EXECUTION COPY
STOCKHOLDERS AGREEMENT dated as of November 22, 1998
(this "Agreement"), among UNUM Corporation, a Delaware
corporation ("UNUM"), and the individuals and other parties
listed on Schedule A attached hereto (each, a "Stockholder"
and, collectively, the "Stockholders").
WHEREAS UNUM and Provident Companies, Inc., a Delaware
corporation (the "Company"), propose to enter into an Agreement and Plan of
Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement"; capitalized terms used but not
defined herein shall have the meanings set forth in the Merger Agreement),
providing for the merger of UNUM with and into the Company, with the
Company as the surviving corporation in the merger (the "Merger"), upon the
terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS each Stockholder owns the number of shares of common
stock, par value $1.00 per share, of the Company (the "Common Stock"), set
forth opposite his, her or its name on Schedule A attached hereto (such
shares of Common Stock, together with any other shares of capital stock of
the Company acquired by such Stockholder after the date hereof and during
the term of this Agreement (including through the exercise of any stock
options, warrants or similar instruments), being collectively referred to
herein as the "Subject Shares"); and
WHEREAS as a condition to its willingness to enter into the
Merger Agreement, UNUM has requested that each Stockholder enter into this
Agreement.
NOW, THEREFORE, to induce UNUM to enter into, and in
consideration of its entering into, the Merger Agreement, and in
consideration of the promises and the representations, warranties and
agreements contained herein, the parties agree as follows:
1. Agreement to Vote Shares. (a) Subject to Section 1(b) hereof,
each of the Stockholders agrees during the term of this Agreement to vote
the Subject Shares as to which it has voting power or control, in person or
by proxy, in favor of the Merger, the adoption and approval of the Merger
Agreement and the approval of the transactions contemplated by the Merger
Agreement at every meeting of the stockholders of the Company at which such
matters are
considered and at every adjournment thereof (each, a "Stockholder Meeting").
(b) Notwithstanding anything to the contrary contained herein,
the obligations of the Stockholders pursuant to Section 1(a) hereof with
respect to matters to be considered at any Stockholder Meeting are subject
to the following conditions:
(i) the Form S-4 (as defined in the Merger Agreement) to be filed
with the Securities and Exchange Commission (the "SEC") by the Company
under the Securities Act of 1933, as amended (the "Securities Act"),
to register the shares of Common Stock to be issued by the Company in
the Merger shall have become effective under the Securities Act and,
as of the date of such Stockholder Meeting, shall not be the subject
of any stop order or proceeding by the SEC seeking a stop order;
(ii) neither the Board of Directors of the Company nor any
committee thereof shall have withdrawn or modified, in a manner
adverse to UNUM, its approval or recommendation of the Merger or the
Merger Agreement pursuant to Section 4.02(b) of the Merger Agreement;
and
(iii) no amendment or modification of the Merger Agreement shall
have been effected which reduces the Ratio.
2. No Other Grant of Proxy. The Stockholder will not, directly or
indirectly, grant any proxies or powers of attorney with respect to the
Subject Shares (other than in connection with matters proposed by the
Company at an annual meeting of the Company) to any individual,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity (each, a
"person") other than UNUM or any person designated in writing by UNUM.
3. No Voting Trusts. Each of the Stockholders agrees that such
Stockholder will not, nor will such Stockholder permit any entity under
such Stockholder's control to, deposit any of such Stockholder's Subject
Shares in a voting trust or subject any of its Subject Shares to any
arrangement with respect to the voting of the Subject Shares inconsistent
with this Agreement.
4. Affiliate Agreement. If, at the time the Merger Agreement is
submitted for approval to the stock-
holders of the Company, a Stockholder is an "affiliate" of the Company for
purposes of qualifying the Merger for pooling-of-interests accounting
treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules, regulations and interpretations thereunder, such
Stockholder shall deliver to UNUM at least 30 days prior to the Closing
Date a written agreement substantially in the form attached as Exhibit C-2
to the Merger Agreement.
5. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in a
Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity, and neither party will oppose the
granting of such relief on the basis that the other party has an adequate
remedy at law.
6. Term and Termination. Subject to Section 11(f), the term of
this Agreement shall commence on the date hereof, and such term and this
Agreement shall terminate upon the earliest to occur of (i) the Effective
Time, (ii) the date on which the Merger Agreement is terminated in
accordance with its terms and (iii) the date of any amendment or
modification of the Merger Agreement, or other agreement entered into in
connection therewith, or action taken (including any waiver of the terms of
the Merger Agreement) by the Company or UNUM which (A) reduces the Ratio or
otherwise alters the Ratio in a manner adverse to the Stockholders or
holders of Company Common Stock generally, (B) grants to the stockholders
of UNUM any securities or other rights or requires UNUM or the Company to
take any action which would have the effect of altering the relative
interests of the stockholders of UNUM and the stockholders of the Company
implied by the Ratio, (C) alters the provisions of Section 5.16 of the
Merger Agreement, (D) extends the date set forth in Section 7.01(b)(i) of
the Merger Agreement or (E) waives, amends or modifies the provisions of
Section 6.03(c) of the Merger Agreement. Upon any such termination, no
party shall have any further obligations or liabilities hereunder.
7. Certain Events. (a) Except as provided for by Section 7(b)
hereof, each Stockholder agrees that this Agreement and the obligations
hereunder shall attach to such Stockholder's Subject Shares and shall be
binding upon any
person to which legal or beneficial ownership of such Subject Shares shall
pass, whether by operation of law or otherwise, including such
Stockholder's heirs, guardians, administrators or successors. In the event
of any stock split, stock dividend, merger, reorganization, recapitaliza-
tion or other change in the capital structure of the Company affecting the
Common Stock, or the acquisition of additional shares of Common Stock or
other voting securities of the Company by any Stockholder, the number of
Subject Shares listed in Schedule A beside the name of such Stockholder
shall be adjusted appropriately and this Agreement and the obligations
hereunder shall attach to any additional shares of Common Stock or other
voting securities of the Company issued to or acquired by such Stockholder.
(b) Notwithstanding the foregoing, Section 7(a) shall not apply,
and the obligations of Section 1(a) shall not continue, with respect to
Subject Shares that are the subject of charitable contributions or bona
fide gifts (as described in Section 2522 of the Internal Revenue Code of
1986, as amended) made by (i) The Maclellan Foundation, Inc. in an amount
not to exceed 350,000, (ii) The R.J. Maclellan Trust For The Maclellan
Foundation, Inc. in an amount not to exceed 250,000 and (iii) Hugh O.
Maclellan, Jr., Kathrina H. Maclellan and Charlotte M. Heffner, in amounts
for each such person not to exceed .05% of the total outstanding number of
shares of Common Stock as of the date hereof (such Subject Shares are
collectively referred to herein as the "Excluded Charitable Shares").
(c) Each Stockholder agrees that such Stockholder will tender to
the Company, prior to any transfer, offer to transfer or agreement to
transfer any Subject Shares (other than Excluded Charitable Shares), by
sale, gift or otherwise, any and all certificates representing such
Subject Shares in order that the Company may inscribe upon such
certificates the legend in accordance with Section 5.18 of the Merger
Agreement and the Company shall thereafter cause such certificates to be
returned to such Stockholder within three business days of the Company's
receipt thereof in accordance with such Section 5.18.
8. Stockholder Capacity. No person executing this Agreement who
is or becomes during the term hereof a director or officer of the Company
(or who has been designated to the Board of Directors of the Company by a
Stockholder) makes (or shall be deemed to have made) any agreement or
understanding herein in his or her capacity as such director or officer.
Without limiting the generality of the foregoing, each Stockholder signs
solely in its, his or her capacity as the record and/or beneficial owner,
as
applicable, of such Stockholder's Subject Shares and nothing herein shall
limit or affect any actions taken by a Stock holder (or a designee of a
Stockholder) in his or her capacity as an officer or director of the
Company in exercising its rights under the Merger Agreement.
9. Entire Agreement; No Third Party Beneficiaries; Amendment;
Waiver. This Agreement (including the documents and instruments referred to
herein) (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, written or oral, among the parties with
respect to the subject matter hereof and (ii) is not intended to confer
upon any person other than the parties hereto any rights or remedies
hereunder. This Agreement may not be amended, supplemented or modified, and
no provisions hereof may be modified or waived, except by an instrument in
writing signed by each of the parties hereto. No waiver of any provisions
hereof by any party shall be deemed a waiver of any other provisions hereof
by any such party, nor shall any such waiver be deemed a continuing waiver
of any provision hereof by such party.
10. Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be in writing
and shall be deemed to have been duly given if mailed, by first class or
registered mail, three (3) business days after deposit in the United States
Mail, or if telexed or telecopied, sent by telegram, or delivered by hand
or reputable overnight courier, when confirmation is received, in each case
as follows:
If to the Stockholders, to the addresses listed on Schedule A
hereto.
With a copy to:
King & Spalding
1185 Avenue of the Americas
New York, New York 10036-4003
Attention: E. William Bates, II, Esq.
Telephone: (212) 556-2240
Facsimile: (212) 556-2222
And a copy to:
Carter Ledyard & Milburn
2 Wall Street
New York, New York 10003
Attention: Richard Covey, Esq.
Telephone: (212) 732-3200
Facsimile: (212) 944-9738
If to UNUM, in accordance with Section 8.02 of the Merger Agreement;
or to such other persons or addresses as may be designated in writing by
the party to receive such notice. Nothing in this Section 10 shall be
deemed to constitute consent to the manner and address for service of
process in connection with any legal proceeding (including litigation
arising out of or in connection with this Agreement), which service shall
be effected as required by applicable law.
11. Miscellaneous.
--------------
(a) When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpreta-
tion of this Agreement. Wherever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation."
(b) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws.
(c) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy,
all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner and to
the end that the transactions contemplated hereby are fulfilled to the
extent possible.
(d) This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall
become effective when one or more of the counterparts have been signed by
each of the parties and delivered to the other party, it being understood
that each party need not sign the same counterpart.
(e) Except as provided for by Section 7 hereof, neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Stockholder, on the one hand, without the prior written
consent of UNUM, nor by UNUM, on the other hand, without the prior written
consent of the Stockholders, except that UNUM may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder
to any direct or indirect wholly owned subsidiary of UNUM; provided that
notwithstanding such assignment UNUM shall remain liable for performance of
its obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
(f) The obligations of the Stockholders set forth in this
Agreement shall not be effective or binding upon the Stockholders until
after such time as the Merger Agreement is executed and delivered by UNUM
and the Company. Nothing contained in this Agreement shall be construed as
containing any liability on the part of the Stockholders under the Merger
Agreement.
IN WITNESS WHEREOF, UNUM has caused this Agreement to be signed
by its officer thereunto duly authorized and each Stockholder has signed
this Agreement, all as of the date first written above.
UNUM CORPORATION
By: /s/ James F. Orr III
---------------------------
James F. Orr III
STOCKHOLDERS:
/s/ Hugh O. Maclellan, Jr.
--------------------------------
Hugh O. Maclellan, Jr.
/s/ Kathrina H. Maclellan
--------------------------------
Kathrina H. Maclellan
/s/ Charlotte M. Heffner
--------------------------------
Charlotte M. Heffner
THE MACLELLAN FOUNDATION, INC.
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.
President
THE R.J. MACLELLAN TRUST FOR THE
MACLELLAN FOUNDATION, INC.
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.,
Trustee
By: /s/ Kathrina H. Maclellan
---------------------------
Kathrina H. Maclellan,
Trustee
By: /s/ Dudley Porter, Jr.
---------------------------
Dudley Porter, Jr., Trustee
THE HELEN M. TIPTON FOUNDATION,
INC.
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.
President
THE R.J. MACLELLAN TRUST FOR THE
R.L. MACLELLAN FAMILY
By: /s/ Kathrina H. Maclellan
---------------------------
Kathrina H. Maclellan,
Trustee
By: /s/ Dudley Porter, Jr.
---------------------------
Dudley Porter, Jr., Trustee
THE CORA L. MACLELLAN TRUST FOR
THE R.L. MACLELLAN FAMILY
By: /s/ Kathrina H. Maclellan
---------------------------
Kathrina H. Maclellan,
Trustee
By: /s/ Dudley Porter, Jr.
---------------------------
Dudley Porter, Jr., Trustee
THE R.J. MACLELLAN TRUST FOR THE
HUGH O. MACLELLAN, SR. FAMILY
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.,
Trustee
THE CORA L. MACLELLAN TRUST FOR
THE HUGH O. MACLELLAN, SR.
FAMILY
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.,
Trustee
TRUST U/A HUGH O. MACLELLAN, SR.
DATED 11/19/66 FOR THE BENEFIT
OF CATHERINE H. MACLELLAN
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.,
Trustee
TRUST U/A HUGH O. MACLELLAN, SR.
DATED 7/8/68 FOR THE BENEFIT OF
DANIEL O. MACLELLAN
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.,
Trustee
TRUST U/A HUGH O. MACLELLAN, SR.
DATED 3/12/64 FOR THE BENEFIT OF
CHRISTOPHER H. MACLELLAN
By: /s/ Hugh O. Maclellan, Jr.
---------------------------
Hugh O. Maclellan, Jr.,
Trustee
SCHEDULE A
Number of Percentage of
Outstanding Voting Power of
Stockholder Shares Owned the Company1
Hugh O. Maclellan, Jr. 1,544,054 1.14%
Kathrina H. Maclellan 2,756,283 2.04%
Charlotte M. Heffner 915,390 0.68%
The Maclellan Foundation, Inc. 15,484,693 11.44%
The R.J. Maclellan Trust For 6,583,160 4.86%
The Maclellan Foundation, Inc.
The Helen M. Tipton 3,327,454 2.46%
Foundation, Inc.
The R.J. Maclellan Trust For 1,076,690 0.80%
The R.L. Maclellan Family
The Cora L. Maclellan Trust 1,071,640 0.80%
For The R.L. Maclellan Family
The R.J. Maclellan Trust For The 1,045,230 0.77%
Hugh O. Maclellan, Sr. Family
The Cora L. Maclellan Trust 1,037,390 0.77%
For The Hugh O. Maclellan, Sr.
Family
Trust U/A Hugh O. Maclellan, Sr. 102,182 0.08%
Dated 11/19/66 For The Benefit
Of Catherine H. Maclellan
Trust U/A Hugh O. Maclellan, Sr. 102,120 0.08%
Dated 7/6/68 For The Benefit
Of Daniel O. Maclellan
Trust U/A Hugh O. Maclellan, Sr. 94,870 0.07%
Dated 3/12/64 For The Benefit
Of Christopher H. Maclellan
- --------
1 Based on 135,406,403 total shares outstanding as of November 17, 1998.