and BB dated as of August 15,
1999 (the "Merger Agreement").
B. The Merger Agreement provides for (i) the merger (the "Merger") of Mint
Sub Ltd., a corporation to be organized under the laws of Virginia as a wholly-
owned subsidiary of Virginia Holdings Inc. ("Mint"), a corporation to be
organized under the laws of Virginia, with and into VA and (ii) a Scheme of
Arrangement between BB and certain of its shareholders (the "Scheme"). Pursuant
to the Merger and the Scheme, the holders of the outstanding capital stock of BB
and VA, respectively, will receive the applicable consideration set forth in the
Merger Agreement. Upon consummation of the Merger and the Scheme, BB will be a
wholly owned subsidiary of Mint, which will change its name to Markel
Corporation.
C. Each Stockholder owns that number of VA's common shares, no par value
(the "Common Shares") set forth next to such Stockholder's name on Exhibit A
hereto.
D. As a condition to its willingness to enter into the Merger Agreement, BB
has required that each Stockholder agree, and each Stockholder has agreed, among
other things, to execute and deliver this Agreement with respect to the Common
Shares now owned or in the future acquired by such Stockholder (all such shares,
including those now owned and those acquired in the future being referred to
herein as the "Shares"), on the terms and conditions provided for herein.
E. Capitalized terms used but not defined herein shall have the meanings set
forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and agreements herein contained, the parties hereto agree as follows:
1. Irrevocable Proxy. Each Stockholder hereby irrevocably appoints BB or any
designee of BB the lawful agent, attorney and proxy of such Stockholder, during
the term of this Agreement at any meeting of the Stockholders of VA, however
called, or in connection with any written consent of the Stockholders of VA, to
vote (or cause to be voted) the Shares held of record or beneficially by such
Stockholder (i) in favor of the Scheme, the execution and delivery by VA of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement, this Agreement and any actions
required in furtherance hereof and thereof; (ii) against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of VA under the Merger Agreement or this
Agreement; and (iii) against the following actions (other than the Scheme and
the transactions contemplated by the Merger Agreement): (1) any extraordinary
corporate transaction, such as a merger, consolidation, amalgamation or other
business combination involving VA or its subsidiaries; (2) a sale, lease or
transfer of a material amount of assets of VA or its subsidiaries or a
reorganization, recapitalization, dissolution or liquidation of VA or its
subsidiaries; (3) (a) any change in the majority of the Board of Directors of
VA; (b) any material change in the present capitalization of VA or any material
amendment of VA's certificate of incorporation and memorandum of association;
(c) any other material change in VA's corporate structure or business; or (d)
any other action which, is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, discourage or materially adversely affect the
Scheme or the transactions contemplated by the Merger Agreement or this
Agreement or the contemplated economic benefits of any of the foregoing. Each
Stockholder intends this proxy to be irrevocable and coupled with an interest
and will take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby revokes any proxy
previously granted by it with respect to the Shares. Each Stockholder shall not
during the term of this Agreement purport to vote (or execute a consent with
respect to) such Shares (other than through this irrevocable proxy) or grant any
other proxy or power of attorney with respect to any Shares, deposit any Shares
into a voting trust or enter into any agreement (other than this Agreement),
arrangement or understanding with any person, directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of such Shares.
2.1 Representations and Warranties. BB hereby represents and warrants to
each Stockholder as follows:
(a) Due Authorization. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of BB, and no other corporate
proceedings on the part of BB are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by BB and constitutes a valid and binding
agreement of BB enforceable against BB in accordance with its terms, except that
such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
(b) No Conflicts. Except for (i) filings under the HSR Act, if applicable,
(ii) the applicable requirements of the Exchange Act, and the Securities Act of
1933, as amended (the "Securities Act"), (iii) the applicable requirements of
state securities, takeover or Blue Sky laws and (iv) such
2
notifications, filings, authorizing actions, orders and approvals as may be
required under other laws, (A) no filing with, and no permit, authorization,
consent or approval of, any state, federal or foreign public body or authority
is necessary for the execution of this Agreement by BB and the consummation by
each of the transactions contemplated hereby and (B) neither the execution and
delivery of this Agreement by BB nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the provisions hereof shall
(1) conflict with or result in any breach of any provision of its certificate of
incorporation or by-laws (or similar documents), (2) 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,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract, agreement
or other instrument or obligation to which it is a party or by which it or any
of its properties or assets may be bound or (3) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to it or any of its
properties or assets, except in the case of (2) or (3) for violations, breaches
or defaults which would not in the aggregate materially impair the ability of BB
to perform its obligations hereunder.
(c) Good Standing. BB is a corporation duly organized, validly existing
and in good standing under the laws of Bermuda and has all requisite corporate
power and authority to execute and deliver this Agreement.
2.2. Representations and Warranties of the Stockholders. Each Stockholder
hereby severally and not jointly represents and warrants to BB as follows:
(a) Ownership of Shares. Stockholder is the owner of the Shares set forth
next to such Stockholder's name on Exhibit A hereto and has the power to vote
and dispose of such Shares.
(b) Power. Binding Agreement. Stockholder has the legal capacity, power
and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any other agreement to which Stockholder is a party
including, without limitation, any voting agreement, stockholders agreement or
voting trust. This Agreement has been duly and validly authorized, executed and
delivered by Stockholder and constitutes a valid and binding agreement of
Stockholder, enforceable against Stockholder in accordance with its terms,
except that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) is subject to general principles of equity.
(c) No Conflicts. Except for (i) filings under the HSR Act, if applicable,
(ii) the applicable requirements of the Exchange Act and the Securities Act,
(iii) the applicable requirements of state securities, takeover or Blue Sky
laws, (iv) such notifications, filings, authorizing actions, orders and
approvals as may be required under other laws, (A) no filing by such Stockholder
with, and no permit, authorization, consent or approval of, any state, federal
or foreign public body or authority is
3
necessary for the execution of this Agreement by Stockholder and the
consummation by Stockholder of the transactions contemplated hereby and (B)
neither the execution and delivery of this Agreement by Stockholder nor the
consummation by Stockholder of the transactions contemplated hereby nor
compliance by Stockholder with any of the provisions hereof shall (1) conflict
with or result in any breach of any provision of the certificate of
incorporation, by-laws, trust or charitable instruments (or similar documents)
of Stockholder, (2) 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, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which Stockholder is a party or by which he or it or any of his or its
properties or assets may be bound or (3) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Stockholder or any of his or
its properties or assets, except in the case of (A) or (B) for violations,
breaches or defaults which would not in the aggregate materially adversely
affect the ability of Stockholder to perform his or its obligations hereunder.
3. Certain Covenants of Stockholder. Each Stockholder hereby severally,
and not jointly, covenants and agrees as follows:
(a) No Solicitation. During the term of this Agreement, neither
Stockholder nor any officer, director, employee, representative or agent of
Stockholder shall, directly or indirectly, solicit, facilitate, participate in
or initiate any inquiries or the making of any proposal by any person or entity
(other than BB) which constitutes, or may reasonably be expected to lead to any
sale of the Shares or any Acquisition Proposal. If Stockholder, or any officer,
director, employee, representative or agent of Stockholder, receives an inquiry
or proposal with respect to the sale of Shares, then Stockholder shall promptly
inform BB of the terms and conditions, if any, of such inquiry or proposal and
the identity of the person making it. Stockholder shall, and shall cause its
officers, directors, employees, representatives and agents to, immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
foregoing provisions of this Section 3(a) shall not be construed to limit
actions taken, or require actions to be taken, by any Stockholder who is a
director of VA that are required or restricted by his or her director's
fiduciary duties and that are undertaken solely in such person's capacity as a
director of VA.
(b) Restriction on Transfer, Proxies and NonInterference. Stockholder
hereby agrees, while this Agreement is in effect, and except as contemplated
hereby, not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Shares or (b) grant any proxies, deposit any Shares
into a voting trust or enter into a voting agreement with respect to any Shares
or (c) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or have the effect
4
of preventing or disabling such Stockholder from performing his or its
obligations under this Agreement.
(c) Legending of Certificates: Nominees-Shares. If requested by BB,
Stockholder agrees to submit to BB contemporaneously with or promptly following
execution of this Agreement all certificates representing the Shares so that BB
may note thereon a legend referring to the proxy and other rights granted to it
by this Agreement. If any of the Shares beneficially owned by Stockholder are
held of record by a brokerage firm in "street name" or in the name of any other
nominee (a "Nominee", and, as to such Shares, "Nominee Shares"), Stockholder
agrees that, upon written notice by BB requesting it, Stockholder will within
five days of the giving of such notice execute and deliver to BB a limited power
of attorney in such form as shall be reasonably satisfactory to BB enabling BB
to require the Nominee to (i) grant to BB an irrevocable proxy to the same
effect as Section 1 hereof with respect to the Nominee Shares held by such
Nominee, and (ii) submit to BB the certificates representing such Nominee Shares
for notation of the above-referenced legend thereon.
(d) Stop Transfer Order. In furtherance of this Agreement, concurrently
herewith, Stockholder shall and hereby does authorize VA's counsel to notify
VA's transfer agent that there is a stop transfer order with respect to all of
the Shares (and that this Agreement places limits on the voting and transfer of
such shares), provided that Shares may be transferred to Nominees upon notice to
--------
BB of the transfer thereof.
4. Further Assurances. 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 action as may be necessary or
desirable to effectuate the transactions contemplated by this Agreement.
5. Adjustments to Prevent Dilution, etc. In the event of a stock dividend
or distribution, or any change in VA's capital stock by reason of any stock
dividend, split-up, reclassification, recapitalization, combination or the
exchange of shares, 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 the Shares may be changed or exchanged.
6. Miscellaneous.
(a) Entire Agreement, Assignment. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) shall not
be assigned by operation of law or otherwise, provided that BB may assign its
rights and obligations hereunder to any direct or indirect wholly owned parent
company or subsidiary of BB, but no such assignment shall relieve BB of its
obligations hereunder if such assignee does not perform such obligations.
5
(b) Amendments. This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the applicable Stockholder and BB.
(c) Notices. 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 so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to a Stockholder, to the address of such Stockholder indicated on
Exhibit A hereto.
If to BB:
Terra Nova (Bermuda) Holdings Ltd.
Richmond House
2nd Floor
12 Par-la-ville Road
Hamilton HM 8, Bermuda
Facsimile No.: (44-1) 296-6645
Attention: John J. Dwyer and
Jean M. Waggett, Esq.
with a copy to:
Debevoise & Plimpton
875 Third Avenue
23rd Floor
New York, New York 10022
Attention: Edward A. Perell, Esq.
Facsimile No.: (212) 909-6836
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(d) Governing Law. Except to the extent that the VSCA applies because VA
is a Virginia corporation, this Agreement shall be governed in all respects by
the laws of the State of New York without regard to any laws or regulations
relating to choice of laws (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.
6
(e) Cooperation as to Regulatory Matters. If so requested by BB, promptly
after the date hereof, Stockholder will use its reasonable best efforts to cause
such Stockholder and VA (if required) to make all filings which are required
under the HSR Act and applicable requirements and to seek all regulatory
approvals required in connection with the transactions contemplated hereby.
(f) Termination. This Agreement shall terminate on the earlier of (i) the
Effective Time or (ii) the termination of the Merger Agreement in accordance
with its terms.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore, each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
(i) Descriptive Headings. 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.
(j) Severability. 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.
7
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf of
each of the parties hereto, all as of the date first above written.
MARKEL CORPORATION
By: /s/ Steven A. Markel
--------------------------------
Title: Vice President
--------------------------------
TERRA NOVA (BERMUDA) HOLDINGS LTD.
By: /s/ John J. Dwyer
--------------------------------
Title: Chairman
-----------------------------
STOCKHOLDERS:
STEVEN A. MARKEL
By: /s/ Steven A. Markel
--------------------------------
Name: Steven A. Markel
Title: Stockholder
ANTHONY F. MARKEL
By: /s/ Anthony F. Markel
--------------------------------
Name: Anthony F. Markel
Title: Stockholder
ALAN I. KIRSHNER
By: /s/ Alan I. Kirshner
--------------------------------
Name: Alan I. Kirshner
Title: Stockholder
EXHIBIT A
Stockholder Name Number of Shares
- ---------------- ----------------
Steven A. Markel 470,361
Anthony F. Markel 341,763
Alan I. Kirshner 102,302
3